The Geauga County Budget Commission voted unanimously Oct. 29 to advise the state auditor’s office it could not corroborate fund balances reflected in the Russell Township Park District’s 2019 tax budget.
In a special session of the commission held in Russell Town Hall, Geauga County Auditor Chuck Walder gave a PowerPoint presentation detailing issues with the probate court-appointed Ohio Revised Code Chapter 1545 park district’s tax budget.
The district has two sources of funds: an unrestricted general fund and a levy-restricted land acquisition fund.
However, due to what he called “significant conceptual errors,” Walder — who serves on the statutorily appointed budget commission with county Treasurer Chris Hitchcock and Prosecutor Jim Flaiz — said the commission received no verifiable evidence to support or authenticate transfers and a final corrected balance for the district.
And, because the publicly-reported figures varied significantly from the estimates the park district provided the commission, Walder said they could not validate those figures.
At issue is the treatment of inside and outside millage. Ohio law allows a taxing district such as Russell Township to collect 10 mills of “inside” tax as a levy without being voted on by the people in the taxing district. “Outside” millage, or voted millage, has to be approved by voters before it can be applied to the tax bill.
Walder discussed in detail financial irregularities, dating back to 2015, with the park district’s accounting of inside and outside millage.
He mentioned the commission met twice with park commissioners — on Aug. 14 and Aug. 28 — and he personally met with park board Chairman Scott Wayt four times to discuss the errors.
Commission members further recommended the park district hire an outside accounting firm to correct their financial issues.
In the end, the park board believed it needed to transfer more than $154,000 from its unrestricted general fund to the levy-restricted land acquisition fund, leaving roughly $30,000 in the general fund.
Park commissioners said this was not enough to maintain the parks, so on Oct. 22, in a split 2-1 vote, they elected to lease about 376 acres of park land to the Geauga Park District for up to 25 years.
However, Walder said the park commissioners seem unable to grasp the basic concepts being communicated regarding the treatment of inside/outside millage. He explained to the roughly 25 people in attendance that he believed the general fund balance exceeded $100,000.
“Are you saying maybe they have more than the $30,000?” resident Shelley Chernin asked.
Walder explained the park district reported a beginning balance of roughly $160,000 in its general fund at the beginning of 2018, before any expenditures or revenue.
“If they’re now saying $154,000 has to be transferred out, leaving them with $30,000, I’m off by a bunch, and these are their numbers not mine,” he said.
He argued roughly $52,000 is the correct amount to transfer out of the general fund, which would leave a balance of more than $100,000 in the general fund, not $30,000.
“Clearly we’re off by a factor of three,” said Walder. “That is conceptual error, that’s not a math error.”
He feels park commissioners thought the commission was advising them to take 100 percent of the park district’s revenue and transfer it to the land acquisition fund.
“That is not what we said from the very beginning,” Walder said. “One hundred percent of the money collected for their levy has to go into the (land acquisition) fund. Inside millage, interest and all the other items go into the general fund. They are struggling with that concept either because they don’t want to know the truth or they aren’t capable of grasping it.”
Flaiz noted the 1545 park district historically has spent around $20,000 per year out of the general fund on general operations.
“So, they would have at least five years of operating money (in the general fund),” he said.
One resident asked why the budget commission did not catch the financial irregularities several years ago.
“I was not the auditor then,” Walder said, admitting the prior county auditor did not catch the error.
The budget commission recommended the park commissioners hire an outside accounting firm to help straighten out their books, Flaiz reiterated, noting park commissioners refused to provide that financial documentation to the commission.
Flaiz also explained the commission has limited powers and does not have the authority to audit any entity.
“We take what people provide us and we try to help in most instances,” he said. “Up until now, pretty much everybody has accepted our help and helped move the ball forward, and resolve some of these problems. It just hasn’t been the case here.”
Did Park Commissioners Fulfill Bonding Obligation?
Once the financial irregularities were discovered, Flaiz said the commission looked to see if the park commissioners were bonded, especially since they refused to provide the budget commission with their accountant’s report.
Walder said his office determined the appointed park commissioners failed to file their bonds with his office and get his approval, as Ohio law requires.
On Tuesday, however, the county treasurer’s office located the bonds, which were filed in that office. By filing with the incorrect authority, the bonds were, in fact, not filed as set forth by ORC, Walder said.
A resident asked about the tax dollars the park board spent if the commissioners were not legally seated.
“I don’t know the impact of that because this bond issue just came up,” Flaiz said.
Asked whether residents could seek a temporary restraining order to prevent the leasing of park land to the county park district, Flaiz said under ORC Chapter 1545, a park district is allowed to lease park land.
“So, you may be unhappy about whatever decisions are being made, but it is permitted in the revised code, to lease the park land,” he said.
Resident Marybeth Dale accused Walder and township trustees of being on a witch hunt to get control of the 1545 park district.
“I find it interesting that you being our ex-fiscal officer, now as the auditor, you went on this witch hunt, you found all these problems that have been going on for the last few years, according to you, with the budgets and all of a sudden you’re finding out that everything is wrong and . . . the head of the 1545, he should be dismissed, the whole board should be dismissed on the 1545 and everything should be completely wiped out,” Dale said.
Resident Howard Shanker asked who is responsible for park board money if the current park commissioners are not legally seated.
“I don’t know,” said Walder.
He acknowledged, however, the bond could be filed with his office and the park commissioners’ actions rewound and done over.
“But it’s got to be done the right way,” he added. “You just don’t go forward because it could be rewound and done over. The reason why the law is written the way it’s written is because that’s the rule, that’s how you have to follow it. It’s not grey; it’s kind of black and white.”
Resident Kristi Burr asked why the budget commission had adopted a more punitive mindset rather than a cooperative and collaborative one.
She said it benefits everyone in the county when there are strong and robust park districts.
“I think you should be helping them, not trying to find a way to implode them,” Burr said.
Walder answered he had gone out of his way to help the park board.
“I gave them every opportunity to present a reasonable set of numbers that we could take for a budget,” he said, noting the accounting firm the park board hired did not understand the difference between inside and outside millage.
“That scared me,” he said.
In an email Tuesday, Wayt told the Geauga County Maple Leaf the bonds were filed, “so I do not see any need to discuss past decisions.”
“However, the board will follow the recommendations of our legal counsel on this matter,” he added.
