Half-million at risk in Mount Carmel over missed audit deadline
MOUNT CARMEL - Grant money totaling more than $500,000 is in jeopardy after the borough's transit director reportedly failed to file a mandatory audit.
Borough manager Edward Cuff III was notified by the state Department of Community and Economic Development (DCED) July 21 that a federal single audit, required by all entities spending more than $500,000 of government money, was not filed by the June 30 deadline for the Lower Anthracite Transit Authority (LATS).
Megan Janolek, as LATS director, would have been responsible for the audit. Janolek is already under fire from the council for reported bookkeeping mistakes, and the borough is advertising for a replacement.
The audit is required to be filed to the Commonwealth's Single Audit Clearing House within nine months after the close of the municipality's fiscal year.
In an e-mail, Margie Stahl, DCED administrative officer, said she warned Janolek by phone June 11 the borough would be flagged if the audit was not complete by the deadline.
"After numerous attempts, via phone and e-mail beginning 2/20/14, we still have not received the single audit," Stahl wrote.
If flagged for non-compliance, the borough will be ineligible for grant funding until the audit is completed and any other delinquencies are corrected.
Not flagged yet
Heidi Havens, DCED press secretary, said Tuesday the borough has not yet been flagged.
"DCED will continue to work with them and offer technical support and assistance as the borough continues to make an attempt to submit their audit," said Havens.
In 2012, Mount Carmel received approximately $552,378 in federal funding. DCED contributed $108,247.98 in the form of a Community Development Block Grant (CDBG), and another $254,632.73 through the Home Investment Partnerships program.
The borough also received $188,402 from the Department of Transportation and $1,095.38 from the Department of General Services.
As the largest contributor in grant money to the borough, DCED is responsible for reconciling any differences in the distribution of the money and to resolve any findings.
Mount Carmel Borough serves as administrator for LATS, a public transit system that serves eastern Northumberland County.
No word on hiring, firing
Borough council voted to open Janolek's position July 17 in the wake of the discovery of numerous bookkeeping errors, including a $67,175.87 transfer of funds to reconcile a year-end discrepancy.
Borough council president Tony Matulewicz estimates the borough will have to pay an accountant $2,000 to fix the books.
At the time, Matulewicz said council had decided not to terminate her until they had further investigated the situation. He would not comment on if she would be terminated at the Aug. 21 meeting or if anyone had yet applied for the position.
While Janolek explained one of the major mistakes the day after problems were first reported by council, and said the problem was corrected, she has otherwise said she does not want to comment.
Matulewicz wasn't satisfied with her explanation.
Janolek was appointed full-time executive director of LATS in July 2012 after already serving as borough treasurer. On March 1, her treasurer duties were transferred to Cuff so she could focus on managing LATS.
Owes PennDOT, too
The borough also will lose $263,509 in state funding in 2014-15 - three-quarters of its operating budget - to reimburse for six years of "overstated" LATS senior citizen ridership numbers and to pay a 25 percent penalty.
A PennDOT report from earlier this year said a LATS policy directed drivers to count senior passengers on the vehicle each time the bus crossed a municipal boundary.
Because of that, funding from Section 1513 grants will be decreased by $229,111 in reparation for the overbilling from fiscal years 2005-06 through 2010-11, according to a letter received Aug. 5 from Toby L. Fauver, PennDOT deputy secretary of multi-modal transportation. PennDOT calculated the amount using revised ridership data to come up with the reimbursements, which totaled $183,289, and imposed the 25 percent penalty - another $45,822 - for the inaccurate statements. Section 1513 grants are for senior citizen ridership.
For Section 1517 funding - applying to total ridership but also including senior citizens - LATS overbilled the state $34,398, Fauver said. That was added to the $229,111 to create the $263,509 total.
The LATS budget for 2014-15 is $348,992, as approved by borough council in May.