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Officials: No one is to blame for $9M shortage
By Francesca Olsen
Hudson-Catskill Newspapers
Who is to blame when $9 million in anticipated funds turns up uncollectible? Can an individual be blamed, or is it the system? Will the county’s bond rating remain stable?
An external audit of federal and state reimbursement revenues at the Columbia County Department of Social Services recently determined that $9 million in accounts receivable, budgeted over the course of at least 10 years, will go uncollected by the county. According to county treasurer Kenneth Wilber, action has already been taken to correct the problem.
The receivables “were all factored into the fund balance and the general fund,” Wilber said. This means that the $9 million was represented in the county’s fund balance at one time.
“The ending balance in our 2007 financials was restated to reflect the $9 million adjustment,” Wilber said. “Before the audit was completed for 2008, the ending balance in 2007 was adjusted by that amount...it was a reduction in the fund balance.”
The county currently has about $15.4 million in its general fund, Wilber said.
“We booked the $9 million in hopes of receiving the money,” he said. “And also to inform the feds, and the state as to what our actual expenditures were. There was a process started whereby some of that was being written off, but there was more going on than what was being written off, once we knew they were not collectable.
“In previous audits prior to this one, that was not noticed. We had three good audits the last three years.”
Each year, Social Services Commissioner Paul Mossman formulates the budget for DSS, the county’s largest department; he has been commissioner since 2003.
“We report the claims and expenditures to track the deficit and the debt that would incur over the course of a fiscal year, in addition to presenting a need for additional reimbursement,” he said.
Programs that DSS is mandated to provide get reimbursement from the state and federal government, but there’s a cap. If a county doesn’t expend its allocated reimbursement, the state sometimes takes excess funds and provides funding to districts that exceeded their allocations, Mossman said.
The time it takes for the state and federal government to come to this conclusion, though, is often longer than a fiscal year. “We have a window where we can retroactively claim for two years,” said Mossman. “So those previous quarters were left open....what the audit found is we should be doing that as we go...to make those adjustments current.
“As soon as DSS was made aware of the findings, we immediately stopped this practice. We’re looking to upgrade our internal accounting procedures and to bring this as current as possible with the outstanding claims.”
“It’s not lost. It’s just money that we were not going to be reimbursed on. Very rarely would we get 100 percent reimbursement on a mandated program. There’s always a local share to it.”
“It was money that was incorrectly anticipated that we would receive under our reimbursement programs for DSS,” said Board of Supervisors Chairman Art Baer, R-Hillsdale. “So it’s not as if we ever had the money and it disappeared. The money simply was never appropriated for us to receive. We got everything we were entitled to get. No cash has left the bank accounts...it is a serious mistake, but it’s one we have corrected.”
Baer said the county’s bond rating, currently rated A2 by Moody’s, may not change. “We’re not sure how, if at all, it will affect our bond rating,” he said. “It is possible, because we still have a sizable fund balance and the county is still operating in the black, that our bond may not be downgraded.”
A rating of A2 is medium-to-high, Wilber explained, putting Columbia County “about a third of the way down the counties in the state of New York.”
If the bond is downgraded, the county may have to pay a higher interest rate on future bond sales, Baer said.
Baer said that the county wouldn’t be asking for a resignation from Mossman or Wilber, but that the county will be putting out a request for proposal for a new external auditing firm. The current firm, Pattison, Koskey, Howe and Bucci, CPAs, P.C., did not return multiple calls before press time.
“(Mossman) didn’t walk into the job knowing how to do that. He was told that this is the way it’s done,” Baer said.
“At this point and time, we don’t consider taking any action. It is where it is, and we have a corrective plan of action. As long as we feel the department is responsible to that, I think we’ll be able to work our way out of it and come out the stronger for it.”
Mossman’s predecessor, Mitchel Oxenhorn, was DSS commissioner until the end of 2002. “Any fiscal procedures done by the department were approved by external auditors and done by the county treasurer,” he said. “Any kind of claiming procedures were done with the knowledge of the Board of Supervisors and the county treasurer. There is no way in the world that had I been advised that any claiming we were doing was questionable or outside the scope of what was believed to be proper fiscal reporting would have been done.”
The county, Baer said, also plans to hire a county controller to upgrade internal audit and control practices.
“Some of the departments have complex reimbursement procedures,” said Wilber. “My office does not audit reimbursement from any department. We receive the requests for reimbursement, send them on, and book the money when it comes in...and that’s the kind of thing we rely on the annual audit to do — to bring those matters to our attention.
“(Residents) have a right to be upset. There’s no question about it. All I can say is, I’m not very happy about it either,” Wilber continued. “There’s no expertise (in the treasurer department) as far as individual revenue streams, and what can be claimed, and what cannot be claimed.”
“We were following what we believe was normal practice, county practice,” Mossman said. “Had we been advised otherwise, we would have made those types of changes. There was no intentional misrepresentation....there was no intentional wrongdoing anywhere here.”
To reach reporter Francesca Olsen call 518-828-1616, ext. 2272, or e-mail folsen@registerstar.com.
An external audit of federal and state reimbursement revenues at the Columbia County Department of Social Services recently determined that $9 million in accounts receivable, budgeted over the course of at least 10 years, will go uncollected by the county. According to county treasurer Kenneth Wilber, action has already been taken to correct the problem.
The receivables “were all factored into the fund balance and the general fund,” Wilber said. This means that the $9 million was represented in the county’s fund balance at one time.
“The ending balance in our 2007 financials was restated to reflect the $9 million adjustment,” Wilber said. “Before the audit was completed for 2008, the ending balance in 2007 was adjusted by that amount...it was a reduction in the fund balance.”
The county currently has about $15.4 million in its general fund, Wilber said.
“We booked the $9 million in hopes of receiving the money,” he said. “And also to inform the feds, and the state as to what our actual expenditures were. There was a process started whereby some of that was being written off, but there was more going on than what was being written off, once we knew they were not collectable.
“In previous audits prior to this one, that was not noticed. We had three good audits the last three years.”
Each year, Social Services Commissioner Paul Mossman formulates the budget for DSS, the county’s largest department; he has been commissioner since 2003.
“We report the claims and expenditures to track the deficit and the debt that would incur over the course of a fiscal year, in addition to presenting a need for additional reimbursement,” he said.
Programs that DSS is mandated to provide get reimbursement from the state and federal government, but there’s a cap. If a county doesn’t expend its allocated reimbursement, the state sometimes takes excess funds and provides funding to districts that exceeded their allocations, Mossman said.
The time it takes for the state and federal government to come to this conclusion, though, is often longer than a fiscal year. “We have a window where we can retroactively claim for two years,” said Mossman. “So those previous quarters were left open....what the audit found is we should be doing that as we go...to make those adjustments current.
“As soon as DSS was made aware of the findings, we immediately stopped this practice. We’re looking to upgrade our internal accounting procedures and to bring this as current as possible with the outstanding claims.”
“It’s not lost. It’s just money that we were not going to be reimbursed on. Very rarely would we get 100 percent reimbursement on a mandated program. There’s always a local share to it.”
“It was money that was incorrectly anticipated that we would receive under our reimbursement programs for DSS,” said Board of Supervisors Chairman Art Baer, R-Hillsdale. “So it’s not as if we ever had the money and it disappeared. The money simply was never appropriated for us to receive. We got everything we were entitled to get. No cash has left the bank accounts...it is a serious mistake, but it’s one we have corrected.”
Baer said the county’s bond rating, currently rated A2 by Moody’s, may not change. “We’re not sure how, if at all, it will affect our bond rating,” he said. “It is possible, because we still have a sizable fund balance and the county is still operating in the black, that our bond may not be downgraded.”
A rating of A2 is medium-to-high, Wilber explained, putting Columbia County “about a third of the way down the counties in the state of New York.”
If the bond is downgraded, the county may have to pay a higher interest rate on future bond sales, Baer said.
Baer said that the county wouldn’t be asking for a resignation from Mossman or Wilber, but that the county will be putting out a request for proposal for a new external auditing firm. The current firm, Pattison, Koskey, Howe and Bucci, CPAs, P.C., did not return multiple calls before press time.
“(Mossman) didn’t walk into the job knowing how to do that. He was told that this is the way it’s done,” Baer said.
“At this point and time, we don’t consider taking any action. It is where it is, and we have a corrective plan of action. As long as we feel the department is responsible to that, I think we’ll be able to work our way out of it and come out the stronger for it.”
Mossman’s predecessor, Mitchel Oxenhorn, was DSS commissioner until the end of 2002. “Any fiscal procedures done by the department were approved by external auditors and done by the county treasurer,” he said. “Any kind of claiming procedures were done with the knowledge of the Board of Supervisors and the county treasurer. There is no way in the world that had I been advised that any claiming we were doing was questionable or outside the scope of what was believed to be proper fiscal reporting would have been done.”
The county, Baer said, also plans to hire a county controller to upgrade internal audit and control practices.
“Some of the departments have complex reimbursement procedures,” said Wilber. “My office does not audit reimbursement from any department. We receive the requests for reimbursement, send them on, and book the money when it comes in...and that’s the kind of thing we rely on the annual audit to do — to bring those matters to our attention.
“(Residents) have a right to be upset. There’s no question about it. All I can say is, I’m not very happy about it either,” Wilber continued. “There’s no expertise (in the treasurer department) as far as individual revenue streams, and what can be claimed, and what cannot be claimed.”
“We were following what we believe was normal practice, county practice,” Mossman said. “Had we been advised otherwise, we would have made those types of changes. There was no intentional misrepresentation....there was no intentional wrongdoing anywhere here.”
To reach reporter Francesca Olsen call 518-828-1616, ext. 2272, or e-mail folsen@registerstar.com.
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The following are comments from the readers. In no way do they represent the view of registerstar.com.
swingbatter2 wrote on Oct 20, 2009 2:01 PM:
" The DSS Commissioner is responsible for creating the DSS budget. This is one of the higher-paid of all Columbia County employees and is a position of responsibility. County Treasurer ranks up there too. They're paid to think about money and budgets. A corporate CFO who oversaw a budget with a $9M error would be fired or asked to resign. "Not Me" and "Ida Know" aren't on the county payroll. "
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15thurman wrote on Oct 20, 2009 8:34 AM: