Attorney: Former controller not sharing audits with commission ‘unusual,’ not illegal

Posted at 5:58 PM, Aug 23, 2016
and last updated 2016-08-23 18:10:04-04

MONTCALM COUNTY, Mich. — An attorney with the law firm officially hired on Monday by the county to investigate a looming $1.5 million budget deficit said the former county controller's decision not to review annual audits with commissioners for several years was unusual, but not illegal.

Officials in Montcalm County are staring down a ballooning deficit, compounded by recent revelations that roughly $2 million had been taken out of the county's savings annually to balance the budget since 2012, ultimately amounting to nearly $9 million in savings drained in just four years.

On Monday, the county board of commissioners unanimously approved the hiring of the Clark Hill law firm from Detroit to investigate previous budgetary practices and formulate a plan to balance future budgets. Commissioners also approved contracting with Municipal Financial Consultants Inc. to assist Clark Hill in the investigation.

“We’re satisfied, at least I am personally, that a good deal of what led up to this was not disclosed properly to the board of commissioners," John Axe, attorney for Clark Hill, said during Monday's commission meeting.

Axe said his preliminary review of the situation revealed that in the past four years, auditors did not have meetings with the board of commissioners or the chairman of the commission, opting instead only to share information with the former country controller who chose not to review the information with others.

"That may not be illegal, but it is certainly unusual," Axe said. “We will review and we will determine if there were any laws broken at any point along the line.”

Chris Hyzer stepped down as Montcalm's county controller in April to take a job as finance director in Ionia County. Previously, Hyzer had been employed by Abraham & Gaffney, the same firm which had been contracted to perform the annual audits for the county.

Reached by phone late Tuesday, Hyzer told FOX 17 he knew the county had been pulling money from savings to balance the budget during his tenure, but said he was not familiar with the larger figures recently uncovered.

"Looking back, it was just poor communication on my part," Hyzer said, admitting he chose not to review audits with commissioners.

Hyzer declined requests to discuss the matter further on camera, saying he was trying to focus on his new duties as finance director of Ionia County.

Bob Clingenpeel took over the duties of controller for Montcalm county in May.

"I’ve known these commissioners for 10 years and they certainly did not know the level we were in," Clingenpeel told FOX 17 on Monday. "My job has really become informing and educating as far as where we’re at.”

Clingenpeel said this year was the first time in four years auditors presented to the full board, "once they presented, we started asking questions."

Patrick Carr, long-time chairman of the board, said under Hyzer's tenure he didn't remember any obvious red flags.

“It’s just hard to imagine why we weren’t aware," Carr said. "We thought we were overspending by a couple hundred thousand dollars out of our fund balance, so it was alarming to figure out we were actually spending that much more than what we thought."

According to averages compiled by Municipal Financial Consultants Inc., the county spent $1.5 million in 2012, $2.3 million in 2013, $2.5 million in 2014, and $2.3 million in 2015 from the general and delinquent tax fund to make up budget shortfalls.

The county needs to reduce its expenses by an estimated $1.5 million, but Clingenpeel admits that estimate could still be low.

County officials are facing down a Sept. 12 deadline to submit a deficit reduction plan to the state. Failure to do so could result in the withholding of a portion of funding provided through revenue sharing.

The county must approve a new budget by Sept. 30.

Asked about the potential for cuts to departments and services, Clingenpeel said everything from parks to public safety is on the table. In May, the county floated the idea of closing the local animal shelter and shuttering some county parks, options that still remain, Clingenpeel said.