As SCM reviewed the last few years worth of audits, we noticed something rather odd.
The City's audit for FY2020 appears to have moved $1.7M out of the General Fund into a business fund. This move occurred sometime between July 1st, 2019 and June 30th, 2020. During this timeframe, Lena Richardson was the City's Mayor. The RVSS Annexation of the City's sewage plant was finalized on July 1st, 2019, at the start of the budget year; the transfer was attributed to the need to provide capital for transactions related to the RVSS annexation and closure of the Sewer Operations fund.
However... when the delayed audit for the next fiscal year (FY2021) was completed in early 2024, the transfer was reversed, moving $1.3M back to the City's General Fund. At the same time, the prior year's 2020 beginning balance was re-stated by almost $100,000 dollars due to corrections to the FY20 sewer annexation amounts.
We allege that the resulting shortfall in the General Fund due to the transfer in 2020 would have significantly hampered the next Mayor (Shari Tarvin) during her term.
As reported elsewhere on our website, City Leaders acknowledged publicly that they knew of additional funds available to the City (read more here). We are aware that there have been rumors for some time that the additional funds were somehow related to a forgotten transfer of money due to RVSS. However, we don't believe that explanation is accurate. We note that Shady Cove transferred approximately $4.5M of real property to RVSS as part of the sewer Annexation. Based on RVSS's own published audits for FY2020 and FY2021 it does not appear that RVSS expected any additional funds from the City. Why would an organization that won awards somehow "forget" they were owed that much money?
Scroll below to read more.
Unfortunately, the excess $1.7M was never invested -- the money appears to have sat in a City checking account for approximately five years (2020 - 2024). SCM estimates that the (alleged) hidden money could have earned almost half a million dollars in interest during this five-year period, had the funds been properly accounted for and managed.
The transfer is shown on pages B-5, 2, 7, 28, 41 and 51 of Shady Cove's FY2020 Audit. We do not claim to be experts, but in our review, it appears that the majority of the money transferred went into the SDC fund, and not to RVSS
Note: The FY2020 Audit was Shady Cove's last on-time audit, completed during Lena Richardson's term as Mayor.
We examined publicly available audits from RVSS for the period from 2019 - 2020, available from the Oregon Secretary of State. We also examined historical budget documents published on RVSS's official website. RVSS won an Award for Financial Reporting Excellence for the financial years from 1990 to 2019. According to public data, their audits were also published on-time (with a slight delay accounting for the 2020 Alameida Fire).
The RVSS Audit for 2019 thru 2020 shows a capital asset transfer (land and utility plant), valued at $4.7M.
The RVSS budget for FY2020 shows that the capital fund for Shady Cove's sewer treatment plant was combined with the White City Lagoons into a single capital fund.
See below for excerpts of the Audit & budget for details.
Based on this information, SCM's conclusion is that RVSS was not expecting an additional $1.7M capital transfer from Shady Cove. This supports our view that Shady Cove's capital transfer in 2019 was intended to move money out of the General Fund into a quasi-investment fund.
Elsewhere on our website, we discuss Shady Cove's delayed and disclaimed audit for FY2021. This audit was finally completed in early 2024. Page 26 of this audit (excerpted below) shows that $1.3M was quietly reclassified back to the City's General Fund.
We use the word "quietly" because we noted that there were no materials published by the City on this audit. In the only Council recorded discussion that we can find, there was no mention of the additional windfall monies.
Paid for by shady cove matters political action committee
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THE CITIZENS OF SHADY COVE HAVE SPOKEN!!! We were notified on June 10th that Jackson County completed the signature verification. As we already knew, there were enough signatures to proceed with the recall. Mayor Richardson will have till June 15th to decide to resign or make the decision to have the City hold an election. We await the City's response.
It's time for new Leadership. Learn how you can support the recall effort.