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Sedgwick Carries Big Debt For City Its Size

Posted 3/16/2017

By Pilar Martin

SEDGWICK – Dr. Ken Kriz, Director of the Kansas Public Finance Center, told Sedgwick’s City Council Wednesday night that the city does not know how much cash it has and has piled on a lot of debt for a small town.

“You’re probably going to have to re-state at least one year of financial statements if not several years.  You’re going to have to report this to Topeka,” he said.

The Kansas Public Finance Center is a Wichita State University program. Kriz was asked by Mayor Lynne Vigil to look the city’s financial reports to help gauge if the city would have enough money to meet current and future obligations. The city has struggled with it finances and last fall City Administrator Jaci Reimer and Mayor Rodney Eggleston resigned.

Kriz did the work pro bono and is not under any contract with the city. “The city should know where its cash balance is, unfortunately the bad news I have to deliver tonight is the city does not.

“I found a nine-month delay from when bank statements were received and a reconciliation was done. That happened in early 2014, and is very much not a good practice. There were unofficial reconciliations.  That’s one of the reasons why the financial statement for 2015 sent to Topeka was incorrect.  The cash position is off.  It does not match what was the reconciled cash balance at the time. The reason was because there was an unofficial reconciliation done, that looked like it was almost the back-of-an-envelope type calculation in order to make the numbers work,” Kriz added.

Kriz said he did not see any signs of fraudulent activity. “What probably happened was, some where along the line, a transaction was misallocated. For example, maybe the general fund wasn’t properly debited or credited. Someone would have to go back through transactions and try and find out where.

“The danger is, if you simply say we have this much cash from this day, and we’re going to put back in the general fund, you are not going to know where the mistake was made.

There was a question about a loan taken out last December because of a need for cash. I believe based on my analysis, that there most likely would have been enough cash, and that the loan was not necessary. That’s the problem it creates. When you need to know, a  $35,000 difference can mean a big deal in terms of what you do in operations.”

Kriz said Sedgwick is carrying a lot of debt for a city its size.

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