Local Government and State Government and Banking & Finance and Government & Economic Development and Government

State audit finds Beech Grove finances in disarray

March 12, 2013

Beech Grove officials are cleaning up the small city’s finances after a state audit found widespread accounting problems.

Mayor Dennis Buckley, a Democrat, requested the audit in March 2012 after uncovering a range of problems, including missing files and delinquent loans in the Main Street program.

“When I took office in January 2012, the evidence of prior mismanagement was both pervasive and obvious," Buckley said in a prepared statement. "Entire boxes of files—almost six dozen total—were missing. Official meeting minutes and records were incomplete. There were taxpayer-backed loans in default and funds that clearly had been spent inappropriately. On behalf of Beech Grove residents, we needed to assess the damage, and we needed help."

The State Board of Accounts reviewed the year 2011. Among the findings, which were announced Monday:

— Former Mayor Joe Wright, who resigned before his term ended in 2011, spent city money on campaign videos. The Beech Grove Republican Candidate Committee refunded $2,487.50 in January.

— Six loans to local businesses made through the Main Street program were in arrears by amounts ranging from $748 to more than $50,000. Buckley has begun collection efforts and has suspended the program.

 — The balance on two other loans totaling $60,000 to Rainy Day Investments LLC is lost because the city made no effort to collect before the company filed for bankruptcy protection in 2009.

— The city made a $10,000 loan without documentation.

— The city spent more than was budgeted from several funds, including more than $936,000 from the general fund.

— The city reallocated local income-tax revenue without authorization.

— The city paid miscellaneous general expenses from the sewer utility fund, which should be dedicated to utility operations. The sewer utility also paid partial salaries in the clerk-treasurer’s office but without documentation to justify the contribution.  

Buckley’s official response argued that Beech Grove’s problems are even greater than the audit indicates. He noted that there are no records from the first two years of the redevelopment commission’s existence, during which the commission issued $5.8 million in bonds.

He also objected to the finding that some of the videos produced under Wright were about city activities.  

Beech Grove, which has a population of about 14,000, had a 2011 budget of $28 million, which it overspent by $609,781.
 

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