Tag Archives: audit

Legislature Should Amend the Law to Allow County to Audit the SEA

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Once again the battle between Allegheny County Controller and the City-County owned Sports and Exhibition Authority (SEA) has bubbled to the surface.  She seeks the right to audit the Authority’s performance, particularly the practice of giving out free tickets to venues they own.  They say it isn’t under her jurisdiction.  She hasn’t been deterred and the SEA is asking an Allegheny County judge to stop an audit.

 

More than likely the SEA will succeed.  As we had written earlier this year (Policy Brief Volume 15, Number 4) the law authorizing the SEA (Act 85 of 2000), states that as long as the Authority has a certified public accountant examine its books, accounts, and records annually then they fulfill their public obligation.  If they fail to do so, “then the controller, auditors, or accountant designated by the county or city is hereby authorized and empowered from time to time to examine at the expense of the Authority, the accounts and books of the Authority, including its receipts, disbursements, contracts, leases, sinking funds, investments and any other matters relating to its finances, operations and affairs.  The Attorney General shall have the right to examine the books, accounts, and records of any Authority.”

 

That is correct—the Attorney General has the right to do an audit as specified in the law creating the SEA.  Not the Auditor General, whose office has expertise in such matters.  The Attorney General is currently too embroiled in her own scandal to care about a ticket giveaway program at the SEA.   Furthermore as the State’s top law enforcement officer, she lacks the skills to do such an audit.  This was done deliberately by the authors of the law to limit governmental scrutiny of the SEA.

 

But the remedy is quite easy.  The Legislature can simply pass a one sentence amendment to Act 85 to enable the County Controller the right to audit.  They can change it to give the County controller the right to do the audit.  If the Authority is operating above board, they shouldn’t care who does the audit.  The awarding of tickets to events at SEA venues has the look of buying favors or rewarding past support.  The public has a right to know whether this entity is operating properly.  This is especially true since the public provided a large portion of the funds the SEA used to build its facilities.

City-County Cooperation Stalls

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In a new audit the City Controller takes the City’s rental car policy to task, noting that Pittsburgh is paying much more for renting similar type vehicles than Allegheny County does, even though there have been opportunities for the City to join the County in a combined bid.

Perhaps there are good reasons why the City stayed put with its current vendor, the same one it has had since 2006, rather than going with the County. There’s no response contained in the audit from the people in charge of the City’s rentals (most of them are for police and parks) so it is hard to speculate. But one has to wonder what it could be when for the price of a four month minivan rental for the City equates to over eleven months for the County under their contract. The Controller also stated that "oversight by City personnel of these invoices appears minimal".

It basically boils down to (1) looking for savings and (2) watching the bottom line. Ironically, the audit points out that the City in 2008 "had an opportunity to join the County in its request for bid (RFB) issuance, but declined". That is the same year when the Task Force on how to merge the City and the County released their report in favor of the concept. That report wanted a clear commitment from the Mayor and the Executive to further efforts at cooperation.

The Allegheny Institute commented on the rental car issue over the summer in a media interview.

Do Homeowners Get It?

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Reaction is coming in to the County Controller’s audit of the contractor that performed the reassessment. The audit deals with four main findings: the contract provisions were satisfied, but they were weak; the project was not completed in the timeframe; the County’s Office of Property Assessments (OPA) did not adhere to its contract provisions; and various internal control deficiencies.

There’s plenty of data as the Controller’s office calculated median, mean, coefficient of dispersion, and price related differential for sales covering two time periods and displayed the results by municipality and school district. There is a response to the audit from OPA, which basically concludes that the property tax system in the Commonwealth is flawed and needs reformed.

What’s very important to note is that in at least two instances the audit goes to great length to dispel the notion that a reassessment automatically causes a tax increase. We noted earlier this year that the County’s reassessment page published a quick and handy guide to this fact, and the Controller’s audit notes that "it is important to understand that a taxpayer’s tax liability will not necessarily increase when the assessed value of their property increases" and "one of the common misconceptions held by Allegheny County property owners about the reassessment is that the reassessment will automatically result in a higher property tax bill for the homeowner…"

By detailing the anti-windfall provisions in Act 71 and Act 1 along with providing examples of homes the Controller’s office has provided another voice to counteract the drumbeat of "reassessments mean higher taxes" that has been so prevalent in the near decade long tussle over revaluations.

A Snapshot of PAT Data as the Connector Begins Service

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With the opening of the North Shore Connector and the extension of the trolley line to the North Shore, and until there is the extension of the project to the airport or the North Hills as boosters of the project have used as justification, it is important to take a snapshot of light rail operations as they are in order to establish baseline for comparison to future operating data.

This year’s Port Authority budget (2011-12) put in some growth in rail ridership (less than 1%) and expenses (5.2%) due to the opening of the Connector. But actual and audited numbers for PAT’s light rail system (in the 2010-11 fiscal year) without the Connector’s impact shows the following:

  • Total Rail Ridership: 6,918,000
  • Total Passenger Revenue: $9,811,000
  • Total Other Revenue: $295,000
  • Total Expense: $49,038,000
  • Total Rail Employees: 468
  • Total Length of system: 48.9 miles
  • Total Rail Vehicles: 83

The critical measure we can glean from this data is "total expense per rider" which stands at $7.08. Of course, this does not take into account the capital expense for the existing rail system which would boost the expense per rider significantly higher. But as the Connector leg gets up and operating and ridership numbers come in it will be easy to see from PAT’s numbers what happens to the total expense per rider. Based on FY11 numbers, a light rail trip was about $1.50 more than a PAT bus trip.

More than 80% of the total expense for light rail is accounted for by salaries and benefits, leaving $9 million or so to be spread between materials, utilities, provisions for injuries and damages, purchased services, and other. Passenger revenue ($9.8 million) covers about 20% of total expense. Recall that until 2015 corporate sponsorships are underwriting free trips between Downtown and the North Shore stations (and vice versa) so "other" revenue on the light rail system may rise slightly relative to passenger revenue.

Budget, Panic, Repeat

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"Do not have officers work when you can’t pay them … or we’re going to face the same thing again". This from the solicitor to the commissioners of North Versailles Township, a Mon Valley community, on the problems that are facing the township and its police department.

Rewind to the beginning of the year: according to newspaper reports, the town had such financial difficulty that it could not pay its employees for a week, including 18 police officers. An audit of the town’s financial practices found that the "internal control environment was virtually nonexistent, lacked a sense of accountability and responsibility and was ineffectively monitored by the governing body".

Here’s what has happened as a result of the mismanagement: police officers went to court and won a $33k settlement for back pay. And since the town’s police budget was cut nearly 20 percent from $1.2 million to $980k for this year but the commissioners did not mandate any layoffs, the cycle repeats itself. At the time of the budget cut, the chief of police noted "are we going to go over budget this year? Absolutely. … And then next year, I don’t know what’s going to happen".

Thanks to some money from the Federal government and a resignation of one officer and lower spending on other items things are less bleak than they could be. North Versailles even gets a payment from neighboring Wilmerding for patrolling that community. It may not be long before North Versailles is looking for a town to do the same for it.