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Staff discloses an unbudgeted $1 million loan payoff that will be reported as an Oregon budget-law violation
Summary
Staff told the board that a prior unbudgeted payoff of an OHS loan (about $1,000,000) was taken from fund balance and will be disclosed as a budget violation in audit work led by finance director Dana Mason; staff said the accounting was not nefarious but that the action conflicts with Oregon budget law.
City staff told the board that audit preparations by Finance Director Dana Mason revealed an unbudgeted payoff of an Oregon Housing and Services (OHS) loan and that the payment will be disclosed as a budget violation.
A staff member said the payoff occurred in the first half of the prior year and was covered by using fund balance because no other budget line existed. "We don't see a way around disclosing a budget violation for Touro," the staff member said, adding that the accounting itself was proper and that the disclosure would be an audit finding of a violation of Oregon budget law rather than a finding of nefarious conduct.
Board members asked clarifying questions about whether ending fund balance can be used; staff explained that ending fund balance generally cannot be spent in the same fiscal year except in emergencies and that the appropriate process would have been to budget the expenditure in a separate fund or to use contingency. The staff member described the payment amount as about $1,000,000 and said the fund-balance cushion at the time was "a million and a half dollars."
No formal action was taken; staff presented the item as a heads-up tied to audit preparation and said the disclosure will appear in audit reporting.
