Glenwood City Administrator Terminated
After meeting in closed session for more than two hours at its regular meeting Tuesday, Feb. 9, the Glenwood City Council fired city administrator / financial director Brian Kissel.
A motion made by council member Jessie Lundvall passed by a 4-1 margin with Craig Florian casting the lone “no” vote.
The city council’s action came on the same night an audit report on the city’s 2014-2015 fiscal year was presented publicly by representatives of Council Bluffs-based Hamilton and Associates, P.C. During their report to the council’s budget and finance committee, the auditors identified four material weaknesses (major concerns) and one significant deficiency (area of lesser concern) in their schedule of findings.
Three of the material weaknesses (financial reporting, cash reconciliation and transfers) were repeat findings singled out by auditors a year ago when they reported on the city’s 2013-2014 fiscal year. Inaccurate fund balances is the fourth material weakness identified by auditors in the report for 2014-2015.
Kissel wasn’t in attendance at the budget and finance committee meeting, held prior to the regular council meeting, but did take part in the closed session where he was joined by legal counsel.
Council members did not discuss information reviewed or shared during the closed session, but Lundvall said making the motion for Kissel’s termination was the toughest decision she’s had to make as an elected official. Lundvall said the move is in the best interest of the city and its taxpayers.
“It’s not about doing the popular thing, it’s about doing what’s right for the citizens we represent,” Lundvall said. “The trail is well documented of what some of the issues have been. It’s a situation where we were having repeat deficiencies and we feel it wasn’t being taken as seriously as it should have been.”
Kissel declined to comment after the meeting, but said he would be releasing a written statement at a later date.
Following the vote for termination, city attorney Matt Woods advised the council that under state law the city would be required to file a written order detailing why Kissel was terminated. Once the written order is filed, Kissel would then have the opportunity to address or dispute the claims at a public hearing before the council. Kissel, however, asked the city to waive the written order, which meant he would also be surrendering his right for a public hearing. The council voted 5-0 to honor Kissel’s request and not file a written order.
Because Kissel was involved in overseeing taxpayer dollars, Woods said it’s important for the public to know the city’s elected leaders have no reason to suspect any type of fraudulent or criminal activity was involved in the handling of city finances.
“There was not one particular reason for the council’s decision (to terminate),” Woods said. “I want to make sure the public knows the council just wants to move forward with a new city administrator.”
Woods added he has “zero reason” to believe there will be an “official audit” of the city’s finances by the state.
Mayor Brian Tackett, who took office in January, said he and council members are exploring their immediate options for hiring a new city administrator / financial director. The city is in the process of developing its budget for the 2016-2017 fiscal year, which begins July 1. As a result of Kissel’s termination, Tackett said the city is seeking an extension for adopting its budget from the Iowa Department of Management. Typically, municipalities are required to have their budgets certified to the state by March 15.
Kissel was hired in 2011. Last year, he was paid a salary of $64,135. He will receive compensatory pay from the city for vacation days and other time and benefits owed. Woods said the amount of compensation the city will pay to Kissel has yet to be determined.
Public Criticism
Following last year’s annual audit report for 2013-2014, which identified several shortcomings in the city’s day-to-day handling of finances, a lack of oversight from the city council and a general fund deficit of nearly $300,000, Kissel and other city officials became the target of public criticism. A capacity crowd filled the city council chambers last March for a public hearing on the 2015-2016 budget. Many in the crowd criticized the city administration, mayor and council members for their lack over financial oversight.
At the same time city officials were being asked to address issues brought up in the audit report, Kissel and the council were continuing their efforts to find funding for the construction of an outdoor aquatic center, a project that had been rejected by bond issue voters in 2014. More criticism mounted when the aquatic center project came in $1 million over budget and fundraising efforts for a “Lazy River” feature at the aquatic center fell significantly short.
The city brought in a financial consultant, Susanne Gerlach of Des Moines-based Public Financial Management, Inc., (PFM) who helped devise funding plans for the aquatic center and the controversial Vine Street and Railroad Ave reconstruction projects. She also advised the city on several other financial matters. The city paid PFM $36,447 for their services in 2015, city clerk Angie Winquist confirmed last week.
Audit Report Findings
During her presentation to council members last week, Liz Larson of Hamilton and Associates said she had difficulty getting requested materials and documents from the city during the audit process last fall. She also noted some documents provided were incomplete or inaccurate.
Notable findings in the audit report for the city of Glenwood’s fiscal year ending June 30, 2015, included:
Fund balances: “The city’s accounting system does not reflect accurate fund balances. In order to bring the beginning book fund balances to actual, a total adjustment of $193,327 was needed.
“When book balances do not reflect actual fund balances, it is impossible for the city to know their actual financial position. There is an increased risk of negative fund balances and inaccurate budgeting. It also makes it impossible for accurate reconciliation processes to be performed.”
Cash Reconciliation Process: “Proper bank reconciliations are not performed by the city to determine that documented fund balances reconcile with bank balances. The city implemented a process during fiscal year 2015 to ensure all activity on the bank statement for the main checking account is recorded on the books, however, there is no reconciliation of fund balances to the bank balances. Additionally, the only bank account reviewed by the city is the main checking account.”
Financial Recording: “During the audit, we identified a material amount of receipts that were directly deposited into the bank, but were not recorded in the books as follows: $31,754 in Local Option Sales Tax from the state of Iowa, $1,783 in interest income, a special assessment for $424, a donation for $20,350.
“We also noted receipts totaling $3,490, which were recorded on the city’s books, but had no corresponding deposit. We also identified a material amount of disbursements which were not recorded in the city’s books as follows: $102,167 in disbursements from the pool fund, a $35,164 bond payment.
“When receipts and disbursements are not properly recorded, the city’s books do not reflect accurate activity or fund balances.”
Transfers: “As funds’ balances recorded on the city’s books are not accurate, the city does not recognize when and if transfers need to be made. Therefore, very few transfers were recorded during the year. Adjustments were subsequently made by the city to properly record transfers required in financial statements. We recommend transfers be made prior to year end.”
General Fund Deficit: The city finished the 2014-2015 fiscal year with a deficit balance of $116,140 in its general fund account.
The lone significant deficiency noted in the audit report involved the city’s “Certified Budget” procedures.