July 8, 2021 |

In Saratoga, the buck finally stopped. For years, large sums money were transferred between enterprise accounts and general fund without the knowledge or explicit approval of one town council after another.

Records were never made of the transfers, which made the town’s financial health look better than it was. Red ink looked black. Stuart Webster, a retired University of Wyoming accounting professor and a CPA since 1969, was hired to set the books straight. Before offering his solution to the problem Tuesday night, Webster told town council what it already knew.

During the course of the meeting, Webster proposed and town council approved his recommendations to correct the bad bookkeeping in a transparent way acceptable to auditors.

It brought to a close a dramatic chapter in town history that included explosive public meetings where officials grew angry, indignant and defensive at questions over the finances. Behind closed doors, lawsuits were threatened against the councilman who raised the questions. Then last year those same officials—a mayor, the town clerk, attorney and others resigned or retired in a sweeping mass exodus.

Officials fled town hall, but the problems remained. Webster was hired to sort out the mess undo the work of the previous accountant, James Childress. Childress reverse-engineered two decades of unrecorded transfers with a scheme that explained the borrowing as “overhead allotments,” or expenses Childress used the overhead allotments to explain away over one million dollars in unrecorded borrowing.

The glitch in the Childress plan: He produced no receipts or time cards to justify the expenses, giving them the appearance of being contrived. Last summer, town council rejected the overhead allotment scheme, causing Childress to sever his relationship with the town. Councilman Jon Nelson put it this way during Tuesday’s meeting.

Reversing the allotments and resetting the accounts to pre-Childress was the first step Webster took in correcting the situation. The accountant presented the scope of his work in a series of four worksheets Tuesday. Each worksheet was accompanied with a series of accounting entries for the council’s approval.

The first and second worksheets were each dated June 30, 2020. The first was a summary of funds before any reversing or correcting entries were made to the work Childress had produced. The second presented a summary of funds after the contrived expenses were reversed, or reset to what they were pre-Childress.

The “before-and-after” spreadsheets reveal how much borrowing was happening to put the town’s general fund into the black. For instance, before reversing the overhead allotments made by Childress, the water fund showed a balance of $688-thousand dollars. After reversing the work done by Childress, the second worksheet showed the water fund with a balance of $1.6 million dollars. Likewise, the sewer fund grew by nearly a half-million dollars after reversing the adjustments Childress had made. The general fund shrank by corresponding amounts.

Webster described the general fund as a shock absorber that smoothes out the bumps from inflows and outflows.

All the black ink Childress pumped into the general fund in 2020 with his cooked-up overhead allotments produced a general fund balance of more than $1.5 million. The books looked healthy, but they weren’t.

The town was actually operating in the red. Webster went through each accounting reversal. The bottom line, when Webster was finished, the total amount of combined cash in all 15 accounts on the spread sheet was the same — $3.4 million. However, with all that phony black ink removed, Webster’s accounting showed the unvarnished truth. The Saratoga General Fund had a negative balance of $11,475.

Council discussed how to handle the negative fund balance. Two options were presented. One was to let the numbers stand and report them to the state as is. The second was to borrow $15,000 from the Weed and Pest account backdated to June 30th last year, and then to repay the loan immediately.

The fast financial footwork is a little complicated but allowed by law. Saratoga is now in a position to repay the loan because of what Councilman Nelson said was the “dumb luck” of having greater than anticipated revenues over the last year

Council voted unanimously on a series of motions that accepted Webster’s recommendations to reversing the Childress accounting entries, reset the fund balances, borrow and then repay $15, 000 from Weed and Pest to create a slightly positive general fund balance to close out the fiscal year that ended on June 30, 2020.

With that, Saratoga is truly in the black, the town’s financial records can be presented to an auditor, and for the first time in nearly two decades the true financial picture of the town is known. The buck finally stopped moving.


Pictured above: File photo of Saratoga Town Hall/Police Department. Photo by Cali O’Hare/Bigfoot 99.

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