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Our View: Forensic audit of DeKalb budget may be needed

It may be time for a forensic audit of the city of DeKalb's finances.

Twice in the past three months, irregularities in the city's budget have led to proposals to make emergency repayments.

On Friday, city officials announced they were placing their interim City Manager Molly Talkington on leave while they investigate a recently uncovered scheme to reduce the city's contribution to a co-op that provides its employees with health insurance. According to a city news release, unidentified officials recently discovered that this year's budget called for the city to contribute less than its 80 percent share of the cost of employee benefits in order to save about $250,000 – and eliminate the need for more budget-cutting.

City Council and Finance Advisory Committee members were not informed of this plan, officials say.

In September, School District 428 officials said the city had misspent millions worth of tax increment financing funds over several years, inappropriately directing $500,000 to $800,000 a year for administrative costs.

DeKalb's two tax increment financing districts redirect about $6 million to $8 million a year from the local governments that are supposed to receive them to redevelop "blighted" areas. DeKalb school officials say the city for years has spent far too much of the money to balance its own budget.

In response, Mayor Jerry Smith offered to pay the local governments that run the area's schools, parks, libraries and sanitary system about $11 million – all the money remaining in the city's tax increment financing accounts.

On Tuesday, the City Council will meet to consider a plan to make an emergency payment of $250,000 to its employee insurance co-op. Council members also will consider a measure to return Talkington to her position as finance director and could appoint their third interim city manager in less than a year.

What about the city's auditing firm, Naperville-based Sikich LP? The city agreed to pay them more than $56,000 in 2016 and 2017 for a comprehensive audit of its books, including the TIF accounts. Before that, the Naperville-based firm Lauterbach & Amen was reviewing city accounting. Why was a school district lawyer able to uncover a trend in one review of the finances that the auditors apparently did not?

The city needs clarification on whether the allegations of misspending are accurate. If there is to be any more tax increment financing in town, funds must be spent appropriately.

In the midst of all this, the city still does not have a permanent city manager. Smith says the council should have a shortlist of candidates ready by the end of this week and are hoping to hire a permanent manager by year's end. At a minimum, that person should be tasked with an in-depth examination of how money is being spent and why. Take the budget apart and put it back together again.

From what we have heard so far, these issues seem to have arisen out of a desire to balance the budget, rather than outright fraud. However, given what we have heard from the city and outside sources, an in-depth examination of whether public funds are being spent appropriately across the board merits consideration.

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