GARY — Mayor Karen Freeman-Wilson said the crux of a recent state audit flagging the city for lacking internal controls and improperly reconciled bank accounts should come as no surprise.
“The report from the (State Board of Accounts) raised a number of issues that, quite frankly, were expected. That’s why we raised the issue a year ago that we needed to focus intensely on getting our finances in order,” Freeman-Wilson said during Tuesday's City Council meeting.
The SBOA has released a series of reports in recent months, finding numerous issues with the city of Gary’s finances, including lack of internal controls and improper or late banking reconciliations. In other cases, funds were improperly used. Such was the case with the Genesis Convention Center, Finance Department and Marquette Park Pavilion, which led to staffing changes.
The latest SBOA report, released last week, said Gary improperly withheld a portion of EMS-related revenue in Fund 224 from the city’s General Fund since 2012 and spent down from that same account without going through the proper channels.
Freeman-Wilson said the administration disagrees with the state’s conclusion in part. She has argued that while a previous city ordinance divvied 50 percent of the EMS fund to the General Fund, the passage of a new ordinance in 2012 — which required any EMS funds be used exclusively for EMS expenses — had implied that the 50 percent funding formula be rescinded.
The city agrees with the SBOA officials on two things, Freeman-Wilson said: “There was no money missing from the 224 fund and that there were approvals from the council that should have been obtained, but dollars expended out of the 224 fund were all used for city-related services.”
An analysis of the city's EMS fund earlier this year by Whittaker and Co. found about $8.2 million was improperly transferred from the city’s emergency services fund.
Money was pulled from the restrictive account between Jan. 1, 2015, and March 31 to cover payroll and other expenses in the face of a multimillion-dollar structural deficit where yearly expenses outweighed revenue.
The emergency services fund, known as Fund 224, was designated for deposits of emergency fees from individuals who use EMS services and largely supports EMS- and fire-related needs.
At Tuesday's City Council meeting, members voted 8-0, with Councilwoman LaVetta Sparks-Wade absent, to formally close its own probe into the EMS fund misuse at the request of Councilman at-large Herb Smith, head of the investigations committee.
Councilwoman Rebecca Wyatt, D-1, expressed reservations about closing the investigation, saying the SBOA audit and the city’s review of the fund misuse never concluded how, exactly, the transfers occurred without council approval.
The probe sought text messages, emails and other documents from the administration relating to the EMS fund.
Freeman-Wilson said another investigation is unnecessary, noting it has been said for months now that the city’s deputy controller, Michele Roby, and former controller, Celita Green, left her administration in the dark.
Roby was terminated in May and Green’s consultant contract, etched after an earlier retirement, was canceled amid the findings.
“The controller failed to advise me of the need to transfer those funds, and there should have been a request,” the mayor said.
In late October, Roby, through her attorney, filed a tort claim that alleged she was “a needless scapegoat” and illegally fired without due process over a financial practice that wasn't illegal.