DUBOIS – A series of discovered budget errors has left the City of DuBois with a $919,000 budget deficit.
During Monday’s council meeting, it was reported that the errors were discovered by City Financial Director Delean Shepard and involve workers’ compensation, insurance, debt service interest and principal payments.
The city will address this new deficit by making budget cuts in all city departments. Specifics will be made public on the city’s Web site.
Council expects to take official action at its next meeting, which was rescheduled to Tuesday, May 28 at 6 p.m.
Both Engineer (and former Interim City Manager) Chris Nasuti and Mayor Pat Reasinger took some blame for not catching the errors during the budget process.
Per information provided to local media, these errors weren’t all universally more costly for the City of DuBois.
For example, workers’ compensation errors Included $38,648.79 in overspending and $2,399.71 in under-spending for a total deficit of $36,249.08.
In the meeting and summary, insurance was also listed as a source of errors. But, these budget errors were in the city’s benefit.
The combined insurance errors were recorded as $63,642.87 less than budgeted.
Most of the $919,155 deficit results from incorrect principle and interest payments on the city’s 2012, 2013, 2015 and 2021 loans.
Loans
Council also reported that it will explore the possibility of refinancing three of the city’s loans. It still has five outstanding loans totaling approximately $14 million.
According to the information regarding the budget errors, the 2012, 2013, 2015 and 2021 loans alone cost the City of DuBois $1,038,697.77 in combined principle and interest payments.
Two of these five loans have reasonable interest rates; but, the remaining three have variable rates.
When asked, City Manager Shawn Arbaugh said the existence of loans taken out at the time of the consolidation study were known; however, the interest rates on the loans was a total surprise for them.
At this point, the city still needs to work out some details surrounding the possible refinancing.
Arbaugh did indicate there’s no reason to suspect anything nefarious happened but said prior accounting methods did make it difficult to account for all uses of the funds.
Reasinger said some was used to balance the budget, though it was harder to determine the direct impact of the loans on the city’s general fund as prior city governments pooled the general fund with the water/sewer funds.
Arbaugh, when asked, said the city will not go “bankrupt.”
Reasinger said the city isn’t in good shape, but is in an okay but solid shape. “No payments have been missed; there is still money in the general fund.”
And, “we plan on spending less than we take in,” added Reasinger.
