Is this all there is to the audit?

The Village Board is required by New York State Village Law to conduct an annual audit of the Treasurer's books and reports.

I wrote about this in a previous post.

While residents have been taxed for this requirement in each of the last four budgets, it was only in September of 2006 that the Village Board agreed to conduct an audit and hired a private CPA, Ray Wager, to get this done. Annual financial reports and audits are important in order for the Board to properly manage Village finances. As some may recall, the Village's Annual Update Document - which is the report the Village Treasurer is required by law to submit each year to the NYS Comptroller's Office - has been submitted well beyond the state's usual deadlines, and in at least one case over the last couple years the Comptroller noted it contained "material deficiencies" and was returned to the Village as unacceptable. In addition, each year the Board is required to formally notify the public when the Annual Update Document has been filed and make it available for review. Here is the section of NYS Village Law, under the duties of the Treasurer, that requires this:

S 4-408 Treasurer. The treasurer of each village shall be the chief
fiscal officer of the village and it shall be his responsibility to:

e. file in the office of the village clerk, within sixty days after
the end of the fiscal year, a statement showing in detail all revenues
and expenditures during the previous fiscal year and the outstanding
indebtedness of the village as of the end of the fiscal year, except
that the village treasurer, if authorized by the board of trustees, may
within sixty days after the end of the fiscal year, submit to the
village clerk a copy of the annual report required by section thirty of
the general municipal law. The board of trustees shall, within ten days,
cause to be published in the official newspaper either a notice that the
annual financial statement has been filed and is available for
inspection or a summary of such statement in a form approved by the
state comptroller, with an endorsement thereon that details thereof are
on file in the office of the village clerk. The board of trustees shall
audit, or cause to be audited by an officer or employee of the village
or by a certified public accountant or a public accountant engaged for
that purpose, such report and supporting records

At the February 11, 2008 Board meeting there was an item listed on the agenda regarding this year's audit by Ray Wager. But that is all there was - just an item on the agenda called "auditor recommendations." Neither the Mayor nor the Treasurer offered any further explanation; nothing was read out loud or shared with the public.


A Freedom of Information request was submitted for a copy of these recommendations that were not shared with the public. The document was shared with me and I post it here:

The questions I have are:

• Why weren't these recommendations read out loud, explained or in any other way presented to the public?
• Is this the finished work product of Ray Wager, CPA for the Village annual audit - will we receive a full audit report or just this two page "summary of areas for review"?
• How much has been spent to date for this audit?
• What specific actions will the Board take to follow up on any recommendations?

The most recent previous external audit of the Village's finances took place in 2002, and it was numerous pages long. It described the condition of all funds, bank accounts, outstanding debt, etc. (This report was produced by the CPA firm Eldredge, Fox & Porretti).

This current audit is long overdue (again, this is an annual requirement that has not been performed since 2002). It was started in 2006, and we are almost three months through 2008. Hopefully, taxpayers will get a full report soon and a formal presentation by either the CPA or the Village Board.

Budget Details Part 2

As we all know, this is budget development time for the Village of Seneca Falls. In an earlier post I spoke about the lack of detail in budgets prepared under the current administration compared to previous administrations. What I said was that the current administration's budgets have abandoned the specific details in favor of grouping costs under accounts. This provides a total for an account, but does not break out sub-accounts.

I used as an example the Clerk/Treasurer's departmental accounts. I pointed out that in the 2003-04 budget (Costantino administration) the departmental accounts are listed individually with dollar amounts assigned to specific cost categories and items. The public could see what the Clerk/Treasurer expected to spend on items in those accounts.


In the 2004-05 budget the same amount of detail was provided for this department.

As we see in the 2005-06 budget, the first budget prepared by Mayor Smith as Budget Officer, the same Clerk/Treasurer’s department accounts are all grouped under one account number and only a total for all the cost categories is provided.

There was no longer a way to determine from Mayor Smith’s budget exactly how much was proposed to be spent on items like mileage, office supplies, postage, and consulting fees, for example, items that previously were specifically detailed.

We see it again in 2006-07. As I noted in my previous post, the total for these specific Clerk/Treasurer departmental expenses increased to $66,288. What categories in that department increased the total by $22,588 over 2005-06? Without the specific line item numbers there was no way to tell.

Finally, the 2007-08 budget again provides only a grouped total for these costs... with another $6,450 increase, but for what?

These are just examples of this new style of veiling costs instead of being open and specific. All other departments are treated the same way in Mayor Smith's budgets - no specific items as before, but only grouped totals for each account. The question is, why provide the public with less information rather than more?

Everyone wants elected officials to control costs, but the key is to do so responsibly. Responsible cost cutting requires details, and it is the public's right to have the same access to the specific details as the Board members. Why not put them in the proposed budget so we can see them?

Too often we have been told by Mayor Smith and Board members that the Board is "on board" with the budget so workshops or other public discussion among Board members is unnecessary. While a "public hearing" is required and is held each year, without details how can the public decide whether they do or do not support the budget proposal, or whether they want to ask questions at the hearing?

As I have said, this is not a "best practice" for Seneca Falls. We must do better at providing information. We must not be afraid to let the sun shine on village operations. We cannot confidently reduce costs without detailed information.

A bird in the hand...

Today's Finger Lakes Times article (2/19/08) titled "Smith Rejected Grant On Her Own" documents yet another chapter in the demise of open, representative government in Seneca Falls.

In the article Mayor Diana Smith weaves an unconvincing smoke screen around her latest actions in conducting Village business. The article reports that Smith claims she "had the authority and a Board consensus had been reached in discussions over several years" to reject the State EPF Visitor Center grant when she sent her letter several days before a Board vote on the issue.

Statements made by Third Ward Trustee Petroccia and Second Ward Trustee Campese also show a lack of understanding of the basic principles of open government. They say they have no problem with Smith sending off her letter before the vote took place, as they agree with the decision, and they have been talking about this for some time. In other words, public discussions and official votes are not particularly important to them.

It may come as a shock to Diana Smith, Tony Petroccia, and Tut Campese, but chatting about a village issue and agreeing "by consensus" that a certain course of action might be good is not at all the same as bringing an issue to the floor at an open public meeting for discussion, having that discussion, bringing forth a formal resolution, getting a second to the resolution, then recording your vote and approving (or not approving) the resolution.

Official Village business is not conducted "by consensus" "over several years." These three Board members should be able to specify at exactly which open public meetings over several years they discussed rejecting the grant. I have attended almost every regular Village Board meeting for years and have never heard this specific discussion by these or any other current or former Board members. If not at any open Village Board meeting, perhaps this "consensus" was reached at a coffee shop, at someone's home, by telephone or email, or even at the annual Village Christmas party at the Rec Center? Apparently, Trustee Ikewood was not included in these discussions?

The questions Mayor Smith should answer are:

• What was the hurry in sending out your letter rejecting the grant on behalf of the Village ("our decision"), just four days before the Board meeting when a decision could be officially made?
• Why didn't you discuss your concerns about the State's requirements for Seneca Knit Development Corporation at the meeting, since it was the reason you stated in your letter for rejecting the grant?
• Why didn't you obtain an opinion from the Village Attorney, or even from the NYS Department of State, regarding whether you could unilaterally reject a grant that was authorized by Board resolution? (What is done by resolution can only be undone by resolution...)

Here's the true irony of Diana Smith's attempt to spin this situation to make it look as if her decisions are actually saving taxpayers money and will make for a better project:

She has stated to the New York State Office of Parks, Recreation and Historic Preservation that the Village wants to apply for future grant funds for an improved Heritage Area Visitor Center relocated at the Seneca Museum building. She states to OPRHP that the $250,000 grant that was awarded is not acceptable because the Seneca Knit Development Corporation should not be required to be named as a liable guarantor for the grant.

But no matter what the mayor or SKDC may feel about this, it is a requirement of the Environmental Protection Fund that any entity with an ownership interest in the facility, such as the landlord, sign the grant agreement. Dumping this grant and then asking for a new grant will do nothing to change this requirement that SKDC - the building owner - be named a liable partner! The factor that her proposal is not changing is that the move still requires that the building owner must be a guarantor for the grant.

Therefore, Diana Smith threw away the cash we had "in hand," in hopes of getting the same agency to award other possible cash in the future, when the same rules will apply to any future grant - which we may or may not be awarded.

Competition for these grants is fierce. More and more municipalities and not-for-profits are submitting applications each year and the available money is getting tighter and tighter. There is no guarantee that any application, especially one from an applicant who has rejected a previous award, will be funded.

As the saying goes, "a bird in the hand is worth two in the bush."

Open, Inclusive Government?

Is representative government disappearing in Seneca Falls?

The clickable image above is a letter, dated February 7th, that Mayor Diana Smith sent by fax on Friday, February 8th to Mr. Kevin Burns, Chief of Grants for the NYS Office of Parks, Recreation and Historic Preservation. This letter officially declines the $250,000 Heritage Area Visitor Center grant the Village was awarded to refurbish exhibits. It declines the grant on behalf of the Village of Seneca Falls. As the official declination of the grant this letter does so unequivocally, implying that this was a decision made by the full Board of Trustees (Mayor Smith calls it "our decision"). It's important to note that such decisions cannot legally be made unilaterally by the Mayor.

The Mayor's announcement as reported in the Finger Lakes Times on Sunday, February 10th was that she was "recommending" that the Board refuse the grant; that this would be a topic for discussion at the February 11th regular Board meeting; that the reasons for Mayor Smith's "recommendation" centered on her dissatisfaction that the grant held "too many strings" related to the requirement that the grant be used solely for refurbishing the exhibits and could not be used for programming or visitor services. She wanted the Board to vote to approve refusal of the grant at Monday's Board meeting.

Obviously, the February 11th Village Board "discussion" and vote on Mayor Smith's "recommendation" was a sham, as evidenced by the existence of Smith's February 7th letter.

One Board member, First Ward Trustee Ikewood, stated at the February 11th meeting that he had not seen the resolution before then; that the meeting packet he received on February 8th did not include the resolution or any mention of Mayor Smith's recommendation. None of the other Board members indicated whether they had or had not seen the resolution or knew about it before that evening. Apparently, there was no prior special meeting authorizing the Mayor's letter. If there had been, why bother announcing a recommendation and a resolution at the regular meeting?

Reading Mayor Smith's letter, it is interesting to note that she does not mention the issue of using the money only for exhibits instead of programming as the reason for the Village's rejection of the grant. In fact, Smith writes in her letter that the Village had adapted its project scope to meet the State's terms. Rather, her letter specifically states that the requirement by the State that Seneca Knit Development Corporation (SKDC) be included as a liable partner in the grant is "the straw that will break the back of our project." Why would this be a deal breaker? Why wasn't this "straw that will break the back of our project" mentioned and discussed at the Board meeting?

After Trustee Ikewood asked if the need for presenting a "pre-filed" resolution to reject the grant had been discussed with the Village Attorney Mayor Smith stated it had not. Who, then, are the attorneys Smith refers to in her letter as having been working on language to satisfy the State's requirements? In matters of applying for grants, accepting awarded grants, and signing grant contracts, a mayor can only be authorized by the full Board to take action. Mayors cannot act on their own to sign contracts, or reject contracts. Why wasn't the Village Attorney consulted on this matter?

Smith's letter is cc'd to Senator Nozzolio and Nancy Mangano of Seneca Knit Development Corporation. It was not cc'd to the other members of the Village Board, or to the Village Attorney, or to the Seneca Falls Heritage Area Commission. I have seen a copy of a drafted Memorandum of Agreement that would potentially be executed between the Village and Seneca Knit Development Corporation for the transfer of the operation of the Visitor Center to the Corporation. The MOA does not mention the Seneca Falls Historical Society, but it does mention that the Village will pay SKDC $50,000 annually, plus an annual 3% increase, for operational costs.

Mayor Smith refers in her letter to having "secured a substantial amount of additional funding" to match the grant. I believe she is making reference to a $50,000 "promise" from Senator Nozzolio for a future member item on the condition that the Visitor Center be moved to the Seneca Museum building. But was that money, potentially being secured by Senator Nozzolio, meant to match the grant, or to pay Seneca Knit Development Corporation?

The Village did have just over $50,000 in a Capital Reserve Fund for the Visitor Center Improvements. In 2003 then-Trustee Smith roundly criticized her predecessor for not annually depositing money in that Reserve Fund to match the grant. In 2005, however, Mayor Smith stated at a meeting of the Heritage Area Commission that $25,000 that was approved in that year's budget for deposit in that Capital Reserve Fund would not be deposited. She stated that it was her decision to deposit that money instead in the General Fund Surplus. A few weeks later Mayor Smith also offered to return a $2,300 donation toward the match for the Visitor Center grant from the Elizabeth Cady Stanton Foundation. How can Diana Smith explain her flip-flopping over committing to match the grant, and how can she justify her unilateral actions associated with funding the project?

What other Village business has been conducted this way? Have other decisions besides this grant refusal been made outside of the public's view and without the other elected Board members?

Mayor Smith claimed at the January 27th candidate forum for the Democratic endorsement for mayor that her administration was committed to open government and transparency. But how do her actions in the rejection of this grant square with that assertion? How does making official decisions outside of Board meetings meet any criteria necessary for proper, legal conduct of Village business? If Diana Smith is committed to open, transparent government, why would she take the step of sending an official rejection of a state grant BEFORE having first discussed it at an open public meeting with the other four elected representatives and allowing those Board members to vote on it? Why would she also misrepresent the official actions of the Village Board to the State of New York?

Village residents elect their Ward representatives with the assumption that they will be equal participants in the governing process. They assume that information will be equally shared among all Board members, and that each decision will be made after the full Board discusses and votes and the public has the opportunity to observe the decision-making process and participate when appropriate.

The First Ward Trustee was the only Board member to ask questions about the process and to request that more information be provided before a formal rejection of the grant was issued. As it turns out, he was tilting at windmills on this. His questions, concerns and opinions did not matter. The decision had already been made.

Grants, Heritage Area 101, and then some...

After reading the 2/10/08 Finger Lakes Time article, "SF may reject $250K state grant" I am prompted to admonish this Village administration for the misleading, if not outright deceptive, statements offered as explanation for possibly refusing a $250,000 grant.

First, a little history. The Heritage Area Visitor Center, which opened in 1990, was equipped with exhibits that had a predicted useful lifespan of ten years. In 2003 a grant application for refurbishing the Visitor Center exhibits, outdoor wayside exhibits, the Visitor Center audio-visual program, and signage was awarded $250,000 in matching funds through the state's Environmental Protection Fund Heritage Area Grant Program. The application was for work to be performed at the Partridge Building site, because at that time there were no plans for relocation. It wasn't until the award was announced that "outside influences" began working to relocate the Visitor Center, particularly to the Seneca Knitting Mill to bolster that seemingly stalled development.

There should be no ironing "out differences... over the use of the money." The grant was written and awarded for a specific project. All grants are. This shouldn't be news to our elected officials. If it is, maybe we should be rethinking keeping them in office. The grant wasn't written for services or programming for visitors, and until the FLT article appeared there had been no public mention of an attempt to change the purpose of the grant.

The mayor referred to "too many strings" attached to the money. Having some experience in this field I am familiar with the usual EPF grant requirements. A 23 year commitment to the project is standard; a preservation covenant is standard; following legally required procurement procedures is standard; working within the parameters of the grant contract is standard; and a required 50% match is standard. These were known factors from day one. No one on the Board should be surprised by these requirements. It is starting to sound like someone had an idea about using grant funds for something beyond the contract work schedule and doesn't like being told "no."

The 2nd Ward Trustee says there are accessibility issues with the Visitor Center. However in spite of its location one level below street level, visitation at the Center was always on par with that of the National Women's Hall of Fame. New York State considers the facility fully accessible, and there is a reason the Center wasn't originally located on street level. Recognizing at the time the potential for commercial revitalization of downtown, the state and Village agreed it would be counterproductive to take up valuable street level retail space for the Center. This "wrong location" as the mayor put it was carefully considered and approved by professionals with much more experience than anyone currently involved with this project.

The mayor's comments also exhibit a lack of basic understanding of the Heritage Area concept, something Seneca Falls has been involved with for the last 30 years. The Heritage Areas Program is a delivery system for heritage tourism, in which each visitor center is a threshold, not a destination. The Visitor Center was certainly not intended to function in competition with the National Women's Hall of Fame, the Seneca Falls Historical Society, Women's Rights National Historical Park, or even the Seneca Museum. These agencies, especially the National Park, are the Seneca Falls Heritage Area's partners in promoting the rich history and developing the local resources and attractions of Seneca Falls. The Mayor and Board need to be reminded of the four goals of the Heritage Area System: education, recreation, historic preservation, and economic revitalization. These goals are not limited to the Visitor Center. The Program uses the Visitor Center as a gateway to get people not only to our museums and cultural agencies, but to our restaurants, stores, lodging, strolling through our historic neighborhoods, boating on our canal, and enjoying the waterfront.

Once upon a time, Diana Smith did appear to fully support the Heritage Area and its Visitor Center. As 4th Ward Trustee she strongly, publicly admonished former Mayor Tony Costantino for not budgeting for the Visitor Center Capital Reserve for the match for the grant. Yet as mayor, after the Board budgeted $25,000 to be deposited in that Reserve in 2004-05, Mayor Smith announced at a Heritage Area Commission meeting that she would not allow the money to be deposited in the account. She stated that she instead would have the money deposited in the General Fund Surplus. This was a unilateral decision on her part, as this action, contrary to Board approval, was not, to my knowledge, ever discussed by the full Board. However, taxpayers paid for a project in the budget, not to pad the surplus.

Another point should be brought out regarding the "need" to move the Visitor Center to the Seneca Museum. Both Mayor Smith and the current Chair of the Heritage Area Commission are members of the Board of the financially strapped Seneca Museum of Waterways and Industry. As such, their support and advocacy of such a move can be seen as a conflict of interest.

Grants are not easy to get. They take a lot of hard work on the part of the applicant, and on the part of the team of people reviewing each application for the granting agency. Every grant in every grant program has requirements and there is a basic understanding between the applicant and the agency that the rules, regulations, and requirements will be respected. If the Village Board is not going to live up to its side of the bargain, not only should they turn the grant back, but granting agencies should also in future review grant applications from Seneca Falls with a wary eye. This decision proposed by Mayor Smith can have far reaching effects that could impact not only the Village, but any not-for-profit in or outside of the Heritage Area boundaries that may seek funding through state programs. And by the way, the Village Board may want to consider saving itself more than $20,000 a year by abandoning its contracted grant writers. Paying consultants to write grants that the Village may not commit to once received is a waste of everyone's time and of taxpayer dollars.