Commission Does Not Have Authority To Recommend Derby To Other State Finance Group

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DERBY — A conversation on whether the state should have more oversight over Derby’s finances did not happen during a meeting Wednesday morning of the Municipal Finance Advisory Commission.

Members of the commission, also known as MFAC, had said in April (during their last meeting with Derby) that the commission would consider whether Derby should be moved to the Municipal Accountability Review Board, or MARB.

Derby’s participation with MFAC is voluntary, MARB is a more powerful state entity with the ability to provide various levels of financial oversight.

“You’re not making the progress you need to be making. And I think we’re going to have to give some consideration to whether you stay with us at the MFAC or whether it’s appropriate to move you, recommend that you be moved to the Municipal Accountability Review Board. I wanted to make you aware of that,” Kathleen A. Clarke-Buch, MFAC chairwoman, had told Derby Mayor Rich Dziekan in April.

However, MARB never came up during a virtual 47-minute meeting between MFAC and Derby on Wednesday.

So, after the meeting The Valley Indy contacted the state’s Office of Policy and Management. MFAC is under that department’s jurisdiction.

A spokesman said MFAC does not currently have the authority to recommend Derby — or any municipality — to MARB.

However, a new law coming Oct. 1, 2022 could give MFAC the ability to make referrals to MARB — if a community meets one of seven criteria.

The naughty financial list includes not filing audits, having a negative fund balance, having a bond rating below A, repeatedly having low fund balances, issuing tax or bond anticipation notes to meet cash liquidity, or having deficits in operating budgets.

Wednesday’s MFAC meeting concentrated on Derby’s overdue audit. The city has not completed an audit from the fiscal year ending in June 2021. Derby has a long history of not filing audits on time with the state.

Past Derby audits show a long list of financial practices that need to be corrected.

The situation came to a head in May 2019, when the city’s former treasurer told the public that the city had a deficit due, in part, to a budget blunder that involved the double counting of grant money.

Derby started going to MFAC, a third party, for check ups.

Derby officials on Wednesday brought an expanded list of officials to answer questions from the commission. Those in attendance included the Derby mayor, the school superintendent (with a new business manager and the former business manager), the mayor’s chief of staff, the city’s new deputy finance director, and Derby’s independent auditor.

During Wednesday’s meeting John Accavallo, the CPA who is conducting the audit, said the delay lies in reviewing, figuring out, and reconciling the financial statements of the Derby Board of Education.

The city side of the 2021 audit was completed in April, officials said. The delay is on the school district’s side, officials said repeatedly.

​“There’s adjustments to their general ledger that weren’t recorded on the city’s books. That’s the problem,” Accavallo said.

Accavallo said he hopes to have a draft of the late audit available in a few weeks.

​“Everything the BOE was asked for has been provided to the auditor and the auditor expects to have the report completed in a week,” Derby Schools Superintendent Matthew Conway told The Valley Indy after the meeting.

On the city side of things, MFAC commissioners asked about vacancies in Derby City Hall.

Walt Mayhew, Mayor Rich Dziekan’s chief of staff, said:

* The city’s finance director is still out on paid administrative leave
* An interim deputy finance director was hired about 3.5 months ago
* The city is without a full-time tax collector but is working on filling the position
* The city is having a hard time finding qualified candidates for economic development director
* The city lacks a grant writer, but is working with the Naugatuck Valley Council of Governments for a possible solution

The lack of staff in the finance department has been a bone of contention in the past with MFAC, given the long list of corrective actions that have to be implemented. In addition to the interim deputy finance director, there are two employees working in finance, according to documents sent to MFAC by the city.

Currently, in addition to being the mayor’s chief of staff, Mayhew is also supervising the finance and tax departments.

​“Everything falls to the chief of staff, unfortunately,” Mayhew told the commission.

Mayhew had told The Valley Indy previously that he did not think MARB would get involved with Derby’s finances because such a move isn’t warranted. Derby’s finances are solid, he said.

In documents supplied by the city to MFAC in advance of Wednesday’s meeting, the city said:

* Derby has a part-time human resources person in place
* The city has a roughly $5 million fund balance in place, even after using about $947,000 to pay for increased healthcare costs (in the budget effective July 1, 2022)
* The grand list grew by 2.5 percent
* The city budget will be able to absorb a $1.2 million hit it took last spring, when officials included a state grant that the city was not going to get

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