It took barely three minutes: the Florida Legislature’s Joint Legislative Auditing Committee this afternoon voted unanimously to conduct an operational audit of the East Flagler Mosquito Control District.
The committee’s decision was expected since Sen. Travis Hutson and Rep. Paul Renner, who represent Flagler County, asked the committee in an Aug. 25 letter to consider an audit after FlaglerLive first reported three weeks earlier that the tax-supported district incurred a $1.1 million deficit in a budget of $1.8 million. The deficit did not significantly hamper district operations but it significantly diminished what until then had been substantial reserves. It did so shortly after the district had inaugurated its new, $2.1 million headquarters on property at the south end of the county airport.
District officials explained the deficit as an accounting error, not an actual lack of funds. But the deficit raised questions about what money was actually spent and how: “The district’s dramatic budget deficit in relation to its overall budget requires investigation and justifies an independent audit,” Hutson and Renner wrote the joint legislative committee, hoping to get answers to the question.
Renner was at the committee meeting and presented the request. Sen. Dennis Baxley, a Lady Lake Republican, asked if a representative from Mosquito Control was present. None was, nor had anyone else requested to address the joint committee. Members, who include five state senators and six House representatives, then without questions approved Renner’s request, 10-0 (one was absent).
At this point, the Legislative Auditing Committee will direct the Auditor General to conduct the audit of Mosquito Control. There’s no specific time as to when that would be done other that it be a “reasonable” span. The Auditor General would then conduct a follow-up the audit report about a year and a half after the release of the initial report to determine if the local government agency being audited has addressed recommendations.
The Auditor General will examine “financial statements in order to provide reasonable assurance about whether they are fairly presented in all material respects,” a staff analysis by the joint legislative committee states. “The focus of an operational audit is to evaluate management’s performance in establishing and maintaining internal controls and administering assigned responsibilities in accordance with laws, rules, regulations, contracts, grant agreements, and other guidelines.”
The Auditor General has no enforcement authority. “If fraud is suspected,” the analysis continues, “the Auditor General may be required by professional standards to report it to those charged with the District’s governance and also to appropriate law enforcement authorities.” It’s up to the agency being audited to implement corrective actions. “Alternately, any audit findings that are not corrected after three successive audits are required to be reported to the Committee by the Auditor General,” and further action may be warranted.
Legislative committee staff prepared an analysis of the issue summarizing the mosquito control district’s history (it was established by the County Commission in 1952 not just to control the mosquito population but to “promote the economic development of the state” by reducing the number of mosquitos).
Most of Flagler County taxpayers pay for mosquito control through their property taxes—about $30 a year on a median-priced house. The district has responsibility for about 117 square miles, including all of Palm Coast, Flagler Beach and Bunnell, but not west Flagler.
“District staff made an error when preparing the budget documents for the 2016-17 fiscal year and used an incorrect amount as the beginning fund balance,” the staff analysis summarizes. “They did not properly account for certain construction costs from the new facility and input the beginning fund balance of $2.89 million from the prior fiscal year (2015-16) rather than the ending fund balance of $1.79 million. This error resulted in the beginning fund balance for the 2016-17 fiscal year being overstated by $1.10 million.”
Last October Palm Coast bought Mosquito Control’s former headquarters on Utility Drive in Palm Coast for $317,000, a transaction that helped the district’s bottom line. The district was still working on selling another property on county airport grounds.
“Flagler residents pay additional taxes to support an independent mosquito control district and reasonably expect the district to achieve greater efficiency and cost savings,” Renner is quoted as saying in the staff analysis. “The lack of internal controls and safeguards that caused this deficit certainly call that efficiency into question.”
District officials and members of its elected board have since August said that district finances are under control. The district’s long-time director resigned soon after the revelations of a deficit and revelations that he had cut back his hours in a six-month plan to retire, and his successor, Mark Positano, has said that the district would cooperate with any auditing agency.