April 14, 2024

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Lake County financial management deemed ‘a Dumpster fire’

CROWN POINT — The Lake County Council appears unwilling to continue excusing incomplete or inaccurate financial reports from the county auditor.

The seven-member county financial oversight panel suggested Tuesday public investigations may be in order — using subpoenas if necessary to compel testimony — to get answers about the auditor’s financial management practices that were described as “a Dumpster fire” by Scott Schmal, the council’s finance director.

“You have a deficiency in skill sets in the auditor and treasurer offices. That’s your root cause,” Schmal said. “We wouldn’t be talking about this if everybody was capable of delivering what we’re told they’re capable of delivering.”

The financial issues stem in part from numerous data entry errors made prior to and following the county’s July 1, 2022, switch to a new financial management system that have prevented key reports from being generated, created uncertainty over spending and revenue totals, and slowed a regular state audit of the county’s finances.

More recently, the system generated inaccurate end-of-year tax statements for approximately half the county’s workforce, depriving many of the 919 affected individuals of a potential tax refund if they don’t revise their already-filed income tax returns.

Schmal said it’s clear the auditor’s office — led at that time by John Petalas, now the county treasurer — was woefully unprepared to deploy the new system in mid-2022, and Auditor Peggy Holinga Katona, formerly the county treasurer, likewise has been playing catch-up since taking office Jan. 1, 2023.

“No one who has a skill set would have allowed the system to go live on July 1. It wasn’t ready,” Schmal said. “We’re a long ways from home. This is a multiyear issue. This isn’t going to be fixed overnight.”

The three-member Lake County Board of Commissioners, which serves as the county’s executive, has contracted with the Baker Tilly accounting firm to try to clean up the mess at a price tag that already exceeds $3 million.

Schmal said the auditor also is planning to hire a comptroller with the education and skills needed to oversee financial management in the auditor’s office.

“Hopefully that doesn’t become a political hiring, and then they can also hire a couple other skilled individuals. That way you have the knowledge and skills within the auditor’s office that can help finish the job. That’s why I say it’s going to take years,” Schmal said.

Holinga Katona subsequently pointed out neither the auditor nor the treasurer had a say in the selection or deployment of the new financial management system, which she insisted isn’t suitable for use at the county government level. She also said the county’s data processing department is responsible for the tax statement errors.

“They can’t blame us for any of this,” she said. “When I came in there it was already there, the mess was already there with that.”

“We’re doing what we can.”

The county council, however, seemed united behind the idea of finally straightening out the presentation of Lake County’s finances more than a decade after the state dropped its financial sanctions on the county for being last in Indiana to adopt a local income tax.

“We’ve got to start getting everything into a system where you can have checks and balances and controls, and you don’t have all these different people doing all these different things,” said Councilman Randy Niemeyer, R-Cedar Lake.

The discussion was quite an introduction for Councilman Ron Brewer, D-Gary, who was elected Saturday by Democratic precinct leaders in the council’s 2nd District to replace Councilman Clorius Lay following his Feb. 12 death.

Brewer said afterward he’s looking forward to learning more about the situation and working to remedy it with his new council colleagues.