The city of Gainesville’s problem retaining employees goes beyond the recent resignations of high-ranking staff this fall — a preliminary state audit found that turnover in the finance department has resulted in inadequate work.
Also noted by the Florida Auditor General’s Office was a growing risk of debt carried by Gainesville Regional Utilities and a lack of adequate oversight of the Reichert House Youth Academy.
Gainesville Regional Utilities
Mayor Lauren Poe said the problems cited in the audit are not surprising, adding the city is working on a required response that will outline corrective measures.
“All of the findings are things we already were aware of and had been working with senior staff and the (internal) auditor to come up with remedies or corrections,” Poe said. “The finance department…is a tough environment. It’s really, really difficult to hire folks with the qualifications we need. It’s really a national problem.”
A review of records and interviews with employees disclosed that finance personnel did not have the knowledge and capability required to prepare financial statements for the 2017-18, 2018-19, and 2019-20 fiscal years that met generally accepted account practices, the audit states.
“According to the 2019-20 fiscal year audit report, the material weaknesses occurred because the Finance Department continued to experience significant turnover resulting in a significant loss of institutional knowledge and limited staff availability to perform the necessary reconciliations,” the audit states. “…City personnel confirmed in September 2020 that the Finance Department staffing issues resulted in the additional fees paid to the financial auditor.”
Those fees totaled $207,785 for the three years. The report states the city’s finance director in 2018 resigned and was not replaced until 2020.
Poe said interim City Manager Cynthia Curry is concentrating on getting the finance department in shape.
GRU was another focus of the audit, which found that the utility’s debt levels were considerably higher than comparable municipal systems.
For instance, in 2019-20 GRU’s long-term debt was more than $1.7 billion, second only to the much larger Jacksonville Electric Authority with debt of more than $3.3 billion. But the 4.3 debt ratio for GRU is much more a problem than JEA’s ratio of 1.01.
High debt-to-net ratios indicate the extent to which the utility is operating through debt rather than assets.
“…GRU’s long-term debt-to-net-position ratio of 4.3 is approximately 5 times higher than the .94 average of its 4 peers,” according to the audit. “Insofar as the GRU’s electrical rates are already significantly higher than the rates of comparable utilities, the City Commission’s willingness to further increase electricity rates may constrain the GRU’s ability to meet current and future debt service payment requirements and also fund general government services.”
The Auditor General’s Office recommended that GRU management and the City Commission jointly establish a long-term debt management plan with quantitative performance measures and timelines.
GRU General Manager Ed Bielarski also was not surprised by the findings, adding in an emailed statement that the utility and the commission have known about the debt challenges for years.
“In our response to the preliminary findings, we will surely point out that GRU and the commission have enacted a comprehensive plan to take action that has already been deemed favorable by its bond rating agencies,” Bielarski said.
GRU has reduced its debt by 12% compared to 2015 levels, or more than $200 million, Bierlarski added.
Reichert House Youth Academy
The state audit also found that the city did not adequately oversee finances at the Reichert House Youth Academy, a program to steer boys away from trouble.
A city audit of the Reichert House reported in 2019 had found oversight shortcomings, which were backed up in the state audit.
The city spent nearly $1.3 million in 2018-19 and $986,917 in 2019-20 on the Reichert House.
“Given the significant RHYA Program resources entrusted to Reichert House, Inc., it was incumbent on the City to ensure that policies and procedures with appropriate internal controls were established by that organization regarding RHYA Program responsibilities,” the audit states. “Although we requested, City personnel did not provide records evidencing established Reichert House, Inc. policies and procedures.”
