By Kathy Savolt -
At the April 17th Board of Trustees (BOT) Budget Work Session, the Board voted 5-0 to issue a Tax Anticipation Note (TAN) in the sum of $1,411,210 on behalf of the Mamaroneck Public Library.
The financing is expected to be completed before June 1, the beginning of the Library’s new fiscal year and the deadline for funding $300,000 so it can stay open.
The funds will be distributed to the Library in accordance with its stated needs: $300,000 by June 1, $850,000 by September 1, and the remaining $261,000 by January 1, 2024. Any funds not needed by the Library will be applied by the Village to repay the TAN. The BOT voted on April 24 to disburse the first round.
Next year, another TAN will be issued to help repay the TAN issued this year and fill any other Library needs. This cycle is expected to continue until the Library is financially sound again.
Background
Earlier this year, the Library Board discovered irregularities in its financial reporting. Ellen Freeman, Library Board President, admitted that the Board trusted its long-time employee, Mary Soto, who served as the Library’s Business Manager and is a life-long Village resident with deep roots to the Library. Based on information Soto had provided the Board, budgets for the current fiscal year and next (starting June 1) were balanced with monies from the Library’s reserve fund. In fact, the reserve fund had been depleted causing both years’ budgets to have shortfalls. In addition, other funds are unaccounted for, which Freeman indicated were in the “tens of thousands of dollars” range.
There is a lot more to be learned about what happened and the public is eager to have more information. However, Freeman, on the advice of the Library’s counsel, is not providing any more details at this time. A forensic audit of the last ten years of financial activity is ongoing, and the Westchester County District Attorney has opened a criminal investigation.
Freeman did talk about corrective actions the Library Board has undertaken and promised transparency and more information when it becomes available, and counsel has given her the green light.
In addition to immediately undertaking a forensic audit when first discovering the shortfall, the Library has taken multiple steps to ensure better financial controls in the future.
New Board Member
Ellen Hauptman, elected to serve on the Library Board last December, was recently sworn in as a Board member, joining before her term officially began due to the resignation of another Board member who retired to Florida. Hauptman, also a member of the Village’s Budget Advisory Committee, is taking the lead on behalf of the Library Board to review, document and recommend new procedures. Hauptman’s professional experience is relevant to the tasks at hand. Before retiring, she spent over 20 years at JP Morgan Chase where she was responsible for a $400 million budget. Her experience includes preparing financial reports for the Executive Committee of JP Morgan’s board (including actual vs. budget reports with full explanations). Hauptman also has extensive experience in analyses of financial procedures, operations, and risk.
Financial Controls
Hauptman will develop new procedures as necessary to ensure clean, clearly defined segregation of duties. All procedures will be documented, and the staff will be trained. Freeman added that the forensic accountant will stay on for the next year and oversee the process and train staff, including a new Business Manager when hired.
Here’s an example of a financial control. The staff at the Library’s front desk collects money for fines and donations, among other things. They reconcile their register every day to ensure the cash matches the receipts record and send their report to a member of the Finance staff for review and entry into the accounting system.
Budget Committee
The Library has formed a new committee to review the current budget and make recommendations for changes. The committee has held its first meeting and is comprised of three Board members – Ellen Hauptman, George Mrgditchian, Lilliana Diaz Pedrosa – and two community members – Rhett Thurman and Francis Lively. A third community member is being considered.
Fundraising
With the help of members of the community, notably Amy Siskind, the Library has launched a fundraising campaign, hoping for robust community financial support.
Transparency
At the April 17th BOT meeting, Freeman agreed to share monthly financial reports with the Board and the community and post the audit reports from the last six years on the Library’s website.
Freeman has also pledged to host a public meeting with the accountants when the forensic audit is complete to present all findings and answer any questions. She also stated that any other identified shortcomings will be corrected.
There is wide-spread agreement that the Library is a vital resource for our community and that its programs are valued. While residents are concerned about what happened and the impact on their taxes, there appears to be an abundance of community support, with all hoping that the Library is successful in resolving its problems and building toward a fiscally sound future.
Editor’s Note:Two members of The Mamaroneck Observer’s Advisory Board are also elected volunteer members of the Mamaroneck Public Library board.Neither of them was consulted or participated in the preparation of this article.
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