Auditor's office to address investment tug-of-war

FINDLAY — Tensions are bound to be running high Tuesday, as the Findlay City Auditor's Office takes center stage to deliver its mid-year budget review. Findlay City Council's Appropriations Committee will meet at 4 p.m. Tuesday to hear the review, before council's regular meeting at 6 p.m. Both meetings will be held at the Findlay Municipal Building, 318 Dorney Plaza, and will be livestreamed on the city's YouTube channel: Findlay Ohio. Mid-year budget reviews were first established by a resolution of council in 2008, as a means to check in on the city's financial health and prepare for budget talks for the following year. In this year's budget review, the auditor's office is expected to address the ongoing tug-of-war over the city's investment polices that has the auditor and council at odds. Even council is split on the issue. In a split vote on July 15, Findlay City Council agreed to form an Ad Hoc Investment Committee charged with developing recommendations to update the city's investment policy, which could include hiring a third-party professional portfolio manager. The vote was 6-4, with council members Holly Frische, R-1, Jim Niemeyer, R-6, and at-large Republican council members Randy Greeno and Jeff Wobser opposed. The vote was promoted by a letter to council, signed by three of its members, and included on the agenda. The letter, dated July 9, was signed by council members Dennis Hellmann, R-2, Beth Warnecke, R-3, and Dan DeArment, R-4, and asked council to address their concerns about the management of the city's investment accounts. "So this whole issue around investments started over a year ago, when I was asking basic questions about our investments with no substantive answers," said DeArment. "So, I started peeling back the layers and learning more, and this has evolved into looking at the entire process around our investments: communication, transparency, reporting, accountability and strategy. Every aspect needs to be evaluated against best practices." Staschiak said the issue would be best handled by council's Appropriation Committee and said formation of the ad hoc committee is "not proper." He said the letter has "too much personalities" and politics. In April, DeArment and Warnecke sought legislation to revise the city's investment policy. Two supporting members of council are required to request legislation. So far, no legislation has been introduced. Members of council serving on the Appropriation Committee include Warnecke, Frische, Josh Palmer, R-7, and Greeno, with Wobser serving as chairman. The city's investment total as of March 31, according to the auditor's report to council on April 15, was $95 million, invested over several funds. The invested amount is not leftover money. Municipalities routinely invest their cash flow to generate returns until access to the money is needed. In the July 9 letter, council members state that a policy change could have earned the city as much as $2.3 million more on its investments since 2023. Staschiak continues to express frustration over the issue and has accused DeArment of political gamesmanship. "But in terms of trying to talk to this group, it's become very frustrating. And this letter fully illustrates that, and it was so frustrating. My deputy auditor is in the audience tonight because she's beside herself in terms of the misstatement of facts and information. We don't know if it's a misunderstanding. We don't know if it's not paying attention. We don't know if it's intentional," Staschiak said at the July 15 meeting. The budget update is also likely to come with red flags from the auditor's office. In May, Findlay Mayor Christina Muryn returned about $709,000 in de-appropriated funds from the city's operating budget for the first quarter of 2025. Council rushed through legislation de-appropriating the money at its regular meeting on May 7. Most of the de-appropriated money, a total of $600,000, had been budgeted for the city's prisoner and jail expenses. The money was set aside as the city braced for the closing of the Hancock County jail, an idea touted by the Hancock County Board of Commissioners late last year that was later abandoned. Closing the jail would have more than doubled the city's expenses for the incarceration of inmates. In December, Muryn said her administration will de-appropriate unspent funds throughout the year and return the money to the general fund. City departments typically return about 8% of the budget at the end of the year. The de-appropriations are meant to assure council that the city can overcome projected budget deficits this year and next. At the July 1 meeting of city council, Staschiak reported that both income tax and business tax collections are lagging behind projections. Income tax collections are down about $1.4 million to date, and by the end of the year, business tax collections could be off as much as $2 million. Earlier this year, council adopted a deficit budget for city operations. Findlay is expected to spend $41.5 million to operate in 2025. Income tax collections in 2025 are expected to be $32.1 million. The budget shows city spending outpacing revenue by $5.8 million in 2025 and $7.6 million in 2026, with the city's year-end cash balance dropping to about $17 million by the end of 2025. Findlay routinely adopts deficit budgets, and then city departments work throughout the year to keep spending under budget. However, Staschiak has called it "the largest two-year deficit proposed since the Great Recession" and an indicator that the city's budget is no longer sustainable. Wage concessions and the end of the "huge windfalls" in business taxes are driving the deficits, according to Staschiak.