In early June, Flagler County’s Mosquito Control District officials were celebrating their new headquarters on the grounds of the Flagler County Executive Airport. They invited county commissioners and others to bask in the ribbon-cutting for a $2.1 million, 10,000-square-foot facility with its own helipad to replace its more cramped offices on Utility Drive off Old Kings Road.
The celebration did not last.
The 14-employee district, supported entirely by revenue on Flagler residents’ and businesses’ property taxes in the eastern end of the county, is facing a $1.1 million deficit as a result of construction of that new building and “overspending in almost all line items,” as Joe Cash, the district’s executive director, put it to staffers in a memo two weeks ago obtained by FlaglerLive, along with other documents. (See below.)
The district provides mosquito control through spraying and inspections in the Hammock, Flagler Beach, Palm Coast, Bunnell, Beverly Beach, Plantation Bay and other areas of eastern Flagler County. The district’s operations are essential to the local quality of life and public health.
“But we’ve developed a couple of plans to resolve that,” Cash said today, noting that actual mosquito spraying and inspection services will not suffer, even though some inspections will be cut back and six of the district’s 14 employees will be laid off.
The deficit came to light, Cash said in a July 28 letter to the mosquito control’s elected board members, only when an accounting error was discovered. “The fund balance was incorrectly stated and by the time the error was discovered the budget was overspent by $1.1 million,” he wrote.
“I have placed a freeze on all but essential spending through this year and into the next,” he wrote, “but even that will not be enough to balance the 2017/2018 budget which as of mid-July was projected to fall $1656,000 short even with the 5% tax increase approved.”
He calls measure to balance the books “harsh.”
The district laid off four employees this week–its four part-timers. Two full-time employees will be laid off. Pilot training is “out,” according to a memo prepared by Rachel Knapp, the district’s finance director (the district has its own helicopter, and that helicopter’s flights will be cut back.) Cash is losing his health insurance, Knapp is losing her dependents’ health insurance, both will not see pay increases. Employees will see a $250-per-employee increase in health insurance costs (it’s not clear if that’s per month or for the year). All remaining employees’ raises will be limited to a 3 percent cost of living increase.
The district is hoping to sell its old building on Utility Drive to the Palm Coast city government for $300,000, what would essentially be a bail-out at city taxpayers’ expense, to make up some of the deficit. The district had been in negotiations to sell the building to Palm Coast about a year ago but the district had backed out, Cash said in an interview Thursday evening. “We didn’t have enough time to execute the project with what we were doing with the new building,” he said.
“We’ll make it up even if the building doesn’t get sold,” he said of the deficit. “The services to residents will not suffer. We will contract our operations and consolidate, we’ve done this before during hurricanes.” But in the wording on the agenda for the emergency meeting, he was anticipating that if Palm Coast does not buy the building, the district would need to further go into its reserves.
Cash had called a special, emergency meeting for Friday morning at 10 a.m. for the three-member board to approve some of those measures. (The documentation sent board members listed the date of the meeting as Aug. 7.) He had to cancel the meeting after the public notice had been deemed improper: it had only gone up on a door at the district office. There was no mention of it on the district’s web site, and it may not have provided for the legally required minimum of 24 hours’ notice.
But Cash’s July 28 letter to board members included a suggestion to board members that, had they complied and the actions been carried out, would have been a violation of the state’s Sunshine law: “If you wish, we can set a special meeting to discuss this,” he had written the board members, “or you can respond to this email with your approval to release $100,000 in reserves and sell the Utility Drive property.” No such approvals by email are legal . “At the next meeting, you can retrospectively act on the approvals requested,” Cash went on.
Elected board members meet regularly and oversee the budget. But they seemed clueless about the crisis Thursday, other than from the materials they had recently received from Cash.
“I thought everything was going good, we had the new building up and everything,” Jules Kwiatkowski, who chairs the board, said in an interview Thursday. “I didn’t know about any problems.” He had received Cash’s and Knapp’s memos but referred all further questions to Cash, saying he’d know more after the special meeting. Less than an hour later, he acknowledged that the meeting had been cancelled or postponed. (Cash said it would take place in seven to 10 days.)
Barbara Sgroi, another board member, who had also received the memos and outlines of proposed cuts, described the matter as “a little bit of a situation that we’re going to talk about at the meeting.” At first she referred to the “situation” as a “deficit,” but then, after her husband whispered to her nearby not to use the word, she said it wasn’t a “deficit.” (It is, in fact, a deficit, as Cash himself characterizes it.)
Sgroi then explained, between further whispers in the background, “When we built that brand new building I think the cost was a little bit expensive but then we ran into some problems, you know with the contractor and things like that, and right now that’s what we’re going to discuss.” She added: “But it’s nothing serious, there’s nothing, ‘Oh my God.'”
The numbers Cash and Knapp presented, however, say otherwise, considering that the deficit is 61 percent of the budget. And the words Cash used previously to alert district staff about the emergency left no doubts about the “critical” nature of the emergency (a word he used in his letter to board members).
“Due to construction activities and overspending in almost all line items, we are facing a very tight budget for the remainder of this year,” Cash had written employees, “and a deficit in 2017-2018.” Effective immediately, he commanded, every purchase of $250 or more had to have his approval, without exceptions. “If I am not in the office, text me for approval,” he wrote, ending his memo with a required “sign off” from every employee.
In some counties, mosquito control is an arm of county or city government. In Flagler County, it’s an entirely independent operation, with its own elected board and taxing authority. (A $175,000 house with a $50,000 exemption ends up taxed at around $30 a year by the district, more now with the coming tax increase.) That doesn’t preclude some cooperation between the district and the county, as with the deal that provided the airport land for the district’s new building.
But Thursday evening was the first that County Administrator Craig Coffey was hearing of the emergency at the district. “They have not reached out to us for any assistance,” he said. “We’re always willing to help where we can.”
It remains unclear how a $1.1 million error could escape the oversight of three board members, the finance director, the executive director and even the district’s independent accountant.
That accountant, Julieann Klein of Lombardo Spradley Klein in Daytona Beach, explained it this way in a July 25 memo: “When the 2016-2017 budget was drafted the actual fund balance for the year ended September 30, 2015 was used as the amount of fund balance to be carried forward d into the 2016-2017 budget year, The amount that should have been used was the projected fund balance as of September 30 2016 The budget process occurs in June and July several months before the end of the fiscal year so this amount has to be projected usually based on the budgeted amounts for the fiscal year prior to the one being budgeted, in this situation September 30 2016 as adjusted for any unusual activity known at the time of the budget process.
“Prior to the construction of the new facility the District’s budget and actual amounts have been fairly even so the prior year’s fund balance was always close to the carryforward fund balance. When the District began construction of the new facility and began to use the funds available from prior years there was a dramatic drop in the carryforward fund balance which was not properly reflected in the 2016-2017 budget. Since the District has not utilized funds from prior years in a very long time the staff preparing and reviewing the budget did not realize the error until after the audit was completed.”
Neither Knapp nor Cash responded to–or acknowledged–public record requests Friday. Knapp provided requested documents Monday morning.