City of Gainesville internal memo on financial reporting finds “risk of overspending budget is extremely high”

Commissioner Reina Saco advises the commission to “Accept it and move on” at April 21 meeting


A March 10 memo has surfaced from Claudia Rasnick (Chief Financial Officer of Gainesville Regional Utilities) and April Shuping (Partner, Carr Riggs and Ingram) to Gainesville Interim City Manager Cynthia Curry and GRU Interim General Manager Tony Cunningham, showing that the financial irregularities on the General Government side of the City of Gainesville are even worse than had previously been reported.

Curry engaged CRI in early January to assisting with stabilizing the City’s accounting division and to help prepare for the Fiscal Year 2021 external audit. CRI recommended bringing in employees from GRU Finance, including Rasnick, to provide leadership and management support, and that began in mid-February.

The Audit Committee, which then consisted of Mayor Lauren Poe, Mayor-Commissioner Pro Tem David Arreola, and Harold Monk, CPA, CFE, heard from the State Auditor General on January 11 about material weaknesses that had gone uncorrected for four years in a row. Since that date, Mayor-Commissioner Pro Tem Reina Saco has replaced Arreola on the committee.

An executive summary of the internal memo from Rasnick and Shuping was on the agenda of the April 20 Audit Committee meeting, but the full internal memo has not been released by the City and had to be obtained through a public records request.

The full internal memo can be read here, and it includes the following statements, among many others:

  • “Every external Financial Statement Audit since 2018 has noted internal control weaknesses that remain uncorrected.”
  • Weaknesses over internal controls can lead to material weaknesses going undiscovered for years; a material weakness “is often calculated in the hundreds of thousands of dollars range for an entity the size of the City.”

The memo underlines the following statement and repeats it at the end: “At the core of every issue is the fact that those placed in charge of the GG Finance Division and of the Accounting Division had no significant prior experience in issuing audited financial statements or performing proper and accurate accounting transactions in a governmental environment. This is… a direct result of the decisions and oversight of prior City leadership.”

The “prior City leadership” appears to refer to former City Manager Lee Feldman, who was hired in October of 2019 by a unanimous vote of the six commissioners who were present. Commissioner Adrian Hayes-Santos was absent, but Mayor Lauren Poe, Commissioner David Arreola, and Commissioner Harvey Ward all voted to hire Feldman. Poe, Hayes-Santos, and Ward all voted to retain Feldman in November of 2020 (Arreola voted against the motion) after receiving an Equal Opportunity report that concluded he had retaliated against Interim Finance Director Diane Wilson. Feldman resigned on September 13, 2021.

The internal memo regarding the financial reporting problems at the City also noted significant turnover in the Accounting division and delays in hiring replacements.

“Serious and consequential items”

Some other “serious and consequential items” are:

  • As of March 2022, 17 months of bank reconciliations had not been completed.
  • No monthly financial periods have been closed in 17 months: “The risk of material discrepancies is extremely high.”
  • “There is no ability to determine budget to actuals for the last 17 months. The risk of overspending budget is extremely high.”
  • “FY 2020 financial records do not match the audited financial statements.”
  • “Beginning fund balance [for Fiscal Year 2021] does not match ending fund balance for FY 2020.”
  • “FY 2021 has zero months closed.”
  • “Material write-off adjustments” may be needed to complete bank reconciliations for all months of FY 2021.
  • The “pension expense in all general government funds… [is] incorrect by large amounts.”
  • Financial statements needed to prepare mandatory pension reporting information were not available.
  • GRU was in danger of not being able to issue financial statements by the mandatory deadline.
  • Reports for federal funds used by Gainesville Police Department were in danger of not being issued by mandatory deadlines.
  • “The external audit from Purvis Gray provided a list of items that are required for the external audit of the financial statements. There are 222 items on this list and, as of today, zero have been completed.”

The memo notes that a mid-fiscal-year roll-out of the Workday records system added to the existing reporting problems. Many financial reporting and recording functions were not properly moved to the new system, and the mid-year change now requires a large amount of manual conversion to upload nine months of data into the new system.

“[T]here is not a quick fix or an easy solution to these issues.”

The memo notes that it will take a significant amount of time to address all of these issues: “They developed over the last five years and were allowed to continue and grow in severity by previous City leadership… [T]here is not a quick fix or an easy solution to these issues.” The memo says that the focus for the next 12 months will be on triaging 2021 and 2022; the hope is that a “baseline of stabilization” can begin in 2023. “The fiscal year 2022 audited financial statements may not make the March 2023 deadline.”

At the April 20 Audit Committee meeting, Shuping reported progress since the March memo was issued, including the filing of many of the mandatory reports mentioned above. She said that most of the transactions are currently being recorded correctly, but a lot of work remains to go through source documents to fix previous months and years. Shuping said, “Money is not going missing. It’s just hitting the account wrong. It’s an untangling process.”

City will miss reporting deadline for Fiscal Year 2021

Shuping also said that the City will miss the statutory reporting deadline of June 30 for audited financial statements, but they’re hoping to have them complete by September 30 and are communicating with the Auditor General’s office. “You won’t be the first government to have missed it; you won’t be the last government to have missed it… It’s not great, but it happens.” She said the City is unlikely to get a clean audit before 2023.

Poe told Shuping that the city commission had unanimously agreed that this would be “one of the top couple priorities for our organization” and that resources would be made available to complete the task.

During public comment, Nathan Skop told the committee that “this is a critical issue that’s been inadequately addressed… The fact of the matter is that the mayor and the Gainesville City Commission have a fiduciary duty to provide effective management oversight of City government. The mayor and the Gainesville City Commission have negligently failed to provide effective management oversight of City government, as evidenced by State audit findings in this memo, dating back many years. There’s constant excuse-making. Accountability starts at the top of any organization. The city commission and mayor are the head of City government.”

Armando Grundy-Gomes pointed out that a month had elapsed between the distribution of the memo and its discussion at a public meeting: “If your house is on fire, are you going to wait a month to call the fire department?” He said the memo contained a lot of “finger-pointing” at past administrations, but no discussion of why the Interim City Manager hasn’t been able to fill the vacant positions.

Poe asserted that the commission had asked staff “from the beginning” to let them know about anything they needed to fix the problems, and “thus far, throughout all of the work that has been done, there have been no findings of money missing, of any malfeasance or fraud or anything else.” The committee voted unanimously to receive the report.

During general public comment, Jo Beaty said that when the State audit was announced, Poe and others dismissed it as unnecessary. At the time, a letter from Poe stated, “The politically motivated nature of this request is palpable.” Poe also claimed that the letter from State Senator Keith Perry and State Representative Chuck Clemons, asking for the audit, had factual inaccuracies. Beaty asked the committee members to discuss the memo in their full city commission meeting the next day instead of putting it on the consent agenda.

Poe said, “Are we spending money we don’t have? I’d like to know how that trick works.”

“To answer the specific question on whether we’re spending money that we don’t have: When the accounting records are not complete and have not been reconciled, it’s difficult to say with any certainty that the budget has not been exceeded.” – Claudia Rasnick, CFO of GRU

Rasnick replied that everyone was working very hard to complete the reports and financial statements. She continued, “To answer the specific question on whether we’re spending money that we don’t have: When the accounting records are not complete and have not been reconciled, it’s difficult to say with any certainty that the budget has not been exceeded.”

Poe continued to insist that there is no evidence that the City is spending money it doesn’t have.

Executive summary removed from city commission consent agenda and continued to next regular meeting

The topic came up again at the April 21 City Commission meeting, when Commissioner Cynthia Chestnut asked that the memo be removed from the consent agenda and put on a future city commission agenda. Poe pointed out that it wasn’t an action item, just an update.

Saco said, “As you said, Mr. Mayor, it’s just a memo. We talked about it at the Audit Committee. Those are open to the public, open to every commissioner. It is literally a memo that we have to receive. I don’t know why it needs to be put on the regular agenda or continued for that matter… Accept it and move on, and we will have our regular quarterly updates on the situation in progress.”

The commission voted 6-1, with Saco in dissent, to continue that item to their next regular meeting on May 5.

  • Red flashing lights everywhere…
    I hope the local mainstream media is reporting this also, and that people will wake up before it’s too late…

  • People aren’t surprised are they? Poe is and always has been a farce. Wanna be Economics Professor and a POS mayor. He’s probably as much of a make believe father …his children should have a paternity test done just to make sure he was able provide the needed ingredient.

    All you lemmings, he’s got you fooled. STILL.

  • Poe and Saco are like… “So you’re telling us THERE’S A CHANCE everything’s okay with the city’s finances?”

  • It looks like Hampton or Waldo x 1000 fold. When will DeSantis come rescue us?

  • Stop buying trees! Poe needs to go. We need some city commissioners that really know what they are doing and don’t swing left.

  • Jail time and fines will stop the lying. These feckless City leaders must be held accountable. Not just voting them out but severe penalties for misappropriation of citizens money.
    They’re all just giving us the finger, feeling they are invincible.
    Many thanks to the Alachua Chronicle for reporting. Not surprised this is absent from other local media!

  • Good work on whoever got the public information request for that internal memo…how long has GNV been
    Incorporated? How many audits since the beginning?
    You would think they had the accounting procedures in
    Place already after 100 years. Whatever happened to
    The lady employee who got the Brazilian butt lift with the city credit
    Cards? Did she go to jail and pay the city back or was she let go for “equity”…you know, ”that it’s ok to steal to redistribute the wealth”…Was
    There something recently about the city wanting to
    Hire employees without doing background checks too?

  • This is exactly the type of thing that an external audit is supposed to protect against. Unfortunately when you have leadership such as Gainesville, who lack any moral or ethical compass, the corrective action is put behind their own personal agendas. The next question is, “how much corruption is in the city halls?”

    Poe is an idiot. He asked, “Are we spending money we don’t have?” What does he think the city has been doing for years now? There’s an old saying that there’s never a stupid question. The follow-up is sometimes stupid people ask stupid questions. That is the elected mayor of Gainesville. If we had a penny for every ounce of stupid in him, the city wouldn’t have any debt.

    Question for voters will be, “would you trust these leaders to balance your checkbook?”

  • Rainy Day Fun Fund? (Maybe someday people will realize their payment to the IRS pays for no government services)

    Is the “law enforcement community” ever going to investigate the lethal vaxxers? Is the “law enforcement community” the same thing as the lethal vaxxers?

    • “Poe continued to insist that there is no evidence that the City is spending money it doesn’t have.”

      • Tip one’s hand: To reveal one’s intentions, plans, secrets, or resources. An allusion to letting someone else see the cards one is currently holding (one’s “hand”)

  • Many of these posts either, stated, or alluded to Mayor Poe being dead center in the fiscal incompetence of the city. Well, come August there is a choice. Ed Beilarski is a competent manager that knows when they are spending money they don’t have and will do a much better job than Poe.

  • GovernmentalCriminals MuzzledSmilesWhileDoingEvil HappyBluePrintRedDevilVille (ThomasBrinkleyMichaelCraveyStill)

  • The Workday project was a joke. Multiple internal employees waving flags at the poor project management and inadequate understanding of the prior systems or Workday by the internal project manager and her team leading to an extremely poor implementation. Feldman just wanted to get it
    done. I have it on good notice that Curry hired Feldman for his first job in municipal government and he hired her as a consultant before the current Commission employed her as City Manager. Anyone doing a quick internet search will see that she barely escaped criminal prosecution for her own consulting business as a subcontractor for the Miami International Airport project after her company double-billed the county for work on the expansion. Whatever happened to ethics in government? The commission had to have done a background check and have some knowledge of her very questionable history. This is who they decided to hire to lead the City? The Finance Director was also a Feldman protegee from south Florida and she was hired by him which is why so many employees quit working in that department as she was heavy handed and onerous. The City needs to be combined with the County and all the issues exposed to the sunshine and light. It will not get any better under current leadership.

  • Vote all the Commissioners out. They hired Curry who was a Feldman protegee who hired him into his first job in city government years before he was hired in Gainesville. He recommended her for the job. She had her own questionable background for questionable billing by her own consulting firm on the Miami International Airport project. She narrowly avoided criminal charges. I don’t know why anyone hasn’t looked into her background or brought any of that information out into the sunlight. The Commission knew all about this and still hired her. She apparently knows her way around some interesting creative accounting processes. Combine the City with the County and clean house.

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