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'We want full transparency'

Washington County commissioners vow to examine fire and rescue finances, increase accountability

April 14, 2012|By ARNOLD S. PLATOU | arnoldp@herald-mail.com
  • Former Washington County Volunteer Fire and Rescue Association President Glenn Fishack.
File photo

The Washington County Board of County Commissioners is pledging to increase accountability standards so it’s clear not only why public money is being given to volunteer fire and rescue companies, but how they’re spending it.

A majority of the commissioners told The Herald-Mail recently that the changes should include examination of each company’s financial needs and perhaps abandon the longtime practice of handing out the same basic subsidies to all of them.

Most of the commissioners also said that before giving one Hagerstown fire company additional funds, the county will question it about tens of thousands of dollars in expenses it refused to explain to the newspaper last year during an investigation of accountability in the fire and rescue system.

“We want full transparency ,and we’re going to withhold our funding until we get it,” Commissioners Vice President John F. Barr said.

Commissioner William McKinley agreed. “If we don’t, then this whole issue of accountability is diminished. So, surely, I believe there will be questions asked.”

The commissioners, embracing this year’s spirit of cooperation from the Washington County Volunteer Fire and Rescue Association, said the public can trust that there is a new partnership dedicated to full accountability.

“I think we’re all put on notice, from your newspaper articles, to the new legislation, to comments from companies,” Commissioner Jeffrey Cline said. “I think you’re looking at a group of people who are going to make good effort to keep all this transparency.”

Some of the commissioners said they share in the blame for not having in place a good review process for fire and rescue finances. They said they believe the accountability problems are more the result of such county failings than of any company’s actions.

“I just believe there was no direction. People doing things best they could,” Cline said.

The push for accountability comes in the wake of a series of Herald-Mail stories based on the newspaper’s yearlong investigation. The paper examined thousands of pages of local and federal financial records, and interviewed dozens of officials.

Key findings included:

 The volunteers’ association has been keeping a large chunk of the millions in public gaming money that lawmakers said they originally intended to go to the volunteer companies.

 The 1995 law that set up the county’s public gaming fund didn’t spell out what the association should do with the money and didn’t set up any governmental supervision or public accountability.

 As a result, the association had been dividing 80 percent of the money among the local companies without telling local government who was getting what. While keeping the rest to pay for a range of services benefitting the companies, the association had built up more than $500,000 in cash and investments.

 The county government, which requires each of the 27 volunteer fire and rescue companies to file a financial report annually, was barely looking at the reports before releasing millions of dollars in support payments to the companies.

 One local fire company knowingly filed incorrect financial figures, without the county questioning or delaying funding. Meanwhile, other companies had to go for months without county funding because they waited to file accurate reports.

 The county government and the volunteer association have been giving two fire companies more than $50,000 a year each in aid — even though one of the companies hasn’t sent any of its own volunteers to a fire in more than two years and the other, as of this month, in five years. One of those companies has more than $600,000 in cash and investments.

 One of the county’s busiest volunteer companies filed a report to the Internal Revenue Service, saying the company suspected someone was embezzling money.

 One fire company had been writing checks to a business that provided workers to sell tip jars in the volunteer company’s gaming operation, a revelation that led to a police investigation over the winter.

The newspaper also found that several companies are opening their financial books to public scrutiny.


From ‘whoa!’ to progress

As the newspaper’s initial findings became public last fall, some members of the county’s legislative delegation expressed displeasure.

“Whoa!” Del. John P. Donoghue, D-Washington, told the newspaper earlier that year, when he was asked about the association having as much as $628,842 in cash and investments by mid-2010.

Association President Glenn Fishack had told the paper that parts of the “little nest egg” were being saved for such uses as a new emergency services training center and, if anyone ever sued them, for an attorney.

“That wasn’t the purpose of this,” Donoghue said. “The purpose of this was to build for charity, and for fire and rescue (companies), not for somebody to build fund balances in case something’s going to happen. You don’t need a bankroll like that.”

The newspaper’s findings, Donoghue later said, led to the delegation joining the county commissioners on Sept. 20 in a somewhat confrontational meeting with Fishack, who had been president of the association since 2008. The lawmakers soon declared plans to change the 1995 law to give the county control over how the gaming fund is used.

Half of the fund, which contains a portion of the tip-jar gaming profits earned by businesses and private clubs, is given to charities and half goes to the association. Tip jars contain small cards bearing numbers, some of which win cash.

Fishack fought giving control to the commissioners but softened his position after the delegation warned him that any display of divisiveness in the Maryland legislature risked the loss of the gaming money to the cash-strapped state.

Since January, when the legislature convened and the new gaming bill was filed, the association actively supported it. Fishack, whose term ended in December, and newly elected President Dale Hill, who took office in January, testified in its favor.

The General Assembly has approved the bill. If Gov. Martin O’Malley signs it, the measure would take effect Oct. 1.

It empowers the county commissioners to require the association to submit financial reports, including its annual budget and information that “shows how money has been spent.”

The bill also gives the commissioners the right to approve or reject the association’s budget. The commissioners can withhold the money until they approve the budget.

In the meantime, the association’s new leadership and its members have begun making changes.

Early this year, a majority of the members voted to withdraw about $263,000 of the association’s financial holdings and divide the money among their companies, Hill said. The $263,000 was being saved to build a training center, but members now believe the county will pay for that, Hill said.

The withdrawal, together with the association’s increased spending on physical exams for its volunteers, should leave “very little” in the cash and investment accounts when the current budget year ends this summer, he said.

Furthermore, the association has told the companies they soon will have to report how they spend each year’s allocation of the public gaming money — a show of accountability Hill pledged to the delegation.

“It’s a different administration and a different process,” Hill said.

In talks with some of the commissioners and the county’s emergency services director, “I’ve said I want to make sure we have an open, cooperative relationship ... and not have any stigma that the association is a group on its own,” Hill said.

He said accountability is more important than ever because the local fire companies need more public funding. The county has been giving the EMS companies a special subsidy since 2010, but there’s been no such relief yet for the fire companies, which are finding it “increasingly harder ... to continue functioning,” he said.

Hill’s actions contrast sharply with Fishack’s. Last year, Fishack told the newspaper he was giving the commissioners all the financial information they wanted — a claim the county disputed — and he refused to divulge information to the county gaming director, urging his members not to provide any either.

But Hill seems to be bent on changing all that this year.

On March 13, while he was in Annapolis testifying on the gaming bill, other leaders of the association presented its operating budget to the commissioners for the coming fiscal year. The presentation was the first in at least four years, a lapse criticized by county Administrator Gregory Murray in a meeting with Fishack last fall.

This time, things were different.

“We really appreciate the information you provided,” Murray told association First Vice President Robert Moncrief and Assistant Treasurer Rick Hemphill. “We certainly appreciate what you’ve been able to provide us.”


Shouldering blame

Asked in separate interviews what still needs to be done to improve accountability, the commissioners said the county has clear steps it must take.

They said they want the county Office of Budget & Finance to begin reviewing and evaluating each of the fire and rescue companies’ annual reports, and to make recommendations based on them.

The budget office had done that until 2005, when the commissioners in office then decided to send the reports only to the county Division of Emergency Services. DES oversees five departments, including the county’s 911 emergency communications center.

But Kevin Lewis, who became DES director in 2008, told the newspaper last year, “I don’t have the staff or the time” to routinely review the companies’ financial reports to see whether they’re spending money wisely.

So, based on when a company’s report is filed — not what’s in it — Lewis said he’s been authorizing the budget office to begin releasing county funds to each of the companies. In all, the county is budgeted to give the 27 companies $3.7 million in the current fiscal year.

Just looking at when — not what — isn’t acceptable, the commissioners told the newspaper.

But they said they don’t blame Lewis.

“Any time you have a process and you don’t have anything to make that process work, part of the blame is yours,” said Commissioner Ruth Anne Callaham, who took office in late 2010. None of the current commissioners was in office in 2005.

It created a problem when the county decided in 2005 to “funnel these reports in to someone whose main job is fire and rescue,” Callaham said, referring to Lewis and his predecessors. “I think the county needs to rethink that. I’m not critical. I just think you had a financial process being managed by a nonfinancial person.”

Although she wasn’t in office back then, Callaham said she should have realized there “was not a clear process for evaluating” the financial reports. “In not seeing that was done, then I’m as guilty as everybody else,” she said.

In addition, she said, “we didn’t have a lot in place to make sure the people we were evaluating understood what it was we wanted,” she said of the fire and rescue companies. “Now, on their side, they didn’t ask enough questions.”

Barr said that this past fall, as he read the newspaper stories, he realized the county needed to do “a more comprehensive financial review” of the companies because their revenue sources range from taxes, to fundraisers, to gaming, to grants.

Barr said expecting DES, instead of the budget office, to review the finances was akin to “having a plumber come to your house, and you probably should have had an electrician.”

By switching the process back to the budget office, he said, “we can assure (taxpayers) that money is being spent properly and evaluated properly.”

Commissioners President Terry Baker said the need for accurate reports is clear.

“The companies want that, the citizens want that and the county commissioners want that,” he said.


Making ‘miscellaneous’ smaller

Debra Murray, director of the county Office of Budget and Finance, said in a March 22 email to the newspaper, “it would make sense to consolidate everything in one place. I know that is the direction Greg is taking with the operation,” she said, referring to county Administrator Greg Murray, who is her husband.

With the new legislation, “more reporting will be required and in more detail,” she said. “... We are currently waiting to see what authority we have so it can happen all at once.”

At that point, Greg Murray will recommend procedures for the commissioners to approve “that will detail what is submitted by the association and, of course, where they submit it to, which will be here,” Debra Murray wrote.

She said the county will wait until the companies file the latest round of financial reports — which were due by March 31 — before deciding “if anything needs changed.”

Baker said the county’s staff “will be in charge (of) coming up with an accountability reporting form.” He said he doesn’t know what it will require.

On being told the newspaper found many inconsistencies in how companies fill out the reports and that some companies report as much as 40 percent of their operating expenses on the “miscellaneous” line, Baker said more line items should be added.

“Obviously, that’s one of the things we need to work on and get cleaned up,” Baker said.

“They need to do a better job of itemizing what they used 40 percent” of the funds for, he said. “‘Miscellaneous’ needs to be broken down and (be) more explicit as to what they actually purchased with those funds.”


No more even-steven?

As the county begins examining the financial needs more closely, the commissioners said they are open to abandoning the practice of giving the companies identical amounts of money as a basic operating subsidy.

For two decades or more, the county has given each of the six volunteer-owned companies in Hagerstown one amount — currently $24,500 — and has given each of the 21 outside the city another — currently $48,000.

“I am open to discussion of everything,” Callaham said. “To me, right now, everything is on the table.”

Asked whether that means some companies might not get any subsidy, she declined to elaborate. Saying so now would “just be inflammatory,” she said.

How much each receives should be “data-driven decisions,” Callaham said. “We’re going to look at the data, look at number of calls, distance that they travel, the response time, the equipment needed, just look at all of that.”

McKinley said the county’s practice of giving the subsidies uniformly has been a question to him ever since he was on the county’s Gaming Commission several years ago.

Part of the commission’s job is to distribute to charities the other half of the county’s gaming fund. Charities apply for varying amounts, submitting financial and other backup information.

“Surely some of these fire companies have a greater need than others. They are bigger, have greater need,” McKinley said. On the other hand, he said, “the little companies, their fundraising abilities are less.”

So, “I’m all in favor of taking a look at need,” McKinley said. “... I think almost anyone that would look at that (would wonder) why does everybody get the same?”

Barr said the county “absolutely” needs to determine whether a company needs the county’s subsidy. “These are the kinds of things we need to be aware of,” he said.

“One size just doesn’t fit all,” he said.

With the newspaper’s scrutiny, “things are coming to light,” Barr said. “I think this in-depth comprehensive evaluation is really flushing out a lot of these issues, and we’re all asking both ‘why?’ and ‘why not?’”

How quickly and how smoothly the system is improved depends, in part, on how the companies respond to the changes, Barr said.

“I think it’s win-win for everybody if they all cooperate. But if it’s still push-back, it’s the same we’ve always had.”

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