Audit Warns Crestwood To Oversee $500K Fund of Sappington House

7pm

All-Star Performance: Requesting a conditional use permit to move his business into Crestwood, at 1000 Camera Ave. He's closing the Kirkwood site.

"We're looking to give the kids more opportunity," owner Matt Whiteside said about the move.

"The location is better. The ceilings are higher. The space is more open," Whiteside said.

Unanimously passed by aldermen.

7:12pm

Audit for Fiscal Year 2010 by Botz, Deal and Co.

A CPA from Botz took the podium: She recommends the city put more oversight on $500,000 a year in Sappington House funds.

Botz is happy to see the city has an investment policy in place now, since they recommended it last year.

New finance officer Greg Kremer presented the new policy to the Board of Aldermen earlier this year. He said at that time it was fairly standard, boilerplate, for cities like Crestwood.

7:16pm

Alderman Miguel asks what the city administrator needs to move forward on the Sappington House oversight. A motion?

City attorney: May be motion or directive.

Ald. Miguel says he will make a motion. The Sappington House money is not under the same constraints or regulations as other city funds. He moves the city receive statements directly from bank, and reconcile them with Sappington House board.

Alderwoman Duncan: Uncomfortable with Miguel's motion. "I don't feel I have the expertise to act on it," she says.

Alderman Foote: Says historically the Sappington House was independent from the city. "That money was brought in by people who are dead now," he said, referring to the $500,000. Through families, it operates. It's been a very easy relationship over the years. "I'd be a little hesitant to go along with this."

Alderman Wallach: A third party (Botz) is recommending this. "I think we should go along with it."

Resident Jerome Friedick: He says the city paid half of  Sappington House sidewalk repair. "If they have so much money why don't they pay for things like that?" That half-million dollars should be set apart from the city of Crestwood, he says.

City Finance Officer Greg Kremer: City staff has already reached out to (Sappington House) to get monthly statements.

Ald. Beezley: If that action is already going, I think that is a good first step. I go along with Mr. Foote (rejecting Ald. Miguel's motion.)

Ald. Dunncan asks Kremer: What was their reaction to that? What was going on with the accounts?

Kremer: They were very receptive. There's not a lot of activity that goes on with the accounts.

City Administrator (acting) Jim Eckrich: Over $450,000 is in Sappington House Library Trust. They have a lot more than the Foundation and the gift shop (at Sappington House.) They are very up front with how they use their money. There is less oversight of the library trust and that's where the majority of the money is.

Ald. Beezley asks Kremer: Did you ask for just the first two accounts?

Kremer: All three accounts. They would be responsive to turning over the information monthly. Three funds for Sappington House: Library Trust, Gift Shop, The Foundation.

Ald. Wallach withdraws his second to Miguel's motion to provide additional oversight of the half-million dollars in Library Trust, because Kremer said they are willing to provide the financial info monthly.

Mayor Jeff Schlink: the motion dies for want of a second.11

Ald. Miguel: He has more questions for the Botz audit spokeswoman, about the process of putting the city's general fund money back into separate, specific funds, after it languishes in the general fund. A lawsuit and state audit happened after this kind of thing about 10 years ago, he says.

7:29pm

Botz.:  A transfer is a budget expenditure, she says, suggesting it shouldn't be a problem to do the transfers on a regular basis, instead of waiting until it's a big amount, and then there are questions about 'Why is such a big amount being transferred?'

Eckrich: "These things have been lost in the shuffle before, I agree with you (Ald. Miguel.) We want to attempt this in the budget this year—to document it. That was our intent."

Ald. Miguel: "Not as strong as I would like, but I'll move on now." More questions for Botz.

7:34pm

Ald. Miguel: Where does this $85,000 number come from? About page 24-25.

Botz: This is a reconciliation between the two accounting numbers/methods. It has to do with pensions, post-employment accrual, etc. "It's difficult for me to explain." There are changes in accrual between the two years. "It's the change in interest payables." The difference in what's accrued this year and what was accrued last year. It's put into place because when bonds go to market, it's more compatible to compare in the for-profit sector. These numbers are a disclosure in part accrual and full accrual, which is required.

Ald. Miguel: What is this $46,000 number? Page 25.

Botz: There's a limit to what amount of money the city is required to pay into it pensions (LAGERS—a state pension fund.) The amount they determined the city has to pay was over the limit the city can pay in for one year (regulated.) So it looks like the city is owing the $46,000, because regulations won't allow the city to pay. And this will continue to add up if the markets don't turn around. 

Ald. Miguel: Can't we just pay it off up front with a check?

Botz: I can't recommend that. Someone did that, they put in a million dollars, and then the stock market dropped, and they lost all that they put in, to catch up. You don't want to pay less than you would owe, but you don't want to pay more. "Slow and steady wins the race."

Ald. Miguel: These are actual liabilities, not some made up numbers. He wants to go on record as pointing that out.

Botz: But you do have the option to change that. I know you don't plan to do that, but you may decide you don't want to pay that. I'm just saying that there's another potential out of that liability, than just paying it. Aneheuser Busch did that. They changed (the pension deal.) I'm not saying it's the best plan.

Ald. Miguel: Goes over the deficit at Aquatic Center, Sappington House at a profit of $20,000. Not too long ago, the stock market crash of '08-'09 wiped out a $2.9 million surplus, he says.

In summary, the city operated at a $150,000 deficit this year, he says. He describes how the city minimized spending. If we hadn't done all this, we would have had a $400K deficit, he says.

I think it's a good report. We've done a good job.

Ald. Foote: Historically, we weren't nearly as efficient in keeping our numbers in past years. I think we can have more trust now in how our funds are being spent. 

But I've found some disturbing trends. (He passes around a chart to aldermen only.) The basic numbers show revenue was a 4.7 percent drop in 2009. Expenses increased 9.8 percent. These are disturbing numbers. We're going to have to find a way to talk to our residents and find out what they want us to do. We've cut back from 130 employees to 89. We're going to go down to "decay" if we don't do anything. The street repairs are a good example, Foote says.

Ald. Wallach ask Botz: How is our investment policy?

Botz: It follows pretty much what is required by the state, etc.

8pm

Resident Jerome Friedick: Funds are supposed to be spent only on what they are for. You're afraid to ask for a tax increase? We have to put these funds back where they belong. I suggest you ask for a tax increase—to keep us from turning into a ghetto. For example, the curbs in my neighborhood were supposed to be done in 2002. "I'm embarrassed."

Board unanimous vote to put the Botz audit into the record.

8:02pm

Board: unanimous vote to proclaim the month "Parks Month."

Resident Jerome Friedick: Thanks Ald. Miguel for taking the time to explain the audit for the public.

Resident Don Clark: The spending—we needed a $41,000 dump truck? Fire truck—a lot of diesel fuel, wear and tear? We got to have the best police cars? I see a lot of small cars, in other cities. If we want to start cutting spending here, let's start looking at transportation. Diesel fuel, over $4 a gallon. There's a lot of money there.

Board action: Concrete purchase for slab replacement needs an ordinance, unanimous approval, for $30K with Eastern Missouri Concrete, LLC.

Ald. Miguel:Why are some streets postponed or delayed? (for slab replacement)

Eckrich: Two or three areas postponed because it doesn't lend itself to selective slab replacement. Maintenance is not capable of doing those other ones. It could cost $100-200,000 more, he estimates.

Eckrich requests approval of company JJ Construction Services to build a pavilion at Whitecliff Park, for the least expensive bid, $14,659. The materials are donated by Rotary.

8:13pm: Unanimous approval of pavilion measure.

8:14pm

City attorney said they intended to meet afterward in closed session for discussion of agreement with firefighters union. But document not ready. Do it in July meeting, he supposes.

8:15pm Adjourn.  Ald. Pickel absent.