The council has evoked a rarely-used city law (IC 36-4-6-21), which allows them to investigate and subpoena city officials in order to find out, according to Council Vice President Kyle Walker (R), “what the Controller [Fuller] is doing to correct the problem.”
According to Lawrence Mayor Deborah Cantwell (D), however, there is no problem. “Let me be clear, there are no missing funds,” she said. “The controller has also repeatedly stated in public meetings that there are no missing funds.”
And on Tuesday, June 27, the Mayor’s Office announced in a press release that accounting errors made by a former city employee led to the “missing” money.
Jeff Peters, an independent CPA and former budget consultant to the city of Lawrence, helped locate the mistakes that led to the apparent missing funds, according to Cantwell’s office.
What led to the allegation of missing funds, according to Kyle Walker, was a document prepared by the council’s CPA, Curt Coonrod, which breaks down actual city cash, spending estimates for the second half of 2004, estimated tax returns and the levy excess fund. The document shows that the expected balance at the end of 2004 was close to $400,000 lower than the actual balance. Walker also refers to a document provided by Fuller. Fuller’s document is almost identical, except that she did not include encumbrances, or money that the city owes.
After receiving more documentation, Walker says that Fuller’s office also failed to subtract the levy excess fund. “When the tax breaks are set for the year, they’re set based on an assessed value … if the assessed value does go up and there’s an excess levy, we can’t just keep that as gravy. So what we do is we keep that in a fund called the levy excess fund. Once you find out what that amount is … the next year you transfer it back into the general fund as kind of a discount for the next year’s tax subsidy. They didn’t do that.” This money, Walker says, would have eventually gone back to taxpayers.
Cantwell explains the alleged shortfall as part of a bigger problem with a former accounts payable clerk, who, according to Cantwell, “used the city’s credit card for personal purposes, falsified documents and used city funds to pay some of the credit card charges.” Cantwell says that the clerk left numerous other booking problems that Fuller’s office did not discover until April of 2004, including disorganized checks, unsent checks, checks that had never been cashed and unpaid invoices. This revelation, according to Cantwell, caused havoc in the Controller’s Office, and can explain why some of the books were not clean.
According to Cantwell, the former clerk was a holdover employee from Mayor Schneider’s administration. Upon discovering the problems, Fuller fired the clerk.
Cantwell adds that it didn’t help matters that the council reduced the budget of the Controller’s Office by $47,000 when they voted to eliminate the deputy controller and remove funding for the accounts payable clerk. “When the council made these cuts they were fully aware of the problems with the former accounts payable clerk, we had an executive session with them to give them the facts,” Cantwell said.
Animosity between Cantwell, a Democrat, and the majority Republican City Council is nothing new. But according to Walker, this investigation and the subsequent subpoena of Fuller had nothing to do with politics. “We just want to make sure we have an efficient government that’s responsible,” he said. “The numbers speak for themselves. If they want to call it political posturing they can, but it’s simply not what it is.”
Cantwell disagrees. “I absolutely believe this is political posturing by Mr. Walker, who, along with other majority council members, also favors the private water company deal that I have filed suit to terminate,” she said. “In watching the Finance Committee meetings, they appear to be scripted to make political hay.”
Another dispute between Cantwell and the council has to do with when the investigation was started. “I find it interesting that Mr. Walker says they have been planning this investigation since April. I don’t recall any such discussion in a public meeting before June 6,” Cantwell said.
An additional issue that will certainly come up is the political and professional history of the council’s CPA, Curt Coonrod. Coonrod, a former Indianapolis Republican city councilman and Marion County auditor, is a Lawrence resident who runs an accounting firm called CLC services, specializing in consulting city governments. In 2000, Coonrod was denied payment by the Johnson County auditor. She claimed he never provided itemized billing documenting his work. In 2002, the state of Indiana committed a bookkeeping error, which resulted in nearly $9 million owed to Hendricks County.
Coonrod allegedly knew about the amount missing, and attempted to charge Hendricks County 33 percent, or almost $3 million, to recover it. He was denied numerous times by the Hendricks County auditor, who claimed she did not believe he did any work that justified the payment.
Finally, in 2003, Coonrod was sued by two former employees, who claimed Coonrod hired a former stripper as a personal assistant and visited inappropriate Internet sites while at work.
Coonrod denied all of these claims.
“I don’t think there’s anything in his history that would lead anyone to question his professionalism,” Walker said.
Cantwell had no comment on Coonrod. Coincidentally, Coonrod and Peters are former business partners.