Audit reached no conclusions, but shows potentially large errors in water bills
Nicole Aimone, Editor-in-Chief
During public comment at last month’s regular meeting of the Village of Arena Board of Trustees on March 7, board members were handed papers by former Village President Paul Pustina. Those papers contained an “Independent Accountant’s Report” covering current Arena Village Clerk/Treasurer DeNean Naeger’s tenure in Monticello. The report represents the findings of what Monticello Village Board minutes refer to as a forensic audit. Arena officials have stayed quiet since the meeting, but the current Monticello village president insists he saw no evidence of wrongdoing.
Naeger was clerk/treasurer for the Village of Monticello, in Green county, from November 4, 2013 to May 1, 2019, when the village board there voted to “separate employment” with Naeger. Two days later the Monticello board voted to conduct a forensic audit. During a meeting the next month, on June 19, the board formalized that decision by directing their village attorney, William Morgan, to contract with certified public accounting firm Johnson Block. Later that year Arena hired Naeger as their village clerk/treasurer.
Former Monticello Village President Leaora Miller, under whose tenure the audit was started, did not respond to questions for this story. However, public records provided to Valley Sentinel show that the Monticello Village Board had concerns including, but not limited to: financial controls, password security, failure to back up official emails to and from the clerk as done for those of all other village officers, a village certificate of deposit with Naeger as the only authorized official, village budget and tax payment discrepancies as well as water bill discrepancies.
Valley Sentinel has not yet received any records or responses that definitively indicate whether the village officials’ concerns at the time were substantiated.
The report also notes that the procedures used were those agreed to by the Village’s legal counsel and are the responsibility of the Village. The accounting firm stated that it would not stand by those procedures as having been adequate “for the purpose for which the report has been requested or for any other purpose.” Despite this disclaimer, the publicly ordered and funded report provides unique insight into the financial dealings of the Village while Naeger was clerk.
The report lists a release date of January 9, 2020, nearly seven months after Johnson Block was directed to conduct the audit. It’s not clear when or if the full village board in Monticello was presented the audit, with public records indicating a village trustee and a community member both asking if the audit was complete at a November 16, 2022 board meeting. Valley Sentinel spoke with an editor at a newspaper that covers Monticello who stated they had requested the forensic audit report multiple times and never received it until Valley Sentinel shared it with them, despite it being a public record.
In the cover letter of the seven page report, Johnson Block makes it clear they were not contracted to make a conclusion based on their investigation.
“We were not engaged to and did not conduct an audit or review the objective of which would be an expression of an opinion or conclusion,” Johnson Block says in the cover letter. “Accordingly, we do not express an opinion or conclusion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you.”
The report outlines several findings, including a review of the payroll of Naeger as clerk and the police chief from July 1, 2017 through May 1, 2019. The audit aimed to determine whether the correct authorized pay rate was made and whether the correct authorized payroll deductions, including health, retirement and FICA were made. In the case of the clerk, there were four instances of overtime being computed and paid when the total hours for the week included holiday, vacation, and compensatory hours. The audit also found that there were potentially small discrepancies in overtime hours for board meetings. The audit states the village president, Miller, believed the clerk was only to be paid for time spent at the Board meeting, but that overtime hours were computed using the total hours in the office for that day less one hour.
In addition, there was one instance where nothing was withheld for health insurance. The report noted that time sheets were only signed by the village clerk, with no other approval noted anywhere.
The police chief’s payroll had issues as well, with three instances of authorized pay rate changes resulting in incorrect gross pay computation. In each case, the error resulted in the chief receiving slightly less than full pay.
In public records reviewed, community members and business owners in Monticello express concerns about their water/utility bills. The auditors reviewed a sample of 60 randomly selected water/utility bills from 2018 to determine if rates were charged accurately. The forensic audit states these were then recomputed using authorized rates and consumption and compared to what actually got billed. Seventeen of those utility/water bills had discrepancies, ranging from under-billing by $260.12, to over-billing by $570. The discrepancies, including under-billing, add up to a net $2,367.58 of total over-billing.
Legal Analysis: This represents roughly a 50% average overcharge, and would extrapolate to roughly $1.8 million over a five-year period if these discrepancies were typical over that time.
“This was for sixty bills for just one month apiece, or roughly the cumulative overcharge that a single bill would bear over five years, if this rate of error remained typical. For a sense of what this rate of error would mean if it held continuously valid, the Green County Property Database lists 756 properties in Monticello. If each were continuously exposed to this rate of overcharge over 5 years, it would appear that the cumulative overcharge would then run on the order of $1.8 million.”
—Gary Ernest Grass, esq., Legal Editor
The auditors state they were given no supporting documentation as to how the additional charges were computed.
When asked about the water/utility bill differences the audit reported and where the money ended up, current Monticello Village President Robert LaBarre told Valley Sentinel: “Our records show that any over-billing did go into the village accounts even though we never found out why those few water billing discrepancies occurred. There were no repercussions.”
Pustina, who served in Arena village government as a trustee or village president from 2007 to 2018 and again from 2020 to 2022, ran unsuccessfully against Arena Village President Kate Reimann in the Spring General Election as a registered write-in. Pustina made water bills a central part of his campaign.
At the time Pustina handed the board the forensic audit report in March, the Village of Arena reported that 85% of the utility/water bills (335 out of 394 total meters) had been estimated reads for at least the months of February and March rather than measured reads, due to what Naeger called an antenna technical issue.
Naeger stated the Village had to purchase a new Galaxy reading antenna and that, as of March 20, the new antenna had arrived and was up and working. Valley Sentinel asked if there was a process in place for correcting the previous readings and Naeger stated that the software automatically corrects.
How widespread were the water/utility bill discrepancies in Monticello during Naeger’s tenure? Based on public records Valley Sentinel reviewed, the Monticello Village Board voted on Feb. 3, 2021 to conduct a forensic audit covering all water bills from November 2012 to 2018. This was after, on June 11, 2019, the village attorney directed Johnson Block to audit a year’s worth of water bills. Only a year’s worth of water bills are included in the forensic audit report, dated January 9, 2020.
It’s not clear the full water bill audit was ever done.
“I am not aware of any other forensic audits produced as a result of DaNean Naeger’s tenure,” said current Monticello Clerk/Treasurer Stephanie Adams when asked.
Valley Sentinel has not been able to verify if or where the decision was made to not continue with the full water bill audit and if any decision was made properly with a vote of the board. A request for public records that indicate where the decision was made to not move forward with the full water bill audit was unfulfilled as of press time.
Another request seeking to clarify if Naeger’s emails were retrieved after they were purportedly not being backed up, or if Monticello is missing public records, is also outstanding as of press time.
Valley Sentinel asked current Monticello Village President LaBarre if Monticello had made any changes or taken any action based on the forensic audit’s findings.
“Because the forensic audit showed insignificant evidence, our village attorney advised not to pursue any action,” stated LaBarre.
In Monticello’s November 16, 2022 board meeting minutes, LaBarre characterizes the decision to do the forensic audit as being based simply upon previous officials’ suspicions.
“His suggestion is for the committees to do more due diligence and try to avoid situations that put people in a bad light,” the minutes state.
Naeger and Reimann did not respond to questions about the audit by press time.
Editors’ Note: Valley Sentinel has no information that suggests there are financial discrepancies in the Village of Arena currently, or that the Village of Monticello took any action as a result of any forensic audit findings. No information Valley Sentinel has reviewed as of press time suggests any deliberate impropriety on behalf of anyone named in the story.
Q&A: Valley Sentinel sent Pustina a list of questions about the forensic audit and his reasons for bringing it to the Arena Village Board’s attention
Valley Sentinel: Why did you share the Monticello audit report with the board?
Paul Pustina: This Board depends upon the Clerk to do quite a bit of work that I think they could be doing themselves. No one is above making mistakes and when much of the day to day responsibilities fall on one person, the Board is putting the Village in a potentially bad situation. If mistakes are made that cost the Village, does the final blame go on the Clerk even though the Clerk may have been the person who made the mistake? No, in my opinion, it goes on the Village Board and the Village, as in the end, both are responsible. An audit is not an out of the ordinary practice in private and municipal business settings.
VS: Why is the audit relevant now?
PP: I feel it is relevant now due to what happened with the previous Arena Village Clerk. The way her termination went down and the fact that there was no audit. Wasn’t there a Closed Session held by the Board where it was voted to do an audit? If so, why didn’t it happen? Monticello did its due diligence when ending the Clerk’s employment with them. They did what should have been done in Arena, an audit. An audit either clears up basic concerns/questions. Which an Arena audit would have done, or brings to light discrepancies/deficiencies. Which the Monticello audit did. I believe there are questions to be answered regarding the water/sewer billing and the Referendum mix up.
VS: A main concern of the audit is utility/water bills, 85% of water bills in Arena were estimated over the past two months, do you have concerns about the water bills in Arena? Why?
PP: When I got back on the Board in 2020, I pushed for a Financial and Water/Sewer audit. It was voted down. Have water bills been estimated for only two months? Mine has stayed pretty much the same for the last couple of years until I received my March 2023 bill. It was down by about $28.00 compared to all of my previous bills. In 2019, there were users in the Top 10 who were on the list in 2017, 2018 and 2020, but were not on the list in 2019. The top 10 list doesn’t change that drastically from year to year. What happened?
VS: You’ve said you hope the audit leads people to ask questions, what questions should residents of Arena be asking?
PP: 1. Who really is in charge of the Village? 2. Was the Village really only estimating water bills for two months? 3. Why aren’t meetings being recorded? 4. What is the Village’s IT situation? Are all Village emails/files being backed up properly? As one result of the Monticello audit, it was stated that the Clerk was backing up Board emails, but not her own.
VS: What do you believe are the top 1-3 issues facing Arena right now? Why?
PP: 1. Transparency: The Board voted down video and audio recording of meetings and doing audits. The Village is audited each year and the audits I asked for would have gone deeper. 2. Inclusion: I personally know of two people who contacted the Village to be considered for a Committee seat or Board seat. One did not even receive a response and the other was asked to provide a Letter of Intent. After several email exchanges asking for clarification, the person gave up. The open seat went to Mr. James Doerflinger, who, when I asked him if he turned in a Letter of Intent regarding wanting to be on the Board, he indicated that he did not. He heard there was a seat open, so he called in and said he was interested in being considered and here he was. That’s not his fault. He had no control over how he ended up getting on the Board. 3. Planning: Ever since 2019, I feel there has been a lack of really going through and thoroughly planning projects. Examples, over spending on the Village Shop construction, the recent Well #2 and Lift Station and Village Edge projects and the lack of communication to residents and re-consideration of possibly scaling back due to the huge increase in cost of the projects. Why is there no work being done on bringing business development to Arena?
VS: What actions should the village take with respect to the 1-3 issues you raise?
PP: 1. Start recording all meetings. 2. Quit picking and choosing because of who a person is/isn’t affiliated with, or votes for. I had a conversation with a Village resident and was told they had contacted the Village regarding their interest in being on the Board. They indicated the first question they were asked by the Village President was who they voted for. 3. Begin thorough planning and not just planning to get something done. There is a difference.
VS: What actions should the village take with respect to any concerns raised by the audit?
PP: I feel there should be a Personnel meeting. Not only to clear the air regarding questions on why the previous Clerk was let go, but to address findings in the Monticello audit. It’s called covering the bases. What is wrong with that when taxpayer dollars are at stake? I feel the air needs to be cleared over any mistakes made since the current Clerk’s employment. Not only by the Clerk, but the Board itself.
VS: Please feel free to share anything else.
PP: Audits cost money. I know that personally. During my first term as Village President, we conducted an audit due to the release of a Clerk. But, questions are answered, the air is cleared and it is much easier to move ahead with a clean slate. With as tight a budget as there currently is, there may be no room at all for funding an audit, but it should be looked at. The Village needs to reach out to Iowa County, the SW WI. Regional Planning Commission and developers in order to let people know that Arena wants business development. The Village President has stated publicly that there hasn’t been anything going on in that arena. Why not? You need to constantly be in contact with people who can help you move forward. Even if it’s just a phone call or email check in.