For Immediate Release:                                                      

Dec. 31, 2019                                                            

Finding for Adjustment Totaling Over $4.4 Million Issued to City of Youngstown

Columbus – Auditor of State Keith Faber today released the 2018 audit of the City of Youngstown. The audit contained multiple findings including deficiencies, material weaknesses in internal controls, and noncompliance that have resulted in a $4.4 million finding for adjustment.

“Significant concerns exist when municipalities continue to use special purpose funds as an ATM to cover general fund obligations,” said Auditor Faber. “These monies are earmarked for specific actions, yet the City continues to redirect these special purpose funds to projects and purchases beyond their intended legal requirements.”

During the 2017 audit, it was noted that the city granted various businesses and developers millions of dollars for economic development from the Water fund, Sewer fund, and Environmental Sanitation fund. These grants were not repaid when identified by the AOS during the 2017 audit. The 2018 audit identified additional grant expenditures to businesses and developers from those funds as well.

Noted in 2017 Audit (remain uncorrected):

Noted in 2018 Audit:

In addition, during 2018, the city inappropriately expensed from the Water account $524,619 to install a new irrigation system at the city golf course. This expense is the major portion of the amount from the Water and Sewer funds for purposes not allowable by law.

Other misused Water/Sewer funds that were identified include:

·       $28,758 – For SUV used by Mayor.

·       $2,120 – For amounts charged to Water/Sewer for Municipal League dues.

·       $45,379 - For amounts charged to Water/Sewer funds for software support and maintenance.

After the notification of the finding, the city took corrective action by providing supporting documentation or making general fund repayments for all but $19,176 of these expenses. This leaves a remaining balance of $543,795 necessary for adjustment.

The Ohio Revised Code delineates the allowable usage of funds received from the collection of water and sewer charges respectively and states money paid into any fund shall be used only for the purposes for which the fund was established.

“We have guardrails and laws in place to protect against misuse and ensure monies are being spent in compliance,” said Faber. “As we enter into a new year and reflect on the past, I hope city officials see this as an opportunity to get their books in order and accept our recommendations to get into compliance with Ohio laws. We stand prepared to assist in any way that would help or assist the city.”

The Auditor’s office issued a finding for adjustment against the City of Youngstown General fund for $3,890,713 and against the Parks and Recreation fund for $524,619, in favor of the Water fund ($2,653,169), Sewer fund ($1,612,163) and Environmental Sanitation fund ($150,000).

While some corrective action has been taken on the 2018 expenses identified in the audit, city leadership has declined to make any adjustments from the 2017 audit or many 2018 adjustments in their accounting records and their accompanying financial statements do not reflect them.

A full copy of this audit report is available online.

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The Auditor of State’s office, one of five independently elected statewide offices in Ohio is responsible for auditing more than 6,000 state and local government agencies. Under the direction of Auditor Keith Faber, the office also provides financial services to local governments, investigates and prevents fraud in public agencies, and promotes transparency in government.

Contact: Allie Dumski

Press Secretary

614-644-1111