At the June 16 Saratoga Springs City Council Meeting, Finance Commissioner JoAnne Kiernan did a presentation on the city’s finances. People who follow this blog know that I have written extensively, and regrettably, about the utter mismanagement in the Finance Department under former Finance Commissioner Minita Sanghvi. For four years, Ms. Sanghvi failed to provide accurate and readable financial reports. As her email auto reply continued to affirm during her term in office, she viewed her job as part-time, and the result has been a debacle. She simply failed to devote the time required to both understand and manage the city’s money. Her budgets often had wildly optimistic assumptions about city income and projected expenses that were obviously inadequate given past spending patterns. Now the proverbial chickens have come home to roost.
In a report to the Council, Kiernan, without naming Sanghvi, detailed how the finance office under Sanghvi dangerously squandered the city’s reserves to hide the utter inability of her office to carry out the most basic of fiscal procedures. It has left the city vulnerable by squandering its financial reserves and failing to craft a way by which the city could live within its means.
Sanghvi Systematically Drained The City’s Reserves
Kiernan’s presentation included several charts documenting the city’s financial problems.
The chart below documents how Sanghvi ran continual deficits of increasing size. She balanced the books by drawing on the city’s reserves rather than controlling costs or increasing revenues. The bitter truth was that her budgets documented her utter ignorance of the city’s spending.
The tan/yellow line at the top of this chart shows the city’s actual expenditures each year from 2022. The green line displays how much the city took in as revenue. At the bottom, in blue, is the 2022 surplus (Sanghvi drew on the budget created by former Finance Commissioner Michele Madigan), and in red are the growing annual deficits.
The city is required to maintain a certain percentage in reserve money each year. Sanghvi managed to blow the huge reserve she inherited from Michele Madigan. The city is now just above the city’s minimum surplus required by New York State.
What The Auditor Revealed
Emblematic of the problem was the revelation at the beginning of this year that this city’s accounting firm was unable to audit our books. The firm cited that the city’s books are in disarray.
Finance Commissioner JoAnne Kiernan is a stand-up professional. Note that she never mentions Minita Sanghvi by name, but her presentation was easy to understand, and its implications were devastating.
This city finally has a real professional who does not view her role as “only part-time” as her predecessor did. Kiernan is an accountant by profession, and it shows.
The video is 32 seconds.
Some of the Auditor’s Observations
- Incomplete reconciliations [JK: Absolutely stunning revelation. This is fundamental to any kind of bookkeeping.]
- Insufficient documentation for journal entries
- Failure to use the city’s microfiche software as part of the city’s internal control process
- Misposting of financial information
- Spreadsheets not updated to reflect actual transactions
- Problems with bond payments, postings, and fund transfers “due to and from” accounts
- Required interest payments were not completed
Commissioner Coll and Commissioner Kiernan Discuss Who Was Responsible For The Crisis (2 minutes 17 seconds)
A Great Presentation On The State Of The City’s Finances (5 minutes 27 seconds)
This video is of Commissioner Kiernan’s full presentation on the city’s finances. It’s not long, and it is very well done. You will not need an accounting degree to follow her slides and commentary.
Saratoga Springs Politics 