Meg Holland Resigning as Bethlehem Controller

I have no details. The Morning Call has a few.

DiGiacinto Spars With Bethlehem Officials Over Poor Audit

David DiGiacinto has only been a member of Bethlehem City Council since January, but was clearly disgusted by Bethlehem's bad marks in an independent audit of the City's finances in 2009. In a local government known for its civility, he had some testy exchanges with Business Administrator Dennis Reichard and Controller Meg Holland at an August 11 Finance Committee meeting.

Listening to a presentation by Tracey Rash, a CPA with MaherDuessel, he summed up his complaints. "Basically, we had a negative fund balance ..., we have misuse of transfers, we transferred funds we shouldn't have transferred. Some of them, I guess, are considered illegal, against City Ordinance. We had internal control failures. We had an inability to make payments, pension fund payables. I'd say that's pretty much a disaster, fiscally mismanaged year. Wouldn't you agree with me?"

"No," answered Business Administrator Reichard. "There's not one bank statement that was negative. ... We did not fiscally mismanage this City. I take exception to that. Every bill was paid, every debt service was paid, every payroll was made."

"That's not what this audit says," countered DiGiacinto.

"This isn't stuff that anybody's going to jail on," responded Reichard, becoming defensive. "You may want to look at fiscal mismanagement. We're managing the City the best that we can. That's your words, that's mine."

"Where's the Mayor. By the way, where's the Mayor?" asked DiGiacinto. Mayor John Callahan was absent from yesterday's meeting, and DiGiacinto's question went unanswered as Chairman Reynolds tried to keep the meeting from spinning out of control.

DiGiacinto: "Is it true or not that the casino revenues last year, without the transfers from the Escrow and the fact that you didn't pay a lot of bills on time, ... that's how you really got through last year, Dennis? Let's be factual."

Reichard: "Isn't it true that if the federal government didn't bail out all the corporations ... "

DiGiacinto: "We're talking about Bethlehem here."

Reichard: "Awww, same thing. Same thing."

At the end of their exchange, DiGiacinto said he's simply unable to understand how Council adopted this year's budget, to say nothing of 2009. "You have a bad economy, as everyone likes to say around here, and you don't act conservatively? That's the disappointing part about all this. Instead, you raise the budget by six million bucks."

Then DiGiacinto asked Controller Meg Holland, "Where've you been?"

DiGiacinto had been Meg Holland's Democratic opponent when she ran for Controller in 2007.

Furious, Holland exploded, "You want to know where I've been. I want to know where the person before me was. That's what I wonder, because this has been going on for years. ... It has not been the fault of this Administration."

She then detailed some changes she's recommended: increasing fees when police serve at private functions; increasing medical premiums; adding use permit fees; and re-billing accounts receivable; stopping the practice of allowing some City employees to take cars home, which costs $100,000 per year; and re-negotiating cleanup costs with ArtsQuest, which often costs the City more than it receives in payment, which is sometimes ten months after it was billed. "I think an expense like Musikfest - the cleanup and whatever, there should be some up front money given for that. We're paying people on a daily basis to go out there and clean up. We're not gonna' get paid 'till ten months later? We should be getting half of that fee up front."

DiGiacinto pressed Holland, asking her what she's doing about the problems identified in the audit, such as juggling funds in different accounts. Holland replied that was being done thirty years ago. "I'm asking you now, I'm not asking about thirty years ago," insisted DiGiacinto. "What are you gonna' do about it? Nothing? Just let it go, it's OK? It's a simple question. I mean, I thought that was part of what you were going to do."

"Darn! Or was that gonna' be you, as the Controller?" sniped Holland.

Once again, Chairman J William Reynolds intervened, and another question from DiGiacinto went unanswered.

DiGiacinto to Controller: "Where've You Been?"

Controller Meg Holland: Bethlehem Needs to Improve Collections

Have you ever read a Controller's report? Even when a massive fraud scheme is being described, I nod off after about three pages. I can't help it. I'm a Democrat.

Fortunately for me, Bethlehem Controller Meg Holland's was very succinct in noting that the Christmas City is too lax in collecting money owed. Through the simple expedient of a document called the "second notice," she was able to bring in $136,000 in just one week.

I'm very familiar with second notices myself. I get them all the time.

Here's what Holland told Bethlehem City Council.

Over the past few weeks my department has reviewed the City’s outstanding miscellaneous accounts receivable balances. Based on the review, I determined that each department completes its own billing and most departments did not complete any re-billing for outstanding balances. Several of the miscellaneous accounts receivable balances were outstanding for over 90 days and some for over a year. In one week with re-billing, we were able to collect approximately $136,000 to date of the outstanding miscellaneous accounts receivable, that would have otherwise gone uncollected.

The problem with miscellaneous accounts receivable was brought to my attention when I was given a contract renewal to sign for a towing company. To my dismay the same towing company had not paid the City for 2009 towing, therefore I held the contract renewal and informed the vendor that I would not sign the renewal until their unpaid balance was brought current.

My department is in the process of instituting collection and re-billing procedures for all departments to alleviate the problem from happening in the future.

DiGiacinto Demonstrates Wisdom of Bethlehem Voters' Controller Pick

When the dust had settled, Republican Meg Holland was elected controller by Bethlehem's heavily Democratic voters over Dave DiGiacinto, even though he outspent her about three to one. But from Bethlehem PA Politics, our latest local poliblog, we learn that her vanquished foe does not go gentle into that good night. A victim of sour grapes, he rages, rages against the dying of the light.

He's hoppin' mad that Meg Holland did not run as Margaret Mary Holland, and wants DA John Morganelli to arrest her or something. Good luck with that one, Dave! By the way, Dave, Bethlehem is in Lehigh County, too. So if you want her executed, the person to ask is the state AG. I'm sure Corbett will hop right on it. Bonusgate can wait.

So what's Meg, 'er Margaret May, doing? At a news conference yesterday afternoon, Bethlehem Controller Holland announced an ambitious and detailed first year agenda in a four-page news release. Instead of summarizing it, you should read it yourself. It reveals a consummate professional who takes her job seriously. Voters got this one right.

1. Hire a Deputy Controller - In December 2007 I instructed Jean Zweifel, Director the Human Resources, to put an advertisement for the Deputy Controller position in the newspaper and on Career Builder. I also informed Daryl Yothers (the former Deputy Controller) that I would consider him for the position if he submitted an updated resume to Human Resources. I received approximately 40 resumes from interested applicants for the position. The majority of the applicants were extremely qualified for the position. I narrowed down the 40 applicants to 10 and interviewed them with Ms. Zweifel. Several applicants were willing to take dramatic decreases in salary from their present employment. I hired Eugene Auman on Sunday, January 13, 2008 for the position. Mr. Auman was Vice President of Finance and Administration of Valley Youth House, has an undergraduate degree in Business Administration from Perm State University and is also certified in human resources. Mr. Auman brings with him over 20 years of financial, managerial and administrative experience with non-profits and governmental entities, particularly in budget preparation, fiscal reporting and contract monitoring.

2. Attend monthly pension board meetings and review reports - As required, I will personally attend the monthly pension board meetings. I attended my first meeting in November 2007 and reviewed all financial reports, actuarial reports, and investment and performance reports with respect to the city's pension funds. I will summarize my review of the aforementioned documents in the coming weeks.

3. Establish fraud deterrence and prevention practices - I will enact several fraud deterrence and prevention practices, including: an anonymous telephone"integrity and humility" tip line, personnel manuals, cash handling procedures, computer access and Internet controls, telephone controls, etc. I will also introduce IDEA software to enhance the current accounting systems and establish routine queries of the city's databases to detect any potential fraud for further investigation.

4. Establish purchase order procedures and authorization controls - My department will perform audits and procedures which will work towards resolving the management comment noted by Maher Dussell CPAs (the CPA firm hired to perform the city's financial audit). This management comment has appeared on the audited financial statements for over ten years. My department will instruct the Accounting Department to record purchase encumbrances, immediately. In addition, my department will institute purchase order reviews, as well as, perform an audit of blanket purchase orders for last twelve months. My department will work with the Continual Improvement (CI) team to review purchase order processing and approval in order to eliminate duplication (i.e. six copies of purchase orders are routed after approval process). Any other management comments noted in the auditors['] report will be resolved and procedures will be instituted to prevent future comments regarding internal control weaknesses.

5. Enact record retention policy for the Accounting and Controller's Department - The legal department recently completed a record retention policy(part of their CI projects) for their department and for city contracts, while researching with respect to governmental record retention. My department, particularly the part-time employee, will work with the CI team and the law department to inventory, categorize and shred unnecessary documents that are currently stored on the fifth floor of city hall. For example, through housecleaning of my department we found telephone books from the 1970s, tax books from the 1980s, four scrap books dating back 40 years with newspaper clippings about former Controller, Wally DeCrosta, and the city administration, a painting from Gloucester Massachusetts from 1966 and various other prints and pictures.

6. Enhance the existing database of municipal contracts with the law department - Until now, the details regarding all city contracts were kept manually on contract cards by the Controller's office, while the law department kept contract detail in a database. My department will enhance the contract database with various contract details to enable more efficient sorting to facilitate audits and reviews of the contacts (i.e. vendor information, dollar amounts, department, purpose, length of time, etc.)

7. Review and monitor the budget process - My department will complete a detailed review of the budget process, budget calculations and overhead allocation (by the Accounting Department) and budget monitoring procedures with a comparison of budgeted amounts to actual amounts by category. I will require an explanation of variances by the applicable department and city administration,which may result in adjustments and changes to future budget calculations. My department will obtain comparative municipalities to the City of Bethlehem from Maher Dussell and will perform ratio analysis to determine areas where the city outperforms its comparatives and areas for improvement and further investigation/review. The Deputy Controller will begin reviewing the actual to budgeted financials for year ended December 31, 2007, immediately.

- For 2006, the accrual basis financial statements indicated an approximate profit of $300,000 and the cash basis budgeted financial statements indicated an approximate loss of ($1,600,000).
- After my review of individual line items, I determined that there was $2,000,000 in interdepartmental revenue recorded on the accrual basis financial statements, which was not recorded on the cash basis financial statements because the revenue was not collected as of December 31, 2006. The difference was primarily due to the following interdepartmental revenue items:
- Ambulance fees (outstanding receivables are overdue and the city has a part-time employee/retiree at St. Luke's Hospital collecting the ambulance fees due to the insurance processing)
- Police roster fees
- 911 fees

8. Meet with all departments as to policies and procedures - I or the Deputy Controller will personally meet with all departments to review procedures, policies, any existing manuals, cash handling detail, etc., which will facilitate future audit plans.

9. Review of medical insurance and catastrophic insurance processing - My department will review the medical insurance claims processing procedures and reimbursement of catastrophic medical reimbursements. I have a meeting scheduled for February 11, 2008 with Mike Caruso and Joe Leonard to discuss my questions/concerns.
- The city is currently responsible for catastrophic medical expenses up to $100,000 and up-front expenses over $100,000 and is reimbursed for expenses incurred over the S100,000 threshold. The reimbursements in the past have not been made on a timely basis.

10. Operation and performance audits of departments and other entities (including the entities that are part of the Bethlehem Authority) - My department will perform announced and unannounced operational and performance audits of various departments and entities as determined through my analysis of financial information.

- i.e. the Municipal Golf Course did not make a profit, therefore, my department will review/audit the golf course to make it more efficient (cash collection procedures, increase revenue generation in other ways, etc.)

11. Review purchase policies and procedures as they relate to pricing negotiations - My department will review the purchase policies and procedures related to price negotiations for quantity discounts. This relates to office supplies, equipment, energy and utility usage, insurance, etc. For example, two departments will purchase photocopiers/printers at the same time and not consider grouping the purchase for additional discounts.

12. Meet with Sands-Beth Works representatives to review the host fee contract,revenue generation and computations - I will personally meet with the Sands-BethWorks representatives to review the host fee contract, revenue generation and computations.

- Determine the applicable reporting, collection, gaming requirements and remittance of revenue to the city.
- Determine city collection, reporting, budgeting, projection and spending of revenue with controls.

13. Meet with various other local government controllers to coordinate any efforts with respect to related areas -I will meet personally with other local government controllers (Allentown, Lehigh County, Northampton County, etc.) to coordinate any efforts (i.e. the casino host fees and revenue collection/calculation).

An Express Times account of Holland's busy agenda, including Mayor Callahan's reaction, is located here.
Update: The Morning Call's story is here.

Meg Holland's Campaign Explains Her Upset in Bethlehem Controller Race

"The Democratic nominee is David DiGiacinto (and he is going to win).

The Republican nominee is Meg Holland (and she is going to lose)."

That's what BethlehemDem wrote a few days ago about Bethlehem's Controller race. I agreed with him, too. After all, Democrats have a vast registration edge and DiGiacinto outspent Holland three to one. But when the dust had settled late Tuesday night, Holland was standing on top. She won in both Lehigh and Northampton County, squeaking by with 51.38% of the total vote.

So how the hell did Meg pull this rabbit out of a hat? Here's how campaign volunteer/daughter, Meg Holland Schaeffer, explains it.

- Walking to 3,000+ doors

- Poll coverage by family members (almost all polls were covered and we all stood out from 7am-7pm most without leaving) and even with all the press coverage people still did not know much about the Controller race (DiGiacinto floated around between polls, but I believe only had 2 or 3 covered all day)

- Very effective campaign mailers

- Qualifications (people who did read about the race said they understood that she was more qualified)

- "Holland" last name and people's friendship and respect for my grandparents and other family members (Attorney Robert Holland and Marie Holland) (BethDem told me it didn't matter about my grandparents.. a lot of people told us at the polls they came out to vote for my mom because of them)

I'd prefer to think it was magic.

NY Execs Fund DiGiacinto's Bethlehem Controller Quest

David DiGiacinto filed elections office reports today to indicate he's picked up another $4,000 in the Bethlehem controller race. All of this money comes from hot shot execs from the Big Apple. This is in addition to the $55,000 he's already reported for a job that pays $47,000 a year.

All this does is make me more convinced that Meg Holland is the right choice.

Bethlehem Dem: Voters Lose if They Select DiGiacinto as Their Controller

From a well-written article about the Bethlehem Contrtoller race, posted by BethlehemDem:

The Democratic nominee is David DiGiacinto, and he is going to win.

The Republican nominee is Meg Holland, and she is going to lose.

The real losers will be the people of the City of Bethlehem. The voters will be making a huge mistake by electing David DiGiacinto.

If DiGiacinto is elected, the City will be subjected to turmoil and controversy. If you have read my blog you already know that DiGiacinto is part of the Schweder-Rooney faction of the Democratic party. There is a fear that DiGiacinto will hold personal grudges against Mayor Callahan and will go out of his way to cause trouble for him. This is something that the City cannot afford to go through with the impending development of the Steel land and BethWorks.

Bethelehem Controller Race: Holland Getting Democratic Support

As The Morning Call notes, Democrat Dave DiGiacinto has collected three times as much money as his Republican opponent, Meg Holland. But what I find most interesting about the money battle in that race is the Democratic support that Holland has garnered.

Bethlehem Attorney Ed Redding, a behind the scenes playa, has risked excommunication by Bossman Joe Long and kicked in $500. Attorney Phil Hof has also contributed to Holland's campaign.

Bethlehem Controller Race: DiGiacinto Ducking Debate

The League of Women Voters has scheduled a candidates' forum on Halloween for Bethlehem City Council candidates, even though that race is pretty much over. But amazingly, it has skipped the controller's race between Meg Holland and Dave DiGiacinto, which is very much up for grabs.

So Bethlehem's Southside Task Force has picked up the slack and has tried to schedule its own candidates' forum, but DiGiacinto has declined. "At this point, my business and campaign schedule precludes [sic] me from being able to accommadate [sic] the special event and timing you are suggesting. I am booked solid with various events, and business related activities, from October 23rd through November 2nd."

Meg Holland, of course, is "very disappointed that my opponent has declined to participate in an open candidates' forum for the City of Bethlehem Controller position. . . . I would still like to hold an open forum to allow the City of Bethlehem residents to ask me questions."

When I have the details about Holland's open forum, I'll post them.

In the meantime, BethlehemDem has an update on DiGiacinto.

Bethlehem Voters Have Tough Choice in Controller Race

Republican Meg Holland (CPA/ABV, CVA, CIA) is opposing David DiGiacinto (DEM) in Bethlehem's controller race. Holland is clearly the more qualified candidate, and her daughter made a nice pitch for her here.

But is she independent?

As a Republican, you'd think she'd be the ideal person to look over the books in Bethlehem, whose Mayor and council are Democratic. But since Holland has the quiet support of Mayor Callahan, some suggest she is actually be less independent than Democrat DiGiacinto.

Today's Morning Call reports that Bethlehem has been dipping into its escrow account over the last three years to cover expenses. Is this a good financial practice? Yesterday, I tried contacting both candidates. Unfortunately, I only was able to reach Meg Holland, and was surprised to learn that she was conducting a press conference about that issue later in the day. Here's what she has to say about dipping into an account with funds earmarked for specific projects.

[T]he city’s actual operations in 2006 required additional cash which the city borrowed from various funds at year end and repaid the funds in March 2007. The liability was properly recorded on the balance sheet at year end. The Auditor/CPA at the finance committee meeting stated she audits four other municipalities and they all have borrowed from other funds to cover short falls.

Holland is not so disturbed about borrowing money from an escrow account. But before you conclude she's just a Callahan rubber stamp, she also stated there are two areas that need investigation: 1. Departmental Earnings – revenue was over $447,000 less than anticipated.
2. General Expenses – expenses were more than $476,000 than anticipated.

I also compared the accrual based financials to the budgeted financials and I noted that departmental earnings reported on the accrual basis were over $2 million dollars higher than the cash basis budgeted financials.

I learned through my conversation with the Business Department of the city, that the major variance in departmental earnings is due to the fact that the city’s ambulance receipts collection are delayed. The billing and collections of ambulance services are performed by St. Luke's Hospital for the city. According to my inquiries the receipt delay is primarily due to claim processing problems. As the Controller, I would perform an operational audit of the entire process in order to expedite receipt of the over $2 million in ambulance fees.

The actual general expenses were in excess of the budgeted by $476,000 and is due to delay in medical reimbursements. Apparently even though the city has catastrophic insurance, the city must first pay all medical expenses and then the claim administrator files for reimbursement from the insurance company for the city for all medical expense payments made in excess of $100,000. I was told that the reimbursement checks were finally received by the city in 2007 for 2006. As Controller I would perform an operational audit of the insurance contract and claims processing to determine any inefficiencies.

Lastly, the second management comment is regarding the fact that all purchases are not acquired with approved purchase orders. This management comment has appeared on the city’s audited financial statements for several years because Wally DeCrosta (former Controller) wanted the purchase orders to match the invoices exactly. Therefore, purchase orders were not recorded in the accounting system until invoices were received. Approved purchases orders should absolutely be required and recorded in the system before any purchase is made, by any city employee. This control is to make sure that a purchase by city employees has been approved, budgeted and is necessary. By not requiring this, purchases can occur for purposes not for the city and in excess of budgeted amounts. I would first notify all city vendors that they cannot except an order without an approved purchase order and any invoices received which did not have authorized purchase orders will not be paid. Then I would obtain a listing of past paid invoices for the last five years on these accounts and investigate them for fraudulent activity.

Now, if you can understand what the hell she said, you're better than me. Clearly, she's in another league. And obviously, she's independent. Mayor Callahan surely didn't write that for her. She'd be an asset to Bethlehem.

Bethlehem Controller Race: A Pitch for Meg Holland From Her Daughter

This November, Bethlehem voters will choose either Meg Holland (CPA/ABV, CVA, CIA) or the less qualified David DiGiacinto as their next controller. Although Meg is clearly the better candidate, she's missing three very important letters from the litany of initials that follow her name - DEM. In the Christmas city, that's going to hurt her.

Yesterday, one of Meg's twin daughters, Maureen Holland Schaeffer, made a pitch for her mom. It's pretty good, and I want it with the rest of you.

It will be a shame if someone with Meg Holland's qualifications and experience does not get elected in the City of Bethlehem even though she is a republican... she is in the city's best interest.

Note Meg Holland's Website (www.hollandforcontroller.com):- You’re a registered Republican, how do you expect to get elected in the Democrat dominated City of Bethlehem?

It is my understanding that the ratio today is more than 2 to 1 Democrats to Republicans. People can look at me as a Republican-Democrat. I was a registered Democrat for over 25 years and my parents (Bob and Marie Holland) were active Democrats. My father was very involved in Congressman Fred B. Rooney’s campaign and President John F. Kennedy’s campaign. I remember wearing the JFK campaign hat during the late night election results with my brothers and sisters in 1960. I changed parties six years ago to support my brother-in-law, David Donio, who is Republican. He was running for State Representative and I was his Campaign Finance Chair.

Since I always vote for the candidate who is most qualified for the position, I did not see a need for a particular party alliance. As I said before, the Controller position should be non-partisan, a “watchdog” of the finances for the taxpayers. Actually, with a Democratic Mayor and a majority Democratic Council a Republican Controller would be a more appropriate watchdog.