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Delayed audit, other concerns at City of Gering catch attention of state

Delayed audit, other concerns at City of Gering catch attention of state


Financial issues attributed to the turnover of staff at the City of Gering have caught the attention of the state auditor’s office. Though concerns were cited, specifically one being that the city had not yet completed its annual audit, a further audit or audition were not warranted, according to a letter from the Nebraska Auditor of Public Accounts (APA).

Gering new administrator Pat Heath is a familiar face. The former public works director is in his first months in his new role. He sat down recently and talked about the city's budget and other issues.

The letter, addressed to Mayor Tony Kaufman, states that the state auditor’s office had been contacted regarding the City of Gering’s financial procedures, with concerns including frequent changes to the finance director position, the late filing of the fiscal year audit and “questionable transfers” listed on the fiscal year 2021 budget form.

One of the issues that has been contributing to problems at the City of Gering has been the lack of a permanent finance director.

The City of Gering has been contracting with the City of Scottsbluff for its finance director, Liz Loutzenhiser, to serve in the role of finance director. According to the auditor’s letter, “the frequent changing of previous Finance Directors has resulted in the failure not only to reconcile municipal accounts in a timely fashion” but also a failure to complete the city’s audit by a March 31 deadline.

Gering has been without a finance director since January 2021, when Renae Jimenez, who held the position for about two years, 6 months, resigned. Prior to Jimenez stepping into the position, Gering had been without a permanent finance director for about six months after the council declined to reappointment longtime finance director John Mejia in December 2018. In February, the city added a deputy finance director position to assist Loutzenhiser.

The City of Gering plans to complete its audit before beginning the process to hire a finance director, Gering City Administrator Pat Heath told the Star-Herald.

“I think we’ve got some more discussion to do,” he said, of administration and the city council. “But, yes, I think we’ll be probably doing something soon on that.”

State auditors noted they had worked with Loutzenhiser as part of their work to determine if a full financial audit or attestation would be warranted. Based upon its analysis, the APA determined a separate financial audit or attestation was not necessary, however, it did cite some issues that needed resolved.

In addition to Loutzenhiser working through work needed during the transition time, she has been also working with auditors hired by the city. He said he anticipates the city will submit its audit by the end of June. The hired auditors are scheduled to be in the city for dates in June, at which point they’ll be doing the final steps of the auditing process.

He attributed the delay to the normal processes that generally taken on by auditing and accounting firms during the year. In the beginning months of the year, he said, those firms are working through completing taxes and they are also scheduled to do other audits for entities and companies.

In its letter, the state outlined that surplus utility funds, which included electric, water and wastewater and sanitation funds, were examined as part of the auditor’s office examination, as the fiscal year 2021 budget had been filed and a transfer of surplus utility. A history of transfers from the last four budget filings, ranging from over $1.8 million in 2021 to a high of $2.5 million in 2019, were recorded. However, though transfer of excess utility funds is allowed, the council had failed to adopt a resolution approving the transfer of the funds. In its response, the City of Gering advised its attorney had advised a resolution was unnecessary because the city does not have a board of public works. The auditor’s office clarified that it is required.

Heath told the Star-Herald the council will be approving a resolution in an upcoming meeting for the last fiscal year and acknowledging previous fiscal years.

Moving over funds is an annual process, and approving the resolution “was something that we were unaware of that had to be done,” Heath said, noting the years referred to in the audit were before he became administrator. The City of Gering did respond in the letter about its attorney’s recommendation, and its responses are included in the letter. 

From this budget year on, Heath said, officials will add the resolution to the processes done when the budget is adopted. Gering anticipates it will begin its budgeting process with staff in mid-June and then begin budgeting sessions with council. The budget is finalized and adopted in September prior to the beginning of the next fiscal year, which begins in October.

Jill McFarland, who previously served as a finance director for the City of Gering from 1983 to 1991 and as a council member for 11 years, reached out to the auditor’s office, expressing concern about a “lack of fiduciary stewardship over city funds which is not city money. It’s our money,” she said, referring to the taxpayers.

McFarland said her concerns go back about five years, specifically about the use of the leasing corporation, which has been in place since the 1980s and she says allows the city to approve city projects without a vote of the public. She feels the leasing corporation, and electrical funds, are overused. Electrical funds can be used to supplement governmental funds, she said, “but they can’t be the golden goose.”

“This council needs a long-term perspective regarding growth, revenue, and financial viability,” she told the Star-Herald.

She said one of the steps the city needed to re-adopt included having its administration committee act as an audit committee, a best practice recommended by organizations like the Government Finance Officers Association.

Asked how the city administration is addressing citizen’s concerns, Heath said officials watch the budget closely.

“I think, financially, the city is OK, but long-term, we like to watch our spending, be conservative and do the best we can do,” he said.

The city has lots of larger projects in its future, he said, such as utility work that needs to be done including electrical conversations, water main replacement as it has an aging system and regular needs for repair and replacement of roadways.

He said he anticipates questions about the city’s financial position, and tries to address them.

“I think it’s important that people watch what the city is doing,” he said. “My goal is to be very proactive, and you know, to put the best budget forward we can, be conservative on our spending, but also, we need to be proactive and try to keep the city viable for growth and economic development.”

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