Oklahoma town's officials try to untangle financial snarl

Nowata city spending has been out-of-control for years, said new City Manager Walter Love.
by Randy Ellis Published: August 27, 2012
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NOWATA — Uncontrolled finances have been strangling this town like an out-of-control grapevine.

“It was like chaos when I came in,” said Walter Love, who took over as city manager in mid-June. “I was amazed. ... It left me in awe.”

The problems stretch back for years.

“The city had been buying vehicles sight unseen,” Love said.

The city “bought a fire truck that didn't pump water” and vehicles that “didn't run when they bought them,” he said.

“There were vehicles the city had been insuring that it didn't own — because they had been surplused — and there were vehicles we did own that weren't insured,” Love said.

Spending was out of control, with employees buying items for the city without purchase orders, he said.

And perhaps even more scary — city officials operated for years without knowing where the city stood financially.

Waimone Hollenshead, who served as city treasurer from April 2010 to April 2012, said the city hadn't had an audit done of city finances in something like three years when he first took office.

“We had no way of knowing where we stood,” Hollenshead said. “How do you make a budget when you haven't done an audit and don't know what you're spending?”

Hollenshead said he and the other elected officials did the best they could. They ordered audits for the missing years and took steps to keep the city operating while waiting for the audits to arrive.

He said the errors in the city's insurance coverage were discovered and corrected during his term as treasurer.

Inadequate records

Spending city money blindfolded is dangerous business, however. It's like an individual writing checks while not knowing how much money is in the bank account.

When the reports from the accounting firm Kershaw CPA & Associates came back, they weren't good.

Kershaw issued a disclaimer of audit opinion, noting on the most recent audit for the fiscal year ended June 30, 2011, that “inadequate accounting records precluded me from performing sufficient audit procedures on the financial statements.”

The city's “bank statements have not been reconciled to the general ledger” and the city's “financial statements may contain misstatements and omit financial information.”

Kershaw found that city officials had repeatedly violated state law by overspending appropriations by $446,478 in fiscal year 2009, $301,412 in fiscal year 2010 and $672,402 in fiscal year 2011.

Exactly where the city currently stands financially remains a mystery, but Love acknowledges it's not on real solid footing.

“In order to close out last year's debt, we had to cash in an old CD (certificate of deposit),” Love said. “It was the last one.”

Despite all the problems, City Clerk Lynn Griggs said the city has never bounced a check and ongoing expenditures are regularly matched with online bank statements.


by Randy Ellis
Capitol Bureau Reporter
For the past 30 years, staff writer Randy Ellis has exposed public corruption and government mismanagement in news articles. Ellis has investigated problems in Oklahoma's higher education institutions and wrote stories that ultimately led to two...
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I personally think too many people are looking to dig up bones. For

the good of Nowata, we need to fix what we have found and move forward.”

Lynn Griggs

Nowata City Clerk

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