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Better financial info sought

Clay County's top elected officials oversee $118 million in taxpayer dollars, but most question if the budget reports they rely on paint an accurate picture of county coffers.

Clay County's top elected officials oversee $118 million in taxpayer dollars, but most question if the budget reports they rely on paint an accurate picture of county coffers.

Now, four of the five county commissioners say it's time they get better information to guide their taxing and spending decisions. The fifth member doesn't oppose those changes.

Commissioners and a consulting company working to improve the county's financial reporting system point to three key reoccurring problems:

- Elected officials and managers routinely face time lags of three to seven months to get information that would help them track revenues and expenses.

- Even when the financial reports become available, a majority of the elected officials and managers don't necessarily believe the information is accurate.


- Because of the time lag and doubts about accuracy, county workers and elected officials have a difficult time accounting for the $17 million in property taxes generated this year alone.

"I think we need better controls because it's the people's money, period," says Commissioner Kevin Campbell. He's the chief financial officer for Mac's Inc.'s regional chain of hardware stores, yet he too struggles to get a clear financial picture of the county.

Ben Brunsvold, the commission's chairman and a lawyer, agrees.

"Our financial reporting is opaque - you can't see through it," he says.

Lori Johnson, the county's auditor and treasurer, maintains the county's accounting system tracks the needed information, but she concedes improvements would make it easier for officials to promptly get good numbers.

She says Brunsvold specifically has made little effort to understand the reports.

Still, her staff hopes to create a better reporting system in the next four to six weeks to aid commissioners as they work toward completion of the 2006 budget, which tentatively calls for a 7 percent property tax increase.

"I think the problems are significant," Brunsvold says. "Because what's happening is we get down to the end of the year and we get these surprises. That should not be happening."


Brunsvold cited several examples, including the recent $290,000 shortfall in the county's revenues for the family service center and money shortages in public health programs and the regional juvenile detention center in recent years.

The family service center deficit was caused when a major tenant left and, because of that, other commissioners said that shortage wasn't a big surprise. Campbell believes the latest public health shortage actually was a budget misunderstanding - another testament of the need for better reporting.

Brunsvold and Campbell, the two newest commissioners, have been the most outspoken on the need for better financial reports, but two of the three other commissioners say the reporting should improve.

"We're always three months behind. It's tough to make decisions," says Commissioner Mike McCarthy. "I've relied heavily on trends and input from department heads to make decisions."

Commissioner Jerry Waller agrees the budget is difficult to read. "Our current way we do things is cumbersome, and that's probably putting it mildly," he says.

Only Commissioner Jon Evert says he's comfortable with how the process works. He points out that the county generally receives positive yearly audits by the state.

In March, the commission decided to bring in consultant Eide Bailly for help.

"We needed an outside source to come in and try to simplify our reporting system so that someone without an accounting background can understand," Campbell says.


"It seems to me that we as commissioners should have the information in front of us that we are making decisions on," he says. "I'm not faulting the county auditor for that. I'm just faulting the system."

Johnson says the current accounting system can provide all the necessary financial information. Her staff provides reports to department heads upon request and she welcomes answering questions, Johnson says.

The county uses computer software developed by the Association of Minnesota Counties, a package used by 78 of the state's 87 counties. Johnson serves on a group that developed the system.

Nonetheless, she says changes should be made in light of Eide Bailly's findings to address concerns about the quality and timeliness of financial reports by commissioners and department heads.

"If they don't have confidence in the reports, what good are they?" Johnson asks. "Now that I know there are frustrations, we will have to make improvements."

Eide Bailly plans to offer changes and additional software to bolster the county's current system.

The firm's report addresses several areas and specifically recommends these changes:

- Setting a date each month to publish reports so officials are confident the data is timely and accurate.


- Providing department heads and officials access to an intranet accounting system and the ability to read detailed journal entries like travel expenses.

- Using a detailed reporting model to explain investment specifics and defining the policies and processes used in investment decisions.

- Educating officials and department heads on how to read financial statements.

While the county already has an intranet, or internal Internet system, Johnson says changes based on Eide Bailly's recommendations will make it easier to use.

The county anticipates Eide Bailly will provide software recommendations to bridge the transition to a system that's easier to use.

Commissioner Evert, an11-year veteran of the group, says the county should be able to use its current software program to generate better reports, while developing department heads' confidence they're dealing with accurate numbers to manage.

But Campbell says he welcomes the recommendations because most department heads don't have the time to become sophisticated users of the system and it doesn't provide the types of detailed financial reports commissioners seek.

He wants a report showing where all local tax revenues flow.


On the other hand, McCarthy wants more timely reports with fewer details and says the changes benefit commissioners and residents who may want a better understanding of where the county spends its money.

"I don't need to know the intimate details," he says. "I need to know the overall situation."

Brunsvold's concerns go a few steps further. He says the current system lacks accountability and leaves the county vulnerable to employee misuse.

He added that he doesn't think employees are abusing funds and noted audits haven't turned up signs of theft or misrepresentation. He nonetheless worries about those possibilities.

"If someone was walking off with cash, we wouldn't know the difference," Brunsvold said. "None of these reports ever adds up."

Readers can reach Forum reporters Patrick Springer at (701) 241-5522 and Steven P. Wagner at (701) 241-5542

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