Due to the deficit in the general fund, the Village of Mount Sterling has been declared in a state of fiscal emergency by the Ohio Auditor of State’s office.
According to a Thursday morning press release from the auditor, the Auditor’s Local Government Services Section (LGS) found negative balances in village funds totaling $340,491 and $269,437 as of Dec. 31, 2016, and April 30, 2017, respectively. Recently, Mount Sterling Fiscal Officer Courtney Bricker reported a deficit of $290,000.
The general fund is a sort of catch-all fund in the village’s coffers. It’s used to pay bills and employees. It can also be used to supplement other funds in an emergency.
A fiscal emergency can be declared if there’s a deficit more than 16 percent of the village’s income, the village can’t pay employees without assistance for 30 days or it defaults on a loan.
According to the report by LGS, they found the village had a large enough deficit in the general fund to warrant an emergency. All loans and payroll obligations were up to date. The village’s budget for 2016 was about $621,000, putting the current general fund deficit at about 46 percent.
The next steps include creating a plan to go back to a positive general fund and avoid a future deficit funding situation.
The plan is directly created by a commission set up by the auditor’s office, which would consist of a representative of the state auditor’s office, a representative of the state treasurer’s office, Mayor Lowell Anderson, President Pro-Tem Mary Lou Stiverson-Ratliff and three representatives selected by Anderson and Stiverson-Ratliff, as approved by Governor John Kasich.
“Mount Sterling is still reeling from a heavy financial blow inflicted by corrupt former officials and employees,” said Auditor Dave Yost, in the release. “While the courts determine their fate, the village must move forward and rebuild. My office stands ready to help.”
The fiscal situation partially stems from Joe Johnson, the former village administrator, who has been accused of stealing more than $724,000 from the village. He used a village credit card to buy vehicles, auto parts, TVs and other items for his personal use between 2012 and 2016, as well as prematurely cash out retirement benefits. In March, he was sentenced to 10 years in prison after he pleaded guilty.
The auditor’s office also mentioned the village had been unauditable between 2012 and 2015 due to incomplete financial records. One report covering 2011 and 2012 mentions a lack of budgetary controls. It was placed on the state’s list of unauditable government entities in 2015.
Other Mount Sterling officials have been hit by the fallout.
Shortly after Johnson’s sentencing, Vicki Sheets, a former fiscal officer, pleaded guilty to falsifying Johnson’s retirement date so he could acquire $131,000 in state pension benefits early.
Then in April, former Mayor Charlie Neff and the former Clerk Bonnie Liff were indicted on felony charges.
Neff is accused of issuing a check for $16,702 to Johnson for sick leave, much more than what Johnson was entitled to.
He is also accused of directing Sheets to issue a $38,120 check to Johnson, paying him more than he was authorized to receive for vacation and sick leave payout.
Liff is accused of cashing in more sick leave time than she was permitted to under village policy and more vacation time than she had earned.
The two cases are being prosecuted by Robert Smith, assistant chief legal counsel for the Auditor’s office. Smith also prosecuted Johnson’s case.
Neff and Liff were arraigned in May. Informal pre-trial hearings for each case were scheduled for June 2, but was rescheduled due to the unavailability of a guest judge to preside over the hearings for Neff. Joseph T. Campbell, a retired judge from Greene County Common Pleas Court has been assigned to oversee all future hearings. Records indicate Judge Eamon Costello will still preside over Liff’s case.
Council members Rebecca Burns and Diane Spradlin, former council member Scott McClelland, former fiscal officers Lana Cydrus, Vicki Sheets and Cindy Miller, Village administrator John Martin along with Mark Pitstick, the village’s law director, have been issued subpoenas to appear July 18 to testify in Neff’s case.
Burns, McClelland, Spradlin, Cydrus, Martin and Pitstick have been called to testify for Liff’s case as well.
A formal pre-trial hearing is still scheduled for July 6, while the jury trial has been rescheduled to Aug. 15 due to scheduling conflicts.
Maximilian Kwiatkowski can be reached at 740-852-1616, ext. 1617 or on Twitter @MSFKwiat.