NELSONVILLE – The Ohio Auditor of State’s office recently released a financial audit on the city of Nelsonville for 2020. The audit results would appear to be largely good news for the city, showing among other developments a significant improvement in its financial net position, a number that serves as a broad indicator of its economic health.

The audit also signals a recovery of sorts from a period of financial difficulties for the city, which included the conviction of a former deputy auditor for theft in office. A section of the audit report written by city management states that the city “continues to work hard to rebound from a range of financial issues. After years of declining fund balances, the city has brought expenses under control and reinforced revenue collection efforts. In 2020, fund balances increased by a notable margin. Of particular note, the general fund saw an increase of several fold. The general fund finances the majority of administrative, police, fire, dispatch, and many other operations at the city, so its financial turnaround is considered a mile marker for the city.”

Current City Auditor Taylor Sappington said Thursday that as someone who came into office with goals that included improving both the city’s finances and its transparency, he’s gratified by the audit results.

“Getting to a clean audit was one of the three goals… that I set, and in the administration everyone’s been really helpful in assisting in that process,” he said. “I’m thrilled with how this (audit) turned out; it was far stronger than the 2018 audit, which was the year before I came in.”

Under a section laying out key financial highlights for Nelsonville in fiscal year 2020, the audit report notes that the city’s net position – essentially its assets minus its liabilities – improved by more than $5.8 million from the previous year.

“This change in net position is important because it tells the reader whether, for the city as a whole, the financial position of the city has improved or worsened,” explains the auditing firm J.L. Uhrig and Associates Inc. “Over time, these changes are one indicator of whether the financial position is improving or deteriorating.”

In total, the city’s net position increased by $5,868,845. The net position of governmental activities increased $798,753, while the net position of business-type activities increased by $5,070,092. Governmental activities cover most city services including police, fire and administration. Business-type activities include sewer and water services and parking meter enforcement, both of which charge fees to recoup their costs.

The city’s 2018 audit report showed a much smaller improvement of net position, of $652,980. Net position of governmental activities increased in that year by $727,059, or 8.7 percent from 2017, while net position of business-type activities decreased $74,079, or 1.8 percent.

The state audit report for 2019 shows a similar-sized smaller improvement in net position from the year before, of $690,500. The 2019 report also contained a number of findings against the city, having to do with issues including the proper use of city vehicles and other equipment; purchases of bulk fuel; timely submission of paycheck withholding payments to state and federal entities such as the Internal Revenue Service and the state retirement system; and the maintenance of copies of payroll records.

City officials responded to these findings by acknowledging that the prior administration had not met the required standards and had failed to respond to the issues, and offering assurances that the city was now “intensely focused” on addressing the problems.

The management discussion section of the new audit report notes that the city’s water fund, its second largest fund, “saw balances increase even with increased investment in infrastructure. In the coming years, the city will be replacing most of its most problematic water lines and nearly every single water meter to ensure an efficient and safe water delivery system. On the sewer side, the city has replaced several main trunk lines and is building a new wastewater treatment plant. All of these major investments provide the City with opportunity for growth and chances to minimize waste and loss. Put next to the growth of most of its major funds, the city sees opportunity for several upcoming years of strong development and continued fund balance growth.”

Sappington said that in addition to achieving a clean audit report, one of his big goals was establishment of “a financial program that leaves us in a strong position to be able to invest in the type of things that the city so obviously needs… like roads and water lines.”

He noted that had a recent downgrade of Nelsonville from city to village status, based on Census counts, not been reversed, it could have potentially undermined the city’s long-term efforts to strengthen its financial standing.

“It’s a little bit hard to predict with certainty, but the problem that it injected into our equation was, it left us very uncertain about grants,” the auditor said. “The grants we have, we confirmed we were going to keep those – but how do we keep building on this? In other words, how do we turn this five-to-10 year plan into reality, if all of a sudden we don’t qualify for the grants we once did, and the new grants we would qualify for would likely be smaller on a project basis or per project basis? And so that was a big concern for us, honestly. And then the second big concern was the business environment, if that inaccurate count was allowed to stand. You know – what would it say to businesses coming into town, or thinking about opening in town, if they thought that the city truly was shrinking at a substantial rate of 18% in 10 years? When in reality, we think that there was some population decline from 2010 to 2015, but we’ve actually had some increase based off our records.”

One negative note in the recent audit report is the mention made by the state auditor’s office that it is currently conducting an investigation, whose results may be reported at a later date.

Sappington said this refers to the auditor’s probe related to financial irregularities under a previous administration, which resulted in former Nelsonville Deputy Auditor Stephanie Wilson pleading guilty in Athens County Common Pleas Court last December to tampering with records, forgery, telecommunications fraud and theft in office, stemming from her theft of funds from the city during her time in office. The Athens County Prosecutor’s Office indicated at that time it would be seeking more than $200,000 in restitution from Wilson.

Wilson was later indicted on more charges, on which she has yet to go to trial.

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