A New Day at the ICA

Print Friendly, PDF & Email

 

Summary: A few weeks ago in mid-September, the Intergovernmental Cooperation Authority (ICA or oversight board) received an outside audit covering its financial activities for fiscal years 2015 and 2016. The audit covered the period which saw major changes in the oversight board’s makeup and governing statute. The statutory requirements related to actions taken by the ICA following receipt of the audit have been performed in a much improved fashion compared to prior years.

 

The oversight board was in the midst of several very troubling issues two years ago. In November 2015 the Auditor General of Pennsylvania released a special report carried out at the request of the mayor of Pittsburgh who was disputing the ICA’s withholding of the gaming assessment funds paid to the city by Rivers Casino. In a serious warning, the report stated “…disputes between the city and the ICA …threaten to derail the [city’s financial] progress”.

The Auditor General made seven recommendations for the oversight board and five for the city. The report concluded that a tradeoff be made: the city would pledge to use gaming money for pensions and the state would dissolve the ICA.

At the time the oversight board had two seated members out of the five stipulated by law (Act 11 of 2004) and really could not conduct business for lack of a quorum. An Allegheny Institute Policy Brief (Vol.15, No.56) called upon state elected officials charged with making appointments (the governor and the legislative leaders) to fill their vacancies. By March 2016 appointments had been made bringing the board to its full complement of five members. A lengthy newspaper investigation found serious problems with financial record keeping at the ICA whereupon the reconstituted board opted to terminate the employment of the executive director effective May 31, 2016.

A second Policy Brief in April of 2016 (Vol.16, No.17) documented a major ICA failure in carrying out the legal requirement (Section 207 of Act 11) stipulating that audits of the ICA be sent to the respective House and Senate Appropriations committees and a financial statement be published in the Pennsylvania Bulletin. The Brief found that audits were not being sent to the committees nor were financial statements being sent to the Bulletin in direct violation of the statutory requirements. Also in April 2016, the Allegheny County District Attorney seized ICA financial documents.

Three months later, the governor signed legislation that became Act 99 of 2016. The law made several changes to the oversight board’s governing statute. Amendments were made to the board’s quorum requirements, the application of laws on open records and procurement to the ICA, the requirement of a publicly available website, how gaming money was to be handled, and the length of existence of the ICA. The law also changed Section 207 to require the audit and the submission process to be completed “by December 31 following the end of each fiscal year.”

Failure to meet the December 31 requirement for 2015 and 2016 was caused by the aforementioned document seizure. Without financial records an audit could not be completed, let alone by the Act 99 deadline. Those documents were returned by the District Attorney’s Office in December 2016 (the office closed the investigation of the ICA in June and no criminal charges were filed) and the audit was completed with a signed date of September 15, 2017. The audit summarized the legal events in its managerial discussion section. It showed that at the end of fiscal year 2016 the oversight board ended the year with a net position of $19 million, with most of the balance related to the gaming money for the city (the treatment of gaming money between the ICA and the city was significantly altered by Act 99 and the new gaming legislation, Act 42).

So how well has the ICA complied with Section 207’s requirement to submit the completed audit to the Appropriations committees and the publication of a financial statement in the Pennsylvania Bulletin?

According to the ICA’s executive director the audit has been submitted to the committees. Communication with the respective committees found that the House Appropriations Committee (both majority and minority) received copies of the audit. The Senate Appropriations Committee (majority) could not locate its copy but attributed it to staff transition in the office. The Senate Appropriations Committee (minority) did not respond as to whether it did or did not receive the audit. While it is not known what level of scrutiny the committees will give the audit, the fact that they have it is much better than the situation when the ICA was not submitting audits.

As of the November 11 issue of the Bulletin nothing had been published concerning the concise financial statement as required by Section 207. However, according to the ICA executive director the submission to the Bulletin is forthcoming. The publications in the Bulletin by the Pennsylvania Intergovernmental Cooperation Authority (PICA) that oversees the City of Philadelphia’s finances go back as far as the late 1990s are a brief summation of the Authority’s finances for a given fiscal year, with the most recent one (for fiscal year 2017) published in the November 4 Bulletin. The PICA report could serve as a model for the oversight board’s notice when it is published.

Things appear to be turning around for the oversight board, which is scheduled to be in place until at least June 30, 2019 according to the language of Act 99. It is encouraging to see a full board, a functioning website, and requirements being carried out by the executive director. Perhaps this bodes well for ICA-city relations going forward and improvement in the city’s financial health.

Print Friendly, PDF & Email
Allegheny Institute
Allegheny Institute

The Allegheny Institute is a non-profit research and education organization. Our mission is to defend the interests of taxpayers, citizens and businesses against an increasingly burdensome and intrusive government.

Subscribe to Our Newsletter

Weekly insights on the markets and financial planning.

Recent Posts