Even with the sentencing of former Paonia finance officer Kristin Chesnik for embezzlement, the Town of Paonia continues to deal with the consequences of her actions.
The town council first considered whether to pass a resolution to amend the 2012 budget to appropriate additional money to defray expenses in excess of the amounts budgeted and to use monies from unappropriated or unrestricted surpluses.
The resolution states, "The amendments contained herein do not violate the statutory limitations and the constitutional limitations applicable to the 2012 budgeting process."
The expenditures for each fund were shown in the resolution according to how they were originally funded, amended and then finally amended.
The Capital Improvement Fund originally budgeted $163,150 for expenditures and has a final amended amount of $230,000. General Fund expenditures were budgeted at $727,810 and finally amended at $863,655. The Water Fund was budgeted for $571,061 with a final amended amount of $872,113. The Wastewater/Sanitation fund was originally budgeted at $179,989 with the final amount being $586,000. The Conservation Trust Fund was budgeted for $41,373 and was amended to $32,220. The total original budget for all the funds was $2,055,620 with the final amended budget at $2,583,988.
Cindy Jones, finance officer, gave a synopsis. She explained that the original budget figures were estimated at the end of 2011 for 2012. "The previous year fund balances were not included in that," Jones said. "In the end of December I attempted to guesstimate a revised budget and came up with $1.9 million in expenses and $4.3 million in revenue. That included prior fund balances per the prior audit. After this  audit I determined that there were some calculation errors and there were some items that came up from a prior year that had to be corrected this year. So therefore, the final amended budget [has] expenses $2.5 million and $5 million in revenue." That means the Town of Paonia has a $2.5 million surplus.
"The beginning balances were distorted because of certain situations. The budget was not done by Cindy. It was done by the prior financial person and it wasn't done probably as well as it should have been done. And therefore you are making corrections to get it where you should be," said auditor Pete Blair of Blair and Associates.
Larry Wissbeck, one of the trustees on the finance committee, made the point absolutely clear. "The bookkeeper (Chesnik) that we had for the last five years at least did not keep a good set of books. That has caused all kinds of problems. We had to go back and pay federal fines, and we're trying to bring the employee's retirement fund into federal compliance. It's just been a nightmare and Cindy (Jones) and to some extent Barb (Peterson, town clerk) have worked for an entire year now trying to get the books into order. This piece of paper (the resolution) is a summation that's going to bring five years of bad bookkeeping into a good set of city books."
Jere Lowe asked if the town really had a $2.5 million surplus. He had understood from an interview Mayor Neal Schwieterman did on KVNF, that the town was broke.
Pete Blair responded that the town's General Fund has over one year's operating expenses in reserve. The town is in good shape financially.
"It's fair to say that if certain things that happened had not happened, that fund balance would be even higher," Schwieterman added.
Blair commented that the surplus could have been over $3 million rather than $2.5 million had "certain things not happened."
Those references are regarding the $401,000 Chesnik admitted she stole from the Town of Paonia while she was its finance officer.
Wissbeck again wanted to put the $2.5 million surplus into perspective. He pointed out that the town recently had spent $300,000 just for a sewer repair. "And we are facing $5 million improvement to the water system, some of which we are hopeful will be low interest loans and grants."
Mayor Schwieterman interjected, "The $5.4 million project is out of the Enterprise Fund for water and sewer. When Mr. Blair is talking General Fund that project does not come out of those monies. They come out of the Enterprise Fund."
Concerning that water project, the Town of Paonia is awaiting final studies on how much in loans it can bear. "We've raised the water and sewer rates a couple of times over the last couple of years trying to move our fund to be in position for that [project]," Schwieterman said. It would be a $5 million project if the town did all improvements at once, but the project could be broken up and done as more than one project.
Trustee Ross King said he did not understand how Jones had come up with the figures for the amended budget.
Mayor Schwieterman said Jones had worked with the auditor on coming up with the final revised figures.
The town council unanimously approved the resolution to amend the 2012 budget with the final expenditure amounts.
Blair thanked the finance committee of Larry Wissbeck and Brian Ayers and trustee Ross King for changing internal controls for the town's finances. "I also want to thank Cindy because we probably went from an average of 40 adjustments on the audit to about nine. Most of those were accrual adjustments or small things like depreciation," Blair said.
"The town stands about where they stood in 2011," Blair said. The town has $2.5 million in cash scattered among all funds. Overall, the town is in good financial shape.
Blair said that the $401,000 embezzled will not be carried on the books, as though the town will get that money back. Instead it will be in a footnote in the audit.
The agenda for the July 23 town council meeting lists under new business, "Chesnik — Civil Action." With the town's insurance only covering $150,000 of the $401,000 stolen, the town will decide whether to pursue civil action against Kristin Chesnik.
The town council unanimously approved the audit as amended and with the notes of Pete Blair.blog comments powered by Disqus