SPRING LAKE -- The Spring Lake Board of Aldermen earned praise Monday from the North Carolina Local Government Commission for responsible stewardship and efforts to get the town’s financial problems corrected.
Kendra Boyle, the town’s finance officer and assistant director of the Fiscal Management Section of the State and Local Government Finance Division for the N.C. Department of the State Treasurer, provided positive financial reports from June to help demonstrate the town is moving in the right direction and recovering strongly from an accounting scandal and embezzlement.
“We never want to go back,” Mayor Kia Anthony said Monday.
Through a fiscal accountability agreement, the Local Government Commission took control of Spring Lake’s finances in October 2021, citing allegations of missing money, budget deficits and fiscal disarray.
The agreement is a strategy developed by the commission that lists the governing board’s responsibilities, the commission staff responsibilities and the goals that need to be met to improve the town’s financial status and internal controls.
Boyle announced Monday the board had attended a training course in October provided by UNC-Chapel Hill and that the board’s audit committee wi working to develop and update policies in compliance with the accountability agreement.
Updates on goals set by the Local Government Commission included progress in hiring a new town manager and improving the town’s water and wastewater infrastructure. Boyle reported that the search for a permanent town manager was on hold; the hiring of a manager is required before the town is released from its agreement with the LGC.
“The interim manager (the current Fire Chief Jason Williams) continues in the interim role where he is successfully managing town staff and priorities,” Boyle told the board.
She said the town is also working with McGill Engineering on an asset inventory assessment and merger feasibility studies to determine how Spring Lake’s water and wastewater infrastructure can be improved.
The N.C. Legislature approved $400,000 to help fund the studies. Boyle also announced that Cumberland County recently expressed interest in partnering with Spring Lake on regional utility services.
While she was outlining budget items to the board, the Fire Department was unloading pallets of construction material outside the boardroom. One budget ordinance Boyle said is needed is to provide funds for a new roof for Town Hall, at an estimated cost of $120,000.
“In order for that work to begin, it had to be in the budget,” Boyle said, while explaining to the board that it had to reallocate money to address the costs needed for the roof replacement.
There were several smiles as Boyle announced that the town’s outstanding audits were now headed to the hands of the accounting firm Cherry Bekaert after months of reconciling bank statements.
Spring Lake’s last audit was completed in June 2020. In June 2021, the Local Government Commission waived the audit requirement after declaring that the finances were in such disarray that they were not auditable. The new audit — a major component of the fiscal accountability agreement — is set to begin in December.
The 8% ‘myth’
As Boyle entertained comments and questions from the board, Alderman Raul Palacios pointed to the “8%” remark former Town Manager Daniel Gerald — and current candidate for the town board — made during the meeting’s public-comment period.
Gerald stated that municipalities are required to have only the equivalent of 8% of operating expenditures in the fund balance, and Spring Lake was well above 8% even with $400,000 missing. His comments referred to when the Local Government Commission first sent a letter with a warning to the town board, during his previous tenure as town manager.
“One of the things I learned early on and was reminded of recently in training was the misconception of the 8% law for the general fund balance,” Palacios said. “Daniel Gerald was the citizen who spoke during public-comment earlier. He was the previous town manager and was fired twice from that position.”
Boyle responded that it’s referred to as “the myth of 8%” and that her staff works hard to counter the misconception that an 8% general fund balance is a minimal requirement.
She said the current threshold is six months' worth of expenditures, or 35%.
In other town business:
The board will next meet at 6 p.m. Nov. 13 in the Grady Howard Conference Room at Spring Lake Town Hall, 300 Ruth St.
Correction: A previous version of this article incorrectly stated that the Local Government Commission took control of Spring Lake’s finances in April 2021. Local Government Commission took control in October 2021. CityView Today apologizes for this error.
