Audit reveals mismanaged funds, errors in finances

FLINT (AP) — Flint is entrenched in more than $370 million in pension legacy costs that remain unfunded, according to a new audit that also revealed significant errors and financial risks that occurred under the purview of a former mayor.

The audit examined the city’s finances from July 1, 2018, through June 30, 2019, and found 12 material conditions — including miscalculated balances and a lack of internal controls over purchasing cards. The findings raised questions about the accounting practices when former Mayor Karen Weaver was in office.

“I’m very concerned about the outcomes and what the audit revealed,” Flint Mayor Sheldon Neeley said. “We’re taking action currently trying to move us beyond the position we are in now.”

The state notified Flint on Jan. 2 that it had 30 days to submit a corrective plan that address the audit’s problems.

On Jan. 3, the state told the city it is delinquent in submitting a separate report detailing its 2019 funding levels for pension and retiree health care.

Neeley said the city plans to comply with the state’s requests, The Detroit News reported. He noted that he’s optimistic about the city’s ability to recover.

Flint has more than $620 million in unfunded pension and retiree health care costs, the audit report shows.

Democratic Senate Minority Leader Jim Ananich pointed to the Flint lead-tainted water crisis as a contributing factor to the city’s financial struggles. The city at the time was under the state’s emergency management control from late 2011 to 2015, which is when the process of returning local control began. Local control wasn’t fully restored until April 2018.

The contaminated water “only compounded Flint’s existing financial issues,” said Ananich, who is from Flint. He added that the problems plaguing the city could take years to resolve, despite some revitalization in Flint’s downtown.

“The city’s population has declined, drastically shrinking its tax base, so there will continue to be some financial hurt until we have recovered from the crisis and the economy has adapted to the new environment,” Ananich said.

Flint’s population fell to nearly 96,000 in 2018 from 111,475 in 2010. Meanwhile, state revenue sharing dipped from $18.9 million in 2014 to $14.1 million in 2018, and taxable value plummeted 40 percent from 2008 to 2012, according to data in Michigan’s Great Disinvestment, a report co-authored by Mitch Bean, former House Fiscal Agency director and a principal at Great Lakes Economic Consulting.

“Places like Flint have a really, really small tax base,” Bean said. “‘much lower than what you need to provide services.”

––––––––––––––––––––

Subscribe to the Legal News!

http://legalnews.com/subscriptions

Full access to public notices, articles, columns, archives, statistics, calendar and more

Day Pass Only $4.95!

One-County $80/year

Three-County & Full Pass also available

 


 

Comments

  1. No comments
Sign in to post a comment »