The Haines Borough received a largely clean bill of health on its latest financial audit, though problems with grant management resulted in funding losses and failure to meet match requirements.
Accountant Max Mertz also observed the borough continues to keep a healthy amount of savings stockpiled: roughly $15 million, with $8.7 million in the permanent fund and $4.1 million in the general fund comprising the majority of it.
In terms of municipalities of the Haines Borough’s size, “there are few that have the kind of resources you have,” Mertz said. “You’re in a pretty darn good position.”
“Frankly, the community is fortunate,” Mertz continued. “You’ve been very careful about the money that you’ve raised in the past and the money has been set aside for a rainy day. And it looks like we might be at a point where you need it.”
Interim manager Brad Ryan, who is drafting the borough’s budget for the upcoming fiscal year, said before the state’s recent financial downturn, he would have been in favor of spending a good chunk of those reserves.
“If we weren’t in the fiscal state we are in at this point, I’d probably be more aggressive about spending it, but right now it’s looking like a pretty nice buffer,” Ryan said. “I don’t have plans to spend down a significant amount of it, but I think we will look at dipping into a little bit of it.”
Mertz’s main suggestion upon conducting the audit was to re-evaluate current procedures for grant oversight. In fiscal year 2015, Mertz noted, the borough failed to submit some state grant reports on a timely basis, lost $15,000 due to improper close-out procedures with grants, and failed to meet a required match for a federal grant.
“These (issues) indicate a higher risk for noncompliance which could impact future funding,” Mertz said. “Responsibility for monitoring grant reporting and compliance is distributed among multiple people causing gaps in controls that, in our opinion, led in part to the condition above.”
Interim manager Ryan, who had been looking at hiring an executive assistant to the manager before the audit, said the document’s findings reinforced his belief that such a position would be valuable.
“There are grants that we have never applied for that I see that could be good for the borough as far as economic development or infrastructure, but the manager doesn’t have the time to go pursue those,” he said.
Ryan said he would like to hire someone with strong grant management skills and an understanding of the public facilities department. He intends to include the position in the upcoming budget.
Chief fiscal officer Jila Stuart said she also supports creation of such a position, as grant management has been so fragmented in the past.
“I think it’s because there hasn’t been one person with training who is responsible for it,” Stuart said. “In the past, it had been delegated out to various people – like various department heads – and sometimes there are people who are good at managing their department but they’re not necessarily grant administrators.”
Two Picture Point grants, which were managed by at least three different people, presented some problems; that’s where the borough failed to meet a required match because “the grant administrator was unaware of all grant requirements,” Mertz said.
The borough’s Alaska Energy Authority biomass grant has also had some “issues” with timely reporting, Stuart said. “I think that the reporting is more or less up to date right now,” she said.
Another recommendation auditors continue to make year after year is to make the Haines Sheldon Museum a department of the borough, rather than a component unit. The library underwent the transition from component unit to department several years ago.
Accountant Mertz said the issue is mainly administrative, as keeping the museum as a component unit means there are separate books and payroll. “Folding it in from a budgeting and reporting standpoint would be more efficient,” he said.
Interim manager Ryan said he is still investigating whether to pursue that recommendation. “There is still some debate about whether the (museum) board wants it and can the borough really afford that, but I haven’t vetted it really well yet,” he said.