By Stephani Dingreville
Imagine you discovered $4.7 million dollars in excess funds in one of your bank accounts. Before you spent a penny, wouldn’t you first want to find out how it got there?
That was the first step the Corrales Village Council took when $4.7 million was discovered in a Local Government Investment Pool (LGIP) at the end of 2019. McHard Accounting Consulting LLC, a forensic accounting firm located in Albuquerque, was engaged to this end. The McHard firm was to perform an assessment of the LGIP funds and make a determination their origin. Anne M. Layne, partner of the firm and Janet McHard, the firm’s founding partner came to deliver their report to the village council during the August 2020 council meeting.
Layne reported that for many years in a row, the Village revenues outpaced the Village expenditures. She explained that this is something that often goes unnoticed in organizations, where the focus tends to be on budgeting rather than on actual spending.
Councillor Zachary Burkett spoke up, saying “This is a real $4.8 million dollars in an account. It seems like at some point the debits and the credits on our budget would not have matched up and shown that we have millions of real dollars in surplus or hundreds of thousands each year. How do make sure that we catch that so that we do not have to retroactively go back and try and find out? Was there anything in particular you saw that we should address?”
Layne responded: “What I noticed, is that there were a couple years where some of your revenues coming through the general fund had exceeded what you had budgeted. A lot of that seemed to be allocations from the state that you maybe did not expect.” McHard then advised: “You may want to look at what kind of reporting you are getting on a quarterly basis so that you can see what is actually happening. When things are going well with the budget, then it typically does not come before council.”
This determination of the origin of the funds revealed them to be indeed free and clear to be spent however the village wants.
The council was advised caution by the firm, saying they should first reconcile all their accounts before spending the sum. Layne advised: “It may be prudent to keep the whole balance until after the reconciliation.” At the same meeting, Village Administrator Ron Curry stated his goal to have the reconciliation finished by the end of the calendar year.
On September 8, 2020, Administrator Curry reported that Reyna Aragon, finance officer for the Village, had begun working with Josh Trujillo’s firm, SJT Group LLC on “the detailed reconciliations.” He also restated: “We expect to go on through the end of the year.”
The next mention came in October 2020 at a Governing Body regular meeting, when Councillor Bill Woldman asked Administrator Curry if it was “possible to have a work study sometime in the future regarding the LGIP funds. Just to see what we should spend the money on, how much we should set aside and having a discussion about that.” Administrator Curry responded that it was a “great idea,” saying, “right now we are finishing up the bank reconciliations which we expect to have done by December. So I think we could have a work study early next year.” After this, the draft minutes from the December 2020 meeting list a “LGIP Funds Work Study” as a “future agenda item.”
This is around the time that Corrales Comment’s Meredith Hughes presented the compelling argument around using some of these funds for the Corrales Pathway Project. She quoted a persuasive letter from former Corrales MainStreet board member Deborah Blank. (See Corrales Comment Vol.XXXIX No.14 October 10, 2020 “$4.7 Million to Pathways?”)
Fast forward to February of 2021, when the next Village Council mention about this sum comes again from Administrator Curry. This time he asserts: “We are going to be working internally with some of our folks on the financial team. We have to discuss what we are going to do with this money.” Curry goes on to say: "I look forward to bringing something to council in late March.”
The next mention of this fund in Village Council minutes comes in the way of Resolution No. 21-26, which was approved at the July 20 Village Council meeting. This resolution first clarifies the definition of the LGIP, saying “The New Mexico Local Government Investment Pool (LGIP) is a fund created by legislation to allow municipal, city, county, tribe, and quasi-governmental bodies to voluntarily remit money to the State Treasurer’s Office to receive professional money management on a pooled basis.”
The exact amount in the LGIP fund is then clarified to be $4,360,997.79. The discrepancy between the original $4.7 million and this new sum may be a result of the account reconciliation performed by the SJT Group. Resolution No. 21-26 states that according to the rules of the LGIP, the village may spend the money any way it considers appropriate.
After these clarifications, the following resolutions are included. First is the decision that the Village will only spend half of the pooled monies, keeping the other $2,180,498.90 in the fund. The resolution then stipulates that the funds will not be spent on “payroll, recurring expenses or any subscriptions.” Lastly, it is resolved that the “Governing Body will approve any monies extended from the pool. “
According to Mayor JoAnneRoarke, this resolution represents the most recent action the Village has taken on these funds. Presumably, the Village has over $2 million in ready money, waiting on the perfect project to come along and spend it.
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