Jami Leeth scoops up ice cream for her kids Katie, left, and Trapper, as husband Rob observes. The Leeths are raising money for a service dog for Trapper, an autistic child who is not afraid of anything. See their inspiring story in Features below.
Photo by Andrew Cremata
Audit letter lists internal control deficiencies
By JEFF BRADY
Last years audit of FY 2007 borough finances found the municipality in a good financial position and in conformity with accounting principles, however the firm of Peterson Sullivan also found that when applying new Government Auditing Standards the borough had certain internal control deficiencies that needed to be addressed.
In a December 15, 2007 letter, the firm listed as an overall material weakness the boroughs account reconciliation and review.
Management had not reconciled certain accounts and had not made adjustments to the general ledger based on supporting documentation, the firm wrote. In addition, no review process was in place to catch these errors.
It then listed: several accounts payable that had not been recorded at years end; second quarter sales tax that had not been accrued as receivables; grants receivables that had not been recorded; interfund transfers that had not been posted, including interfund service charges and a tourism fund deficit; deferred revenue adjustments for clinic and land sale revenue; and property and equipment additions in enterprise funds that were not capitalized.
The auditors then recommended that formal policies and procedures be designed, documented and implemented regarding reconciliation and review of those areas.
Borough Treasurer Cindy ODaniel said this week that a Corrective Action Plan has already commenced and has been submitted with the auditors letter to federal and state governments.
She explained that the new government standards were put in place during the year that she took her leave of absence. Before, the auditors would come in and do their own control, and were allowed to adjust entries, based on documentation, in areas like second quarter sales tax and payables.
With the new audit standards, they are not prepared to do that, she said, and the borough was caught off guard.
We didnt make those journal entries that first year... she said. Its just a part of the process that we need to change to comply with the audit standards. Its an easy fix, weve already got it worked out.
The auditors letter also listed under these significant deficiencies: a police checking account that has not been recorded on the general ledger and needs controls to prevent fraud; separation and better review of various cash receipts that come into the borough office to prevent stealing; and a need for a unified system of grant tracking and compliance, instead of having some administered by the treasurer and others by department heads.
ODaniel addressed the police checking issue in two recent memos to the Finance Committee and Borough Assembly, saying its existence was in conflict with borough code regarding how municipal funds are to be distributed. She also cited the auditors letter which recommended policies and procedures to be put in place to prevent fraud. ODaniels memo said there needs to be further documentation on how the money is spent. She recommended that the account be closed and run through the general fund.
Language about preventing fraudulent use raised some eyebrows at the police department, and at the Feb. 7 Borough Assembly meeting. Mayor Tom Cochran said it bordered on slander and should not be in open memos between departments. He said he wanted all Finance members and the treasurer at the next committee meeting on Feb. 20, and have it in assembly chambers.
Police Chief Ray Leggett this week said it wasnt so much the reference to possible fraudulent use, but ODaniels classification of the $3,252 patch account as being a petty cash account and municipal funds.
Leggett said when he became chief, he found cash from the sale of patches in a drawer and became nervous about the money sitting around. He got permission from former city manager Bob Ward in 2006 to activate an old checking account that had formerly been used in a drug-buying sting operation until it was closed in 1999.
It was approved by the Finance Committee, and went through two audits, Leggett said, adding that no one came by to ask about the account during the most recent audit. He said they keep receipts.
He said the money is used to buy more patches, and profits from the sales have gone to the Food Bank, pizzas for Klondike Road Relay road crew volunteers, and a Sirius radio for the office to keep the late shift from getting bored.
He said he has written only 17 checks on the account in two years. He said ODaniel received the bank statements, but they never were forwarded to the police department. She knew what was going on and knew the balance, he said.
Leggett said that if the department is forced to close the patch account, then he would recommend they run it through a police association, similar to the Skagway Firefighters Association, which holds fund-raisers from patch sales, car washes and barbecues.
ODaniel said she had had no discussions with Leggett about the accounts history, nor what may have been approved by Ward, but it is my view, and I spoke with the auditor, that if they are selling patches in the police department, then they are functioning as a municipal department.
She said that if the patch fund were set up through an association, then she would need to know how it would be set up. It would be fine as long as they are functioning as an association separately from a municipal department, she said.
Her memo also recommended a review of the SVFD to make sure no general funds are going into the fund-raising account set up through its association. She said that issue is now up to the Finance Committee.
As for the rest of the action plan:
Duties will be re-allocated between the tax clerk and accounts payable/receivable clerk so one person is not in complete control of the cash receipts process.
The treasurer will implement a comprehensive unified tracking system administered by her to show all grants and their status, and have a single point of contact with departments receiving grant funding.
A separate fund for capital projects was adopted with the FY08 budget, and the accounting software assigns each project a ledger code.
All old outstanding checks will be reported to the state annually as required by the Unclaimed Property Act.
Sprinkler trouble leaves board feeling all wet
By ANDREW CREMATA and JEFF BRADY
Recent comments by Borough Assembly member Dave Hunz concerning the repair of the schools sprinkler system prompted some Skagway School Board members to question the priorities of the assembly.
At an assembly meeting last month, after hearing the new estimate to repair the sprinkler system, Hunz said it was possible the system was not maintained properly over the years and added, I think the school should bear part of the cost of this.
Previous problems with the 24-year old system, rated to last for 20 to 30 years, have cost the school over $30,000 in repairs and due to the use of substandard pipe and faulty installation. Original estimates suggested the cost to replace the system would be in the $100,000 range, but actual estimates came in at $329,051.
At the school boards Jan. 29, meeting Superintendent Michael Dickens said he was pretty sure children would not be in danger from a fire, but without a safety backup a ceiling fire could take out the building.
He added the school was liable for any repairs until the problem could be fixed. Due to the nature of the repairs, work to the sprinkler system can be completed only in the summer. With repairs put off to this upcoming summer, and now apparently postponed for an additional summer, members of the board were perplexed.
In reference to Hunzs comments Board President Darren Belisle said, That kinked my colon. He said it was aggravating as a board member because Hunz had previously stated the building was the responsibility of the municipality.
Belisle pointed out the municipality had paid over $200,000 for a water tank, which was being stored down south at the rate of $25,000 a year. He said the assembly purchased the tank thinking it might be needed one day and added, We have a need now, its the school.
Member Chris Maggio said he did not appreciate the assemblys sniveling over the cost of the sprinkler system. He said the price was a drop in the bucket to keep the building safe and legal.
It needs to be resolved right now, he said.
Member Joanne Korsmo said, I really feel like its squeaky wheel time. This is their building.
Dickens said the project could be partially funded through a capital improvement project grant, and the municipality would have a better chance to receive the grant if the work were already finished.
At the Feb. 7 Skagway Borough Assembly meeting, Mark Schaefer, the assemblys liaison to the school board, stated that the sprinkler system was still an issue with the school board, and Dr. Dickens was looking for grant money.
Its got to move forward somewhere... he said. They werent too happy with the Assembly postponing it.
Later, during discussion on an assembly budget amendment for other items, Schaefer said the sprinkler system was different than the rifle range, which had been planned for many years. Colette Hisman said the school sprinkler system is not off the plate, and that it can be submitted in upcoming budget meetings. Borough Manager Alan Sorum said the district should seek school capital improvement money from the legislature.
Mayor Tom Cochran said the school districts frustration is with the small construction window, since replacing sprinkler systems has to be done over the summer when school is not in session.
Classification study will weigh heavily on borough pay scale
By ANDREW CREMATA and JEFF BRADY
Employees of the Municipality of Skagway will soon see a change in their paychecks. The completion of a classification survey by Tim Pierson, the study contractor, makes it possible for the borough to proceed with devising a pay scale where each employees ranking can be plugged in to determine his or her wage.
The last time an official pay scale resolution was adopted by Skagway was in 1996, and it called for two-year reviews to adjust them as necessary. The reviews never took place.
A year ago to the day, former City Manager Bob Ward suggested an independent study be conducted to determine where each city employees pay scale should be ranked. This was after a resolution was approved by the then Skagway City Council to award the police department a 12-step pay increase.
Some city employees thought a pay increase for only one city department was unfair, so on March 1, 2007, a city-wide interim pay scale increase was adopted. It was hoped a classification study could be completed by June 30, 2007 to bring city job descriptions and pay scales current and compatible with other Southeast communities.
Borough Manager Alan Sorum took the reins on the project after replacing Ward. Pearson was hired to conduct the classification study which was to define precise job descriptions with input from individual employees and department heads.
Those who felt their classification was unfair were given an opportunity to appeal their ranking by a committee of Pierson, Mayor Tom Cochran, and former mayor Stan Selmer. According to Sorums records, of the 34 positions ranked in the study, 18 appealed the original findings. No one individual appeal resulted in a pay scale step increase or decrease.
The study was completed on Jan. 18, and a memo was then sent to all municipal employees informing them the final report would go to the Jan. 24 assembly meeting. The borough assembly would then either accept or deny the official position ranking.
At the meeting, the borough addressed the ranking of two employees after letters were received questioning their final placement in the study. Refuse collector and incinerator technician Rod Jensen said via telephone that his department head wrote a letter to the assembly questioning his grade ranking of level 14 on the scale.
Assemblyman Dan Henry suggested members follow Rod (Jensen) around for eight hours, and added he did a good job. Henry said he would be more comfortable with the pay scale of the position being moved to a level 15, equal to that of municipal groundskeeper.
Sorum said Public Works department head Grant Lawson also supported such an increase.
Sorum also said he supported a step increase to the other city employee who expressed concern over her ranking, tax clerk Kathleen Moody. He explained she was hired in July, during the interim phase.
Two separate amendments to the resolution were offered, one to increase the tax clerks rating by one step, the other to increase the refuse collector/incinerator technician by one step.
The increase for the tax clerk increase failed with Dave Hunz and Colette Hisman voting no on a 3-2 vote, with four votes needed for passage. Assemblyman Mike Korsmo was absent.
Said Hunz, (Moody) knew what they were getting into when they took the job.
The second amendment passed unanimously. Hunz said there was more responsibility to the job of refuse collector. Cochran added there was a lot more to running the incinerator than meets the eye.
The assembly then unanimously approved the amended pay scale classification study.
This is a huge step forward, said Sorum.
The position of visitor information specialist, held by Marlene McCluskey, still remains to be classified, as all involved felt the proposed job description was inadequate for all the duties she has.
At the CVB meeting on Feb. 6 Tourism Director Buckwheat Donahue said he was happy where he placed (level 19) but was very disappointed at McCluskeys classification of level 11.
Its (level 11) is basically entry level and thats not right, Donahue said, adding that the mayor on his own directed a review of McCluskeys situation.
The next step for Sorum is to develop a pay scale into which the classification rankings will be plugged. Municipal employees will then know what their actual paychecks will look like.
Sorum said he hopes to have the pay scale developed no later than Feb. 21. He said the process gave everyone a chance to participate and was about as transparent as it can get.
BOROUGH: Capital project list additions
The Skagway Borough Assembly on Feb. 7 passed final reading of budget amendment Ordinance 08-03, which will fund $620,000 in capital projects:
Rifle range - $295,000 (from original budget of $60,000): This is a scaled down amount from an inflated project estimate last fall. Members said the new range has been planned for many years and is a safety issue.
West Creek gravel extraction - $30,000: This would be for the new Dyea subdivision roads.
Harbor expansion master plan - $275,000: This has been requested by the Ports and Harbors committee.
Bio-diesel equipment - $15,000: This has been requested by Public Works to speed up the process for making bio-diesel for the incinerator from discarded vegetable oil.
Air quality monitoring equipment - $5,000: This will cover equipment and lab costs for an additional monitoring station at a higher level on the east hillside where hemlock trees have been dying. The previously approved National Park Service monitoring program will include testing over the next three summers at various sites in Skagway and Dyea. The additional cost does not include labor, reporting and overhead which are funded by NPS.
The money for all projects will come from the sales tax fund, which had stronger collections in 2007. JB
BOROUGH: Dyea land sale date set
The Skagway Borough Assembly has set April 15 as the date of the first municipal sale of land in the Dyea area. The date was plugged into Ordinance 07-28, which passed second reading on a 5-0 vote on Jan. 10.
The six lots are part of Block B of the Taiya Inlet Subdivision, but are actually in the area of the entrance to Dyea, just north of the Chilkoot Trail Outpost, noted Mayor Tom Cochran. The parcels vary in size from 2.18 to 2.82 acres.
The sale of these lands will occur by lottery on April 15 at 7 p.m. in assembly chambers.
The assembly has not set a date for the seven Dyea Point lots designated in an earlier ordinance because of unresolved easement issues.
Assembly members said the April 15 date should be okay for people to get out and walk the land. To qualify, each applicant must be 18 or older, be current on all payments to the municipality, and will be allowed to purchase one non-refundable ticket for $100. The mayor will draw tickets, and assign available lots in order of preference noted by the applicant.
SCHOOL: Four top finishes for Skagway DDF team
Skagway entered six events at the Drama, Debate and Forensics Tournament in Haines last weekend, and won four of them. The placement follows:
1st Place Readers Theatre: Put Down Your Cigarette Rag. Erica Harris, Cody Burnham, Shelby Surdyk and Brandy Mayo.
1st Place Duo Interpretation of Literature: Erica Harris and Shelby Surdyk.
1st Place Expository Speaking: Cody Burnham
1st Place Extemporaneous Commentary: Shelby Surdyk
The event included teams from Skagway, Haines, Juneau, Sitka, Wrangell, Mt. Edgecumbe, Ketchikan. This was the last tournament before State, which takes place at the end of the month in Anchorage.
PHOTO OF THE WEEK
DDF ENSEMBLE Brandy Mayo, Erica Harris, Shelby Surdyk, and Cody Burnham perform the "Put Down Your Cigarette Rag" at the Eagles recently. This piece was one of four winners at the recent meet in Haines. See story above. - Jeff Brady
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