Report clarifies tower ambulance fund balance

Marshal Helmberger

TOUR— For nearly three years, officials at the City of Tower have been accused of “stealing” nearly $ 1 million in apparent profits from the city’s ambulance service to fund city projects and other expenses.
Annual reports from the city’s auditors seemed to reinforce these allegations, as they pointed to huge fund balances in the ambulance fund, which tipped the scales at nearly $ 900,000 in 2018.
In some cases, residents of the city and neighboring townships who contribute to the city’s ambulance replacement fund have requested that the city reimburse the money to the ambulance service.
Yet after several months of investigation, including lengthy discussions with city auditors and a review of more than 33,000 journal entries between 2006 and 2018, city officials revealed at Monday’s city council meeting. that much of the fund’s balance had never existed.
Rather, it was a case study showing how government accounting rules don’t fit easily with a medical payment system where the bills providers send to insurers rarely coincide with the actual payments the provider will receive. ultimately.
“What auditors record in the fund balance is the amount charged for ambulance services,” according to a report on the city council agenda drafted by acting mayor Dave Setterberg with support from Victoria Ranua, Clerk-Treasurer. “When we charge for the ambulance, we can charge $ 3,000 and only receive $ 500,” Setterberg noted in Monday’s meeting.
The disparity reflects the different ways in which municipal and government accountants track income and expenses. The City of Tower has long operated on a cash basis, which means that income and expenses are recorded in the city’s accounting program as the money associated with it comes in or goes out.
Government accountants, on the other hand, record income and expenses as they are billed or incurred, although it may be weeks or months before funds arrive or that the bills are paid. At the end of the year, the auditors convert the city’s financial statements from the cash method of accounting to the accrual method of accounting. While the change does not affect most of the city funds much, the city ambulance fund does not.
The council’s report provided this week explains: “Unlike other businesses or government activities, the amount received for medical services is almost always LESS than the amount charged. This is different from our Hoodoo Point campground, airport fuel, or utility funds. What we charge for overnight camping, a gallon of aviation gas, or quarterly utility use is typically what we receive with only minor adjustments for canceled reservations, fuel equipment malfunction, or late payment of utilities. The City of Tower or its billing contractor charges for the ambulance services provided. What the patient’s insurance company pays is usually less or much less than the amount billed.
This discrepancy is not a problem for a city that manages its cash books, since the city only records the amount of money actually received from an ambulance bill. But auditors, using the accrual method of accounting, calculate ambulance revenues based on what was billed, not what actually happened. This means that ambulance fund balances shown in audit reports never existed, at least not in cash, and far from the amounts described by auditors.
The disparity is a reminder that government accounting is very different from the way most people track money, a point Setterberg said the city’s auditor Devin Ceglar made clear in a meeting to discuss of the question. “He said most people shouldn’t read audits thinking they understand them,” Setterberg recalled. “It was a revelation.”
Partly because the auditors never explained this disparity in their annual reports, it allowed a dispute to linger for years over the balance of the ambulance fund, allegedly used by the city to pay for purposes. non-ambulatory, which was largely a fiction.
By exaggerating the revenues of the city ambulance service, the auditors also exaggerated the true balance of funds of the service. And because auditors are required to balance municipal funds at the end of the year, auditors routinely used these apparent ambulance service surpluses to cover, at least on paper, deficits that appeared in other funds. municipal. These calculations were reflected in a “Due To-Due From” analysis that the auditors provided each year, which suggested that the city had borrowed heavily from ambulance service when there is little reason to believe that this is the time. case. Setterberg’s investigation uncovered two cash transfers from the ambulance service to the general fund, both made in 2014, though neither exceeded a few thousand dollars and appeared to correct entries.
The auditors recognize that many of the funds they have included in their accounts as ambulance revenue will never be received given the disparities between the invoices that go out and the actual payments received. In effect, they track this amount in a separate fund, which they have dubbed “dubious allowance accounts”. The exact amount of that total is not entirely clear, Setterberg notes, due to the confusing nature of the thousands of diary entries he examined in his investigation. Setterberg and Ranua both noted that many diary entries in the past were not well supported by notes, an issue she said the city has already addressed in the future.
Due to the lack of supporting notes with all journal entries, Setterberg acknowledged that it was difficult to keep track of some of the adjustments made over time. So, he used another method to determine the actual cash balance that the department should have available, by totaling all income and expenses entered into the city’s Banyon accounting software between 2009 and 2018.
“Rather than trying to sort through the quagmire of all the journal entries, we know we have all the income and expenses entered into the system,” he told the board.
This analysis showed a total of all sources of income of $ 3,027,352 versus $ 2,596,024 in expenses, for a total ten-year fund surplus, or balance, of $ 431,328. This is less than half of the fund balance of $ 883,000 that auditors reported in 2018. In both cases, these balances included $ 125,990 in township contributions dedicated to the ambulance replacement as well as $ 133,470. an insurance settlement following a fire in 2014 that damaged the old fire / ambulance. garage hall, which Setterberg assumed to be dedicated to future capital expenditure. Ambulance service, to date, has not replaced the garage, which was eventually sold to a private buyer and moved to a new location.
According to Setterberg’s analysis, the actual ambulance service unallocated fund balance from 2009 to 2018 was only $ 171,868. It is difficult to determine how much of this money was still in the city’s ambulance account at the end of 2018 because ambulance funds were not segregated from the checking account of general funds at that time.
Ranua addressed this problem early on by creating a separate bank account for ambulance operations, which will make financial tracking easier in the future.
While some have called for a forensic audit to dig deeper into the ambulance fund, Setterberg said it was pretty clear to him that there had never been a large balance of real money within the service. ambulance.
Ranua said the situation helps illustrate the value of good budgeting. “We should change the budget during the year so that we don’t have these weird conversations about funds that never existed and that we will never receive. “
Other board action
In other Monday business, counsel:
• Approved the publication of his vacant post of mayor for two weeks, with an application deadline of November 1, 2021.
• Appointed Setterberg to replace former mayor Orlyn Kringstad at both the Tower Economic Development Authority and the Gundersen Trust.
• Heard from Ranua that several jobs in town currently paid with wages do not meet standards for salaried workers and should be converted to hourly. She said she would discuss the duties and time required for the various positions with the employees to develop a recommendation for hourly wages. City council members will likely be paid per meeting again.
• Gave the first reading of Ordinance 2, which concerns connections to public services.
• Council member Joe Morin told him he had received an estimate for city grader repairs totaling $ 21,000. “They think that with the repairs, the grader could work again,” he said. Morin said he is also contacting companies about the possibility of renting a grader.
• Took no action regarding the possible sale of the old city police vehicle.
• Agreed to submit the ambulance replacement contract to the townships in the region for signature, as is. “We can’t wait any longer on this,” said Kevin Norby, board member. Setterberg agreed, noting that some townships are delaying payment of their ambulance grant until the contract is in place.
• Presented action on a possible adjustment to the race requirement for the city’s EMTs and EMRs. Norby and Setterberg will meet with ambulance manager Dena Suihkonen ahead of the next meeting to discuss the matter.
• Filed an action on a demand by former maintenance supervisor Randy Johnson to have the city pay him $ 1,773 for the lost investment income he would have received had the city transferred funds on his behalf to a state pension program to cover her current health costs. The city was supposed to transfer the funds when Johnson retired in 2018, but never did, and Johnson said he lost investment income as a result. The board discussed the matter at length and seemed to agree that paying it was appropriate, although they wanted more time to determine what amount would be appropriate.

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