City’s financial info delinquent

• Concerns raised about impact on 2004 budget, reasons for delay

By Jeff Havens

Staff Writer

Rockford is among 3 percent of local governments in Illinois that are considered “delinquent” by the state in filing a mandated annual financial audit and

financial report.

Concerns about the reasons for the delay and its possible impact on the city’s 2004 budget have been raised by at least one Rockford alderman, Dave Johnson (R-4), at the Oct. 20 City Council meeting.

Johnson said the city’s audit for 2002 was supposed to have been filed with the state comptroller’s office June 30. The city asked and received from the state a 60-day extension, which was subsequently missed at the end of August.

The city asked for a second extension that was also missed at the end of September. Rockford Mayor Doug Scott’s Communications Director, John Strandin, said they will not miss Friday’s third deadline extension for filing the state-mandated financial information. Strandin attributed the missed deadline and extensions to the city’s change in computer software from Pentamation to Munis program.

According to Karen Craven, press secretary for the Illinois State Comptroller’s office, the audit is used for constructing the annual financial report. Craven also said the state has about 6,000 municipalities that are required to file annual audits and financial reports.

Of the approximately 6,000 municipalities, 618 asked for extensions this year. Craven said 221 of the 618 local governments are “delinquent” in reporting financial information. Rockford is one of the 221 delinquent municipalities, which translates into 3 percent of approximately 6,000 local governments in Illinois.

Craven said in 1999, 40 percent of municipalities were delinquent, which has been reduced to a 3 percent delinquency rate for 2003. Craven attributed the increased compliance to State Comptroller Daniel Hynes’ efforts to work with municipalities.

Statutes allow the state to audit a local

government’s books at the municipality’s expense, if the local government has been delinquent for two years. Craven said for that to happen, a “local government has to completely disregard all communications on a consistent basis for two years.”

Craven added that Rockford officials have responded to recent correspondences.

Johnson is concerned about why alderman were not notified earlier about the financial reporting problems and its possible impact on the 2004 budget.

“You need to know where you’ve been to know where you’re gonna go financially,” Johnson said.

Alderman Jeff Holt (D-11) chastised Johnson at the Oct. 20 City Council meeting for inquiring about the audit. Holt said: “What would you do with that information, Alderman Johnson, if you knew about it? What good is the audit going to do you?”

Holt went on to question Johnson’s credibility about an unrelated issue and finished his statement by saying, “Why would you drag, continue to stand up and try to bring down the credibility of this city and department heads and our administrators when you don’t have any facts to back it up?” Holt added that the city’s finance department has kept aldermen apprised of the city’s financial condition.

Johnson responded by asking: “If we have that information, Alderman Holt, how come the state doesn’t have it?…I don’t think you can bring the [2004] budget in until you have your audit. …I don’t think I’m pulling up a red herring here, Alderman Holt, when I ask where something is and they don’t have it.“

The 2004 budget was a topic discussed at an August retreat that included city administrators and alderman. Information at the retreat projected a 2004 deficit between $2.7-$5.6 million deficit with 37-82 positions slated for possible elimination.

Johnson also had concerns about how the late reporting and impending audit may affect the city’s bond rating with Moody’s Investment Service.

Ivan Samstein, financial analyst for Moody’s who wrote Rockford’s last rating opinion in August, said the late reporting will not affect the city’s bond rating. However, when the 2002 audit is complete and new information is submitted to Moody’s, the city’s A1 rating may be positively or negatively affected, Samstein said.

The bond rating is a guide for investors that concerns a public body’s ability to pay back investors when the terms of the bond are complete.

Johnson concluded an Oct. 23 interview by saying, “Remember, Rock Valley College got on the [state’s] watch list for not having their audits in on time.”

RVC experienced similar financial reporting problems the past four years and also blamed their problems on new computer software. RVC ultimately laid off eight employees to address deficit spending and had its recognition status downgraded by the state last February. The college continues its efforts to achieve full-recognition status from the state, which is not expected before early next year.

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