By David Hutchinson
The Special Meeting was held in the Surrey Township Hall on January 27. All five board members were present—Mike Coon, Mindy Campbell, Glenna Bradbury, Dixie Adams, and Paul Ghinelli. More than ten people attended. The meeting was called to discuss the township’s accounting software situation, the recently completed audit, and the Transfer Facility.
Supervisor Coon started the meeting by telling attendees that board members were “not mad at anybody.” He said that sometimes the board reminded attendees of rules of conduct, or board members had heated arguments with each other. But it was not personal, just “business” of getting through the meeting.
Clerk Bradbury talked briefly about the township’s audit. She said there were “double postings” and other issues from using BS&A Software last year, but the audit was “decent.” There were “savings” from GFL, over $90,000.
The township had recently switched back from BS&A to Cogitate, its previous accounting software company, for the clerk’s services. Bradbury said that Cogitate was mainly known for serving government clientele, but they were not exclusive to municipalities. The company was founded in the 1960s.
The township’s permits would be handled by BS&A as a separate system. Checks and other payments would be handled by Cogitate.
Next, the board discussed the results of the township’s audit which was completed in December by Shelly Browning of Weinlander Fitzhugh. The results were posted to the State of Michigan website (https://treas-secure.state.mi.us/documentsearch).
“The Township’s net position decreased by $409,916 or 10%,” according to the results. A major factor for the decrease in funds was “dredging project costs.” The township’s revenue included 42% from property taxes, 21% from state shared revenues, and 19% from special assessments. Expenditures included 39% to public works (lake dredging), 22% to public safety, and 19% to general government. The state shared revenue is expected to decrease in the future due to “decreases in state revenue.”
The township’s earlier change in accounting software (from Cogitate to BS&A) and consequent “bank reconciliation being completed on paper” resulted in late filings, late payments, and “significant adjustments.”
The township government’s “limited staff size” was cited for “insufficient checks and balances” in accounting. The results also stated that it was not uncommon for small townships to struggle with employing enough people for “segregation of duties” and thorough financial reporting.
Due to late payments for taxes and retirement plan contributions, the Michigan Department of Treasury said that Surrey Township was “not authorized to issue municipal securities” without treasury approval. The inability to borrow money could impede future projects and emergency expenses.
The state also requested a “corrective action plan,” and failure to submit the plan could result in an audit from the state at the township’s expense.
Board members had booklets which they opened and discussed, mentioning various numbers stated in the audit. There was some confusion about “corrections” and “net position.”
Trustee Ghinelli spoke at length about the township’s situation. “Always the numbers are incorrect!” He said the accounts needed to “reconcile to zero.” Reconciling was done “on paper” last year while the township struggled with BS&A issues. He said people, in their personal finances, reconciled their bank statements “to the penny” every month. But the township’s accounts kept needing corrections. “It’s still wrong!”
Ghinelli was particularly concerned with accurate financial reporting on a monthly basis. Timely accounting was important for staying informed and identifying errors. “Follow the money!” There were “little red flags” that added up “like a quilt.” People were “taxed to death,” and governments needed to manage taxpayer money responsibly.
Ghinelli said there were no significant audits done when the township treasurer position changed from Esther Pitchford to Stacy Delong, or from Delong to Mindy Campbell. He felt that a thorough checking of accounts was prudent anytime someone new took the position.
Trustee Adams said that board members had met the auditor in three different groups, and they got different impressions of the results. She had asked the auditor to attend a township meeting, but Browning refused. The reason given was the reputation of the meetings, particularly questioning from attendees. Ghinelli suggested getting an auditor who was willing to attend.
Bradbury said the previous audit was the “best” “in a long time.” That was when Cogitate was being used. She said one issue she identified with BS&A was keeping track of “outstanding checks.”
Bradbury mentioned that Ghinelli thought she was dishonest with the accounting. Ghinelli protested that he would have contacted law enforcement if he suspected foul play. Arguing between the two members quickly got heated. Coon rapped his gavel, calling for peace.
Adams left the room briefly. Bradbury said the BS&A situation was a “nightmare.” Ghinelli expressed that he was strained dealing with this “mess.” He said they might as well do accounting “on paper” like the old days if the software was so bad.
Bradbury said that even a good audit could have corrections. She added that the township was never “reprimanded” by the State of Michigan. Ghinelli said the township was currently not allowed to “borrow money” because of the “payroll issue.” Adams said it was “hell” issuing W-2 forms. Coon was concerned what would happen if a firetruck needed replacement.
It was noted that the last couple changes in the treasurer position did not include training. Bradbury assured her fellow board members that Cogitate was better than BS&A.
Ghinelli wanted a more thorough investigation into the township’s resources and expert advice on how to manage accounts. He said some townships had “forensic” audits every few years, and that might be good for Surrey Township.
Coon said an “in-depth audit” would provide more information than the normal, annual audit. He did not want a “forensic” audit because it required a narrow focus of inquiry, and the term had association with criminal activity. He had experience with forensic audits from his work as a detective. The township needed a wider scope of investigation.
One estimate for such an audit was 60 hours at a cost of $27,000. Ghinelli suggested auditing years back to when former Treasurer Pitchford left her position. After some discussion, the board approved pursuing an in-depth audit.
Next, the board discussed the Transfer Facility. The township had a “substantial amount” of money in that account for landfill monitor wells, and there was some interest in moving funds to “contingency.” Board members were uncertain what restrictions there were on management of the funds. Bradbury left the room to make copies of a special assessment document for the other board members.
Coon called for recess at 7:29 p.m. so everyone could take a break and stretch their legs. The meeting resumed ten minutes later.
Coon started with explaining that one “budget adjustment” was due to taxes being duplicated in a second account in the software. There was no loss or gain of actual money in that case.
Ghinelli returned to Transfer Facility funds. He said the township was not allowed to be “profitable” so something needed to be changed with the facility. Either expenses needed to increase, or fees needed to decrease. The board discussed ideas for adding service for “waste oil” disposal, old tires recycling, and old electronics disposal.
The board then discussed BS&A Software. Last year’s ordeal was a “$40,000 beating” for the township. The software was “poorly written” and “not user friendly.” The software did not use standard “chart of accounts” popular around the state. The company created new account numbers without notification to the township.
The board discussed BS&A’s aggressive marketing, misleading phone conversations, and insufficient technical support. The company required appointments for every conversation. But going back to Cogitate had worked “wonders.” The difference in support was like night and day. “George will call her back within five minutes.”
Board members were unhappy with spending so much money on such poor service last year. The apparent waste of $40,000 was “hard to swallow.” One attendee suggested considering it “money under the bridge” and to not lose more money on court costs trying to get something back.
For Public Comment, an attendee asked about the auditor refusing to come to a public meeting. “What are we paying her for?” The board explained that Browning did not want to be “bombarded” with questions from residents.
Another attendee said the board was experiencing “sunk-cost fallacy” about BS&A. He said they should stop trying to fix a “sinking ship” and move on to better things.
Someone else asked about board members meeting with the auditor separately. The board explained that regulations banned them from meeting altogether for township business outside of public meetings. That was why they split into groups to talk with Browning.
The attendee asked about finding an “accountant with a spine.” Coon said that board members probably had different impressions of the audit because they each had different questions for Browning.
Adams suggested asking Browning to attend on condition that residents would not question her. An attendee took “offense” from officials’ negative comments about residents asking questions. She was a taxpayer who did her own research and cared about how taxes were spent.
The attendee went on to say that “Heartland Materials Management” was coming in the future with mandates for the Transfer Facility. “It’s all recycling now.”
Ghinelli agreed about the future restrictions on the facility. He mentioned robotic sorting of rubbish and challenging logistics for recycling. He said landfills were running out of space, and recycling was not profitable. “It’s comin’, like data centers.”
Coon said he valued opportunities for guest speakers to answer questions from residents, but attendees needed to maintain civility. He reiterated that board members could not discuss matters together outside of meetings, and sometimes that made it difficult to solve problems quickly.
Another attendee said GFL General Manager Rick Fancon got what he “deserved” in being questioned at a meeting. There were promises made in the past, but nothing was in writing. He told the township “lie after lie” which upset residents.
The attendee added that there was always “something” going on with the Transfer Facility. She took pictures of a dump truck at the facility which did not belong to GFL. Coon responded that he contacted truck’s company, and the township sent them a bill for $500. The board welcomed residents to report any suspicious activity. Providing photos and time of occurrence was helpful.
Someone else said the Open Meetings Act was “clunky as hell.” It made efficient operation difficult but was intended to “protect you.”
This reporter asked about the meeting room’s audio equipment. Several new microphones and a speaker were installed last year to improve listening conditions for attendees. As of last month’s meeting, however, the equipment had been noted as not working. Coon demonstrated that the equipment was currently working, but the microphones were not placed close enough to register board members’ voices.
An attendee asked about a case of sand being removed at the Transfer Facility. Coon said a Michigan State Police detective told him an attorney deemed the matter a civil case. The state police would not pursue the investigation further. The township had not received a letter of denial.
The meeting adjourned at 8:50 p.m. The next regular meeting is scheduled for February 10 at 6 p.m. That meeting is expected to include a public hearing about a MSHDA Community Development Block Grant.
