November 5, 2012 – An internal audit shows Glendale (Aa3 / 378280SV4) administrators improperly took about $6 million from a city trust fund over three years to cover expenses. The audit obtained by The Arizona Republic shows the account dropped from about $8 million in July 2010 to less than $3 million in June largely because of the improper transfers. The trust fund is essentially a self-insurance policy to cover personal injury or property damage liabilities. The audit found city staff used the money during tight budget years to pay other bills, including $3.2 million to the state retirement system, $2.65 million to the city workers compensation trust fund and $500,000 to pay for administrative expenses and salaries. The drawdown of the insurance trust fund means the city may come up short of cash to cover liabilities. The fund board apparently wasn’t told, but the City Council was told of some payments. The revelations come as Glendale voters were to decide Tuesday whether to repeal a sales tax increase the city council approved to bolster the city budget. Proposition 457 seeks to undo a temporary, five-year city sales-tax hike and require all future sales-tax hikes to go before voters. If the ballot measure is approved, the city estimates it would lose about $25 million annually and face dire budget cuts. But proponents say the extra tax hurts businesses and that the city should focus instead on controlling reckless spending.
Link to Full Article: http://azcapitoltimes.com/news/2012/11/05/audit-glendale-wrongly-used-6m-in-trust-money/