Going through the motions

Following James Childress’ appearance before the Saratoga Town Council on February 18, it appeared as if there were some answers to the questions that have been plaguing the Saratoga Town Council since receiving the 2017/2018 audit last year. 

During the March 3 meeting of the governing body, however, it appears that there are even more questions to be answered following a February 28 email from Childress. In addition to the email serving as a catalyst for a dissenting vote on approving accounts payable, it led to a myriad of motions made by Councilmember Jon Nelson.

General Deficit

As was reported previously (see “No body, no crime” on page 16 of the February 28 Saratoga Sun), Childress answered the question of whether or not fraud had taken place within the accounting system and was further engaged by the Town of Saratoga to integrate adjusted journal entries and reconcile a number of enterprise funds managed by the Town.

In the email from Childress, he states that it appeared the general fund had been operating at a deficit for a number of years. Furthermore, the ongoing deficit was kept at bay only by transferring from the enterprise funds into the general fund with transfers ranging from $28,654 to $504,521. 

“This begs the question, since the general fund was incurring overruns, and receiving transfers in, what was funding it?” wrote Childress. “I had understood that this was the enterprise funds, and I believe the financials support his.”

Childress added that he believed it had been understood by past auditors that the approval of expenditures on a deficit fund balance “constituted an implicit approval of the required transfer of funds from the surplus fund balance to the deficit fund balance.” 

During the March 3 meeting, Nelson stated that he read Childress’ email as acknowledging that the general fund had been in a deficit for six years and had been sustained by transfers from the water and sewer fund. 

“I believe—reading the email, understanding the email to the extent that I can understand it—that we owe the water and sewer investment accounts somewhere to the tune of $1.2 million,” said Nelson.

Define Municipality

As discussion continued, Nelson expressed his concerns about the information brought to light by Childress as well as his disappointment in Anton Collins Mitchell (ACM) and Childress for not notifying the town council of the issue previously. The council member stated that he believed that the Town of Saratoga could face legal trouble in accordance with the Uniform Municipal Finance Act, reading from Wyoming State Statute 16-4-123(c) and (d).

According to those statutes, any auditor knowingly issuing a false or misleading statement shall be reported to the Wyoming Board of Certified Public Accountants. Additionally, any elected officials or employees who “knowingly and willfully” violate this act may be removed from office or employment.

In an email to Mayor John Zeiger and Councilmember Judy Welton, legal counsel Tom Thompson stated that the Uniform Municipal Finance Act does not apply to the Town of Saratoga as it does not fit the act’s definition of a municipality. Indeed, 16-4-102(a)(xiv) defines a municipality as “All incorporated first class cities, towns having a population in excess of 4,000 inhabitants and all towns operating under the city manager form of government.”

“So, I guess my question then is, if that’s Tom’s legal position—that that doesn’t apply to the Town—does that mean that it’s okay for us to violate the provisions of the municipal fiscal procedures act?” asked Nelson.

Making Motions

Throughout the discussion under council comments, a total of four motions were made. The first was to hold a workshop with Childress and Carver, Florek and James (CFJ), the accountants auditing the 2018/2019 Town of Saratoga Financials. The motion passed unanimously.

Nelson followed with a motion to suspend engagement with Childress, putting a moratorium on the accountant’s work. The motion failed 2-3, with Nelson and Councilmember Bob Keel casting the two aye votes. Before voting, Keel stated that he was concerned about the information presented by Childress and wanted to “be really careful so that we make as little mistakes as possible.”

The second motion from Nelson was to contact the Wyoming Department of Audit’s public finance department. Following that motion, it was revealed that Town Clerk Suzie Cox had been in conversation with the Department of Audit. The Saratoga Sun reached out to Richard Cummings, Auditing Manager, who confirmed Cox’s statement and said that the department was waiting for CFJ’s audit to be completed. 

Nelson’s second motion failed by a 2-3 vote with Nelson and Mayor John Zeiger both voting aye.

“I’m going to go ahead and vote yes only because I feel confident that the auditors are satisfied,” said Zeiger. “So, if they want to come back, so be it.”

The final motion from Nelson was to contact the Limited Government Liability Pool (LGLP) about possible litigation faced by the Town of Saratoga surrounding the finances. Cox informed the council that she had been keeping the LGLP apprised of the situation, adding that it would be okay for either Zeiger or Welton to contact them.

“What are you going to tell them the issue is?” asked Welton.

“That we have a councilman that’s questioning some of the fiscal accounting and he’s concerned and so maybe they should look into it a little bit for him,” Cox replied.

The motion to contact LGLP passed 4-1 with Councilmember Steve Wilcoxson casting the only dissenting vote.

The next meeting of the Saratoga Town Council will be at 6 p.m. on March 17 at Saratoga Town Hall.