Friday, February 25, 2011

McClure Op-Ed Misrepresents $60 Million Fund Balance

In his Express Times Op-Ed, Lamont McClure betrays a basic lack of knowledge about Northampton County's $60 million fund balance. During Council meetings, he's called it a "slush fund." He misrepresents it as a "gentlemen's agreement" between Executive John Stoffa and Council member Ron Angle, or as two months of the County's entire $300 million budget. Both claims are incorrect.

According to McClure, instead of $60 million, "The more fiscally appropriate amount of money to have set aside in a fund balance or surplus is about $19 million. For five years, Northampton County has been keeping a surplus three times larger than was necessary."

Let me give you the facts.

Northampton County's fund balance is $60,093,120. It's going in the wrong direction. It's $1.5 million less than it was in 2009, and $4.5 million less than it was in 2008.

It's no "gentlemen's agreement," but the product of an accounting standard called GASB 54. Last year, Northampton County Council formally adopted it by a 7 to 0 vote. McClure may be confused about all this because he was absent that night, and also missed all the Committee meetings during which the importance of this accounting standard was discussed.

A product of the Governmental Accounting Standards Board, its purpose is to prevent exactly what is happening in Bethlehem, where money set aside for one purpose is spent on something else. Fiscal Affairs Director Vic Mazziotti tells me that failure to adopt GASB 54 would result in a "qualified financial statement" from outside auditors, and that would affect Northampton County's favorable A/A2 bond rating.

Contrary to what McClure seems to think in his Op-Ed, most of that $60 million is already committed. Here's how it breaks down.

* $13.8 million is set aside to pay the cost of a swaption agreement coming due next year. Gracedale proponents will tell you that the nursing home is being sold to pay this bill, but the funding has already been set aside. Their claims are disinformation.

* $25 million is set aside as a stabilization fund against emergencies like a collapsed roof or a bridge that needs immediate repair or cost over runs on a parking deck. Would McClure really advocate eliminating the rainy day fund?

* $463,000 is set aside to pay for purchase orders. Should we follow McClure, adopt Bethlehem's accounting style and delay paying our bills?

* $5.9 million is set aside to plug the hole in the 2011 budget so it is a balanced budget. Should we spend this money anyway and end 2011 in the red?

* $15 million is unassigned. This pays the bills when people are slow paying their property taxes. If I read McClure's op-ed correctly, this sum should actually be $19 million, which would make the fund balance $64 million.

McClure seems to think that the County can find $7 million to fund Gracedale next year, as well as another $10 million for capital projects. He claims there's no "fiscal necessity" to raise taxes. But as you can see, he is misinforming you. I don't believe it's intentional, but it's what happens when a Council member has a 60% attendance record. IHe should attend a few more meetings and listen to Controller Steve Barron a little less.


Anonymous said...

Keep lying O'Hare, The Big Lie theory depends on constant repition.

Stoffa and his hack Mazzioti lost the confidence of the people months ago when their numbers were shown to be bogus.

Anonymous said...

Bernie try to be factual. GASB doesn't force amounts, it guides how money is allowed to be catagorized. It strives to make government ensure their are accounts or "pots" for funds.

Northmapton County has always been good about this so the reg's really didn't impact us that much. The only real difference now is that you must create silos and apportion funds to those silos.

The County Council controls what is apportioned with recomendations from the Adminstrations fiscal Department.

The "cash reserve" amount is what the Adminstration suggested, not any hard and fast rule.

The amount to run the government awaiting tax returns is not a set amount. Any amount from 6 to 8 weeks of "true operating" expenses is fine and prudent. The Stoffa/Angle "gentlemens" agreement is no rule just an agreement with no basis in law or regulation. Both men admitted to the agreement even before GASB was in effect. Your nose is growing.

By playing word games the Adminstration and Angle have actually set aside over $45 million dollars of taxpayer money to be used if there are problems or at their whims. Much, much more than necessary or even prudent. That does not even include the $7 million Mr. McClure references.

You and the Angle/Stoffa gang have tried to take basic arithemtic and with smoke and mirrors make it look like rocket science.

Your so-called facts are Angle double speak backed up by Adminstrators trained to agree with everything he says.

Thanks Lamont for exposing the three naked little emporers in the room.

One who knows more about finances than you, Angle and Stoffa combined.

Now get back to help the Stoffa Adminstration write Ron Angles reply to McClures Express letter.

Bernie O'Hare said...

Of course, GASB leaves it to Council to decide how to divide the fund balance. But what about it is smoke and mirrors? Should the County not set aside money to pay for the swaption? Should it ignore setting aside money to plug 2011's budget hole, or ignore nearly $500k in purchase orders? Should it eliminate he $25MM rain day fund?

Tell me, where in this $60 MM is the money for Gracedale? You have no answer bc there is no answer.

The simple truth there is no $60 MM slush fund. $15 MM is set aside for operating expenses, and according to McClure himself, that should actually be $19 MM.

Tell me, where will you take the money out of that fund balance? I have laid out the facts. I have explained exactly where all that money is committed.

And no, there is no longer any gentlemen's agreement. It is GASB 54 that controls.

Rising Sun said...

Correct me if i'm ignorant here, but isn't $25 million set aside for "rainy days" and $15 million set aside to cover delinquent taxes and stuff, essentially $40 million set aside for "rainy days?" It would seem that $40 million is being left unassigned in all reality, just under multiple names for accounting purposes?

On a related note, I'm interested, what's Lehigh County's situation here, for comparison?

Bernie O'Hare said...

Rising Sun,

I checked with LC and this is almost exactly the same as it is there. The $25MM is a rainy day fund for real emergencies. There are $15 MM in unassigned money, which pays operating expenses when tax revenue is not there.

Don't forget. NC is still waiting for $5.7 MM in tax revenue from last year.

LC obviously does not have the swaption problem.

Anonymous said...

Rising sun your instincts are spot on. This is a game of semantics. There is $45 million for surplus, rainy day, cloudy day whatever the Hell day you want to call it. It is exrta usable cash.

Last year the County claimed it needed $22 million for the swaption. Today it is down to a $12 million payout and dropping like a rock. With interest rates rising, by the end of the year it will be well under $10 million.

All of this still ignores the $7 million just hanging around.

The real problem here is the Stoffa Adminstration screwed the pooch and it knows it can't run the governemnt without a tax increase.

So they concote a goofy story about Gracedale, better care, private enterprise, bad unions, yada, yada.

This has less to do with policy and more to do with poor fiscal management by the County. Lamont McClure was dead on in his analysis. What pisses off Angle and O'Hare is that they know he is right and fear some of the robots will actually pay attention and research the truth for themselves.

Sanity Through Truth!

Anonymous said...

so as i look at it, Mclure is wrong. it's only 40 million-the sum of the stabilization and unassigned items.

still a hefty chunk of change

Anonymous said...

McClueless can't count past ten without lowering his trousers. If lawyers could perform math, they'd be making honest livings.

brenda said...

Well, $40 million over a 300million budget is actually only 13%. This is a responsible amount to be kept unassigned. It sounds like alot of money, but consider the amount of land that NC covers. Remember the hazmat emergency in Wind Gap?

NC needs this fund for emergency prepardness and unforseen losses as the price of commodities escalate through the roof. Lets not forget the medical costs at the prison(runaway train) I dont want to see the county spend down its fund to serve gracedale which will never profit again.

Tom Foolery said...


Seriously, Gracedale will never profit again??? OMG.. That's funny..Don't tell the guys that are buying it about your little secret..They might be bummed..Oh, how ignorance abounds!!!

Anonymous said...

Brenda....medical costs at the prison and forget about Gracedale. Convicts over our seniors tells me where your priorities are!

Anonymous said...

Anon 1:16 and 2:11

You have no idea what you are talking about.

If you are so sure that you are correct, go to the public county council meeting when the outside auditors present the annual financial report to the council and make these points!

Show how well informed you are on county council financial matters!

Can we count on you to be there? No way. You prefer to hide in the shadows and make up lies! You are a coward!

Iaudit said...

I have a hard time taking seriously a guy that shows up for work only 60% of the time. Is that really the kind of person you want representing yourself on a government body? At least the union guys show up for work, although when I worked at Bethlehem Steel they only worked when they had to. I guess that's why they are gone now. We need more Lamont McClure in government. NOT.

brenda said...

Hey Tom,
The new company that wants to buy it does not have to pay bloated payroll, health insurance and pension.

Conglomerates can make a small profit, not a large one...without the public sector union costs

brenda said...

Anon 9:53

Sorry to sound so callous about seniors...the medical costs at the prison are provided by contract to an outside firm. When costs exceed the contract, NC must pay out of pocket for those expenses.

Unfortunately, prisoners are the most litigous group of people around. If it were up to me, it would be bandaids and tylenol at the prison and nothing more

The Battle Cry of Freedom said...

Let's keep a couple of things in mind. First off keep the amount in the rainy day fund low that is my money. Let's do repairs in a better then timely manner so we don't have to pay out the nose for them. Let's treat government money like it was your own account and maybe then you can keep taxes at a zero increase. Then we need to examine exactly what the government is suppose to do as opposed to what it is actually doing. We need to get our government nose out of stuff it is not authorized to do. Why, for example, do we have a domestic relations bureau at the County level. People need to resolve their issues because I am sick and tired of paying for other peoples problems. Why are we supporting a bus service? That should be a private for profit endeavor.
As for Gracedale and other homes, allow me a prediction. You are going to see Gracedale and other homes for the aged either trim back or go broke. Gracedale charges $7,800 a month not including meds. If you go there you will sign over your pension and your social security and possibly your home. Gracedale is losing customers. Some say it is between 600-630 others state that it is actually around 570 inhabitants. Medicare and medicaid are both in bad shape. I would suggest that more and more of us will be taking care of our parents. Why you say. Well it is quite simple. Note that we were told that the recession was over in 2009 yet here we are and here we will be for at least another 2-3and maybe as high as 5 years before our assets, like houses, begin to increase in value.
I honestly hope I am wrong but for now we need a small rainy day fund, allocate money to pay bills, and get out of places we should not be. Oh, we need to avoid telling lies as to where money is and we need people on council who will not miss meetings, will not be on constant vacations, will attend committee meetings and will do their duty and not send a surrogate to do the job. Most importantly we need to tell the people the truth not what you think they want to hear in order to get re-elected.

Anonymous said...

Anyway you look at it....this administration is the worst (including Reibman) that we have ever had, and also the worst bunch of Councilmen and women we have ever had. They may be honest but None of them have a clue as how to run a government. You do not need a 45 million dollar slush fund or a rainy day fund or anything else you want to call it. I have never heard of anything so absurd. As for selling Gracedale, how am I supposed to vote on something when no one gives you the information to make an intelligent decision.Throw them all out and lets start over.

Bob said...

Anonymous 2:52, How can you say this administration is worse than Reibman??? Who is the idiot that floated the bond issue that we are still paying for? Look at the things they threw money at in order to buy votes when the democrats were in charge. Maybe if they had taken enough of that money and put it into Gracedale, the facility could compete with some of the private run places.

gruntled said...

Well, actually anon 2:52 has a point, a bit skewed but worth considering.
McLure says Gracedale makes money, Angle/O'Hare say it costs money. Who ya gonna believe?
Kinda sad commentary that right now I believe a bottom feeding blogger over an elected councilman.

Anonymous said...

The only people who beieve O'Hare and Angle are the bagger extremists who have been on board this bullshit ride since the beginning.

Anonymous said...

It's not only McClure that can tell you the real true story on the money matters of NC Mr. Steve Barron who is the county controller
can also tell you about it.
If you are interested in real figures phone his office, he or his staff will set you straight.
Of course I can just hear Bernie
saying " he is a liar too "
It seems every body that tells the truth is a liar.

Bernie O'Hare said...

"If you are interested in real figures phone his office, he or his staff will set you straight."

These are the real figures, right from the year end financial, the same source used by McClure. He just failed to tell you the numerous components that make up that $60 MM figure.

As far as Steve Barron's staff is concerned, I doubt very much they will inject themselves into policy discussions. They recognize their role is not political, uinlike the current occupant of the Controller's office.

Anonymous said...

Present yearly cost per patient at Gracedale is now around 112.000 per yr and growing ...all at tax payer expense . Compete my foot ! They are a bloated fringe benefit whale .

Anonymous said...

Mc Clure is up for election and doesn`t deserve re election consideration. He is an absentee Councilman who pontificates like he is still in pre law school.He`d never vote for a tax increase but he would spend money

Anonymous said...

At least Lamont is still a real lawyer.

Anonymous said...

Is this Lamont guy the same one who barely shows up to do his job?

He's a perfect shill for public service unions.

Anonymous said...

"Maybe if they had taken enough of that money and put it into Gracedale, the facility could compete with some of the private run places"

reibman had a private group audit the billings at Gracedale, and they made money.

Anonymous said...


Anonymous said...

I'm so glad McClure doesn't represent me. Then again a "no-show" doesn't represent anyone!

Anonymous said...

The O'Hare piece in the Excess Times read like an Angle/Stoffa campaign flier. Joe Owens must be so proud of O'Hare carrying on the papers proud tradition of carrying Stoffa's water for him.

Good Job.

Anonymous said...

great op- ed piece Bernie...the truth was told...thank you

Anonymous said...

McClure stated facts. Mr. O'Hare stated sound bites from the Adminstration.

The sale of Gracedale is the greatest fraud ever perpetuated on the citizens of Northampton County.

Anonymous said...

poor management by this administration plain and simple.

Anonymous said...

The Stoffa/Angle crew has botched this big time. Damn shame.