The St Marys City Council on Monday approved more than $237,000 of the city’s portion to alleviate the potential $700,000 of the Camden County Public Service Authority.
The $700,000 shortfall comes after former Executive Director William Brunson was indicted on two counts of theft where he used $38,500 of PSA funds to buy vehicles. Also, it has been learned that IRS payroll taxes have not been paid, which could equate to over $1 million.
Mayor John Morrisey recused himself from the vote to alleviate the appearance of a conflict of interest, as Morrissey sits on the PSA Board of directors who oversees the PSA’s operations along with the Mayors of Kingsland and Woodbine and two County Commission members. Morrissey has been a member since 2014.
“Unfortunately, I am not in a position tonight to [answer questions]. Through complaints from unpaid vendors and possible irregularities of the financial management of the PSA and we immediately sought an audit. The scope was greater than anticipated, and an outside audit firm was obtained to conduct a complete audit. The GBI was brought in to investigate possible fraud and embezzlement concerns. Both the criminal and CPA in-depth audit are still in progress. The [PSA] Board members have been advised that it would be inappropriate for any of us to comment publicly on either the ongoing investigations or provide our individual perceptions and personal opinions until the investigations are complete. We have not been given a timetable as to when we might expect closure. When authorized to speak, I will answer any and all questions. Right now, I can say the investigations are continuing,” said Mayor Morrissey.
“It appears with an incomplete audit, the county believes it has enough information to determine a $700,000 shortfall as they close out their budget on June 30, 2018,” said the mayor. Morrissey stated that St. Marys’ contribution would be $237, 230. This number is in addition to over $482,000 for which St. Marys is already obligated to pay each budget year to the PSA. “This is not in our current budget,” said Mayor Morrissey.
How we got here –
Councilmember Elaine Powierski, and Mayor Pro Tem, assumed control of the meeting after Morrissey announced his recusal. Powierski explained St Marys’ form of government, which is the Weak Mayor form of government. That means the Council makes the decisions and the Mayor advises and controls the items to be voted on by Council. The policy-making and administration, by the city’s charter, in large degree are subordinated to the City Council and not the Mayor.
The Camden County Government has taken over the payroll and other financial aspects of the PSA. According to City Manager, John Holman, the County has upfronted the $700,000 shortfall and the three cities of Kingsland, St. Marys, and Woodbine will be paying the County their share based on a 2004 agreement with the PSA that stipulates payment structure.
Each year the cities get a bill from the PSA from their percentage, which was issued by the former assistant director, Shawnte’ Jenkins, who was fired after mismanagement was discovered.
City Manager Holman stated that St. Marys is the first City in the County to act on voting to make up the $700,000 shortfall. The insurance claims for reimbursement are not known at this time as the investigation is ongoing.
According to City Finance Director Jennifer Brown, the City is billed 32 percent each year which has been over $220,000 each budget year for many years. Brown stated that request she received from the PSA was different than what the County was using as this was discovered recently related to the current shortfall. The funding from each city is based on a population formula.
“The funding from the cities should be based on the tax digest, but when the [PSA] Board met, they asked the funding to be set on population; therefore, that is where the 33.89 percent came from. I will tell you based on the budget, the 2018 budget was underfunded for the PSA,” said Brown. “This is why the county is asking for the funding shortage. The bills need to be paid, and the county is already on the hook for over $500,000 for payroll and insurance.”
Council reacts –
Councilmember Powierski said most of the information has been discussed in PSA Board executive sessions and “we do not know anything, nor can they tell us. We are at a disadvantage here because we do not have the same breadth of knowledge and understanding.”
“Did I hear you say that our shares were split differently in the agreement?” asked Councilmember David Riley.
“The budget would have been presented by [former executive director William Brunson],” said Brown. “I do have letters from 2016 where he would submit saying ‘you owe 32 percent of $1.5 million’ and that is where we would actually get our funding numbers from. Then I was brought another budget of what was actually passed.”
Brown stated that the first PSA total budget request was $1.4 million and then the second request totaled $1.5 million. This continued over several years. “That is why I came back to you several weeks ago to ask for additional $24,000.”
Riley asked if next year’s budget would be more, such as $1.6 million.
Brown said, “It could have been more than underfunded from last year.” The city was paying only 32 percent, according to Brown, when the city should have been paying 36 percent.
“This is something that is going to continue into the future. The organization is not being managed like it supposed to be managed,” said Riley.
According to the agreement, the PSA was to perform yearly audits. According to sources close to AllOnGeorgia, the last audit was done between 2002 and 2005. Currently, there is a 2017 audit underway by the PSA Board.
“This is a tragedy,” said Councilmember Jim Gant. “We do not have this kind of money to just cough up. We do not have any choice. This is a tragedy for William and his family and a tragedy for Shawnte’ Jenkins. This does point out why there should be audits.”
Councilmember Bob Nutter said, “I feel absolutely zero remorse for Mr. Brunson and the other person involved. They knowingly and willingly stole money from our citizens as it is alleged. If proven true, there is a special place in hell for that person, ” Nutter said. “The city should no longer accept a piece of paper asking for 32 percent of funding. I would hope there would be more information provided. I feel that I have been duped. I feel our collective Mayors and County Commissioners were asleep at the switch.” Nutter asked for improved oversight in a future recommendation to the PSA.
“I will vote for this. It galls me to do it,” said Nutter.
Councilmember Powierski said that the County did not give sufficient notice on this shortfall. “I was disappointed with the lack of depth in what they sent us. This has been an uncomfortable learning experience,” said Powierski. She recommends future safeguards to be added to the PSA financial process and wants the County to involve more than just the Mayors and a few Commissioners.
“This is very uncomfortable for me to approve this amount of money which is unbudgeted, but I also sympathize with the circumstances. We want to take time to educate ourselves,” said Powierski.
City Manager Holman said they would know more once the GBI’s forensic audit is complete.
Powierski asked about relevance to the St. Marys Aquatic Center. The PSA manages the Center, but the City of St. Marys manages payroll for the employees and oversees the Center’s financial information. The PSA provides for a manager and trains employees. The Aquatic Center’s budget is built into the City’s annual budget, not PSAs.
The 2019 funds are paid to the County each quarter starting on July 1 of each fiscal year.
All Councilmembers voted to approve the $237,230 contribution to the PSA’s $700,000 shortfall.
During the public comment period, former Councilmember Sidney Howell reminded that Council’s vote did not include the IRS payroll tax withholdings, which may be more than $1 million.
“Mr. Riley, you are right, they [PSA] are going to come back to you,” said Howell.
After the meeting, AllOnGeorgia-Camden interviewed Councilmember Nutter and asked if he would vote to consider more large payments to the PSA related to the financial impropriety. Nutter stated that likely he would, but there would have to be significant documentation from the County before he would make that vote.
For the fiscal year 2018, which ends June 30th, the City of St. Marys has $5.3 million cash on hand were $1.6 million is restricted. The $237,230 payment for the shortfall will be paid out the unrestricted amount.
The County and the cities of Kingsland and Woodbine will meet to make similar votes in the near future. St. Marys was the first city in the county to address the PSA shortfall in public.
Video of Council’s discussion on the PSA shortfall vote-
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