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Special Called Board of Supervisors Meeting (Thursday, January 23, 2025)
Northumberland County, Virginia
Members present:
James M. Long, Richard F. Haynie, James W. Brann, Chip Williams, AC Fisher, Jr. Other Staff Present:
Mr. Luttrell Tadlock, County Administrator
Mr. Drew Basye, Assistant County Administrator
Ms. Morgan Wilson, Executive Assistant
Ms. Mary Dodson, Bookkeeper & Benefits Administrator
Mr. Carl Hayden, IT Technician
1. Opening of Meeting 5:00p.m.
Procedural: A. Call to Order
The special meeting was convened by Chairman Haynie and held at the Northumberland Courthouse located at 220 Judicial Place, Heathsville, VA 22473.
2. Items Related to Closed Meeting
Action, Information: A. Convene into Closed Meeting
Motion to Action: A. Convene into Closed Meeting: convene into closed meeting as permitted by Virginia Code Section 2.2-3711 (A)(3),(7),(8); 3. Discussion or consideration of the acquisition of real property for a public purpose, or of the disposition of publicly held real property, where discussion in an open meeting would adversely affect the bargaining position or negotiating strategy of the public body 7. Consultation with legal counsel and briefings by staff members or consultants pertaining to actual or probable litigation, where such consultation or briefing in open meeting would adversely affect the negotiating or litigating posture of the public body. For the purposes of this subdivision, "probable litigation" means litigation that has been specifically threatened or on which the public body or its legal counsel has a reasonable basis to believe will be commenced by or against a known party. Nothing in this subdivision shall be construed to permit the closure of a meeting merely because an attorney representing the public body is in attendance or is consulted on a matter. 8. Consultation with legal counsel employed or retained by a public body regarding specific legal matters requiring the provision of legal advice by such counsel. Nothing in this subdivision shall be construed to permit the closure of a meeting merely because an attorney representing the public body is in attendance or is consulted on a matter.
Motion by: James W. Brann, second by: Chip Williams.
Final Resolution: Motion Carried
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Aye: James M. Long, Richard F. Haynie, James W. Brann, Chip Williams, AC Fisher, Jr. Action, Information: B. Reconvene into Open Meeting
Motion to reconvene into open session.
Motion by: James W. Brann, second by: AC Fisher, Jr.
Final Resolution: Motion Carried
Aye: James M. Long, Richard F. Haynie, James W. Brann, Chip Williams, AC Fisher, Jr. Action, Information: C. Certification of Closed Meeting
Motion that the Northumberland Board of Supervisors return to Public Meeting and certify by roll call vote that only public business matters lawfully exempted from open meeting requirements by the Virginia Freedom of Information Act, and as were identified in the motion convening the closed meeting were heard, discussed or considered during the closed meeting. The vote on the motion was passed by a roll call vote as follows:
Aye: Richard F. Haynie, AC Fisher, Jr., James M. Long, James W. Brann, Charles H. Williams
Motion by: James W. Brann, second by: AC Fisher, Jr.
Final Resolution: Motion Carried
Aye: James M. Long, Richard F. Haynie, James W. Brann, Chip Williams, AC Fisher, Jr.
3. Presentations 5:30 p.m.
Information: A. UHY Advisors Mid-Atlantic, Inc - Forensic Audit Report
Mr. Jack Reagan and Ms. Heather Ness provided an overview of their forensic audit on the County and School Division. Mr. Reagan reminded the Board that they specifically looked at payroll, time, attendance, policies, procedures, procurement activities, accounts payable, purchasing cards activity, revenue management and treasury management. He explained that their goal was to provide the Board with recommendations to address the findings in the report that were both practical and actionable. Some observations identified were significant gaps in succession planning, segregation of duties, robust current policies and procedures, and proper oversight of key functions. Mr. Reagan stated that these gaps were consistent throughout the County, Treasurer, and the schools. He did mention that they were able to notice a “before and after,” as there were changes in personnel at the schools around fiscal year 23 which improved the quality of information and timeliness of that information. Mr. Reagan emphasized that there was a significant difference between documentation and the quality of that information found prior to fiscal year 23 in comparison to post fiscal year 23. Another item identified was that there are certain automated controls in both IT systems that could prevent overspending, but the
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controls can be overridden by the user, so they serve more as a warning rather than actual controls.
Mr. Jack Reagan continued his presentation by presenting the recommendations for the school and the recommendations for the County based on the findings presented above. A summary of the recommendations from the auditors can be found in the PowerPoint presentation located in BoardDocs.
Ms. Heather Ness explained that the appendix included in the PowerPoint has all the details behind the numbers, recommendations, and responses that are in the final report. She then offered the Board to ask any questions they may have at this time.
Supervisor Fisher asked what the difference was between uncontrolled versus unidentified findings.
Ms. Heather Ness explained that there were some items that they were unable to identify because there was simply no documentation in which to identify. In contrast, they were able to find some activities that were not fully locked down in control. Ms. Ness continued by stating the record keeping and retention was not appropriate for 2019-2022. They were provided with 5 to 10 boxes of financial records that were not organized. Mr. Reagan clarified for the Board that they could see a transaction recorded in the ledger, but they were unable to find the documentation to support the transaction that was recorded because it was missing. Ms. Ness stated that they went through the boxes several times looking for the documentation and still couldn’t even find 60%. They explained once they figure out they won’t find close to 100%, they make the call to wrap up that section of evaluation and look no further.
Supervisor Williams asked at what point during the auditing process do they determine that they aren’t going to find with the documentation.
Mr. Reagan explained that he made the call after his team looked through the boxes 2-3 times and after County staff members looked through, unable to locate the information either. Ms. Ness stated they spent multiple months looking through the documentation that was provided to them from the school.
Vice Chairman Brann stated that the lack of documentation was noticed more in 2019-2022, which concerns him. He believes the information used to conduct the audit was based mainly on 2023, so the auditors were not really able to conduct the audit on the past years because they were unable to access documentation at the schools in 2019, 2020, 2021, and 2022. Mr. Brann shared his concern of the audit being “flawed” due to the lack of documentation recovered.
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Mr. Reagan stated that he doesn’t believe the audit procedures done were flawed. The test was to find supporting documentation and to see if it supported the transaction that was initiated, processed, and recorded. He explained that finding no documentation is a finding in itself. Vice Chairman Brann stated that it’s considered a finding, but it doesn’t really help with finding the facts and the numbers.
Ms. Ness stated that they did look at the numbers, they did test a reasonable list, they did look at policies, procedures and control structures which fed their recommendations listed in the report. She explained that there are a number of firms that would have started their evaluation just to find no policies or procedures and that be their conclusion.
Chairman Haynie brought attention to a finding related to purchase order forms not being filled out properly or not being filled out at all at the schools.
Mr. Reagan explained that it appeared that there was a purchase order system in place, but it wasn’t being followed 100% of the time.
Vice Chairman Brann stated that the controls should also help control the negative balances in the categories/line items.
Mr. Reagan explained that it should. He made the Board aware that through many discussions with the school’s personnel, it was made very clear that they were managing their budget to the total appropriation level and not on a categorical level in any year that they reviewed. Vice Chairman Brann stated that the County should have controls that do not allow overspending in categories/line items.
Mr. Reagan agreed and stated that this is what he was referring to earlier in their findings. A warning in the system appears when overspending is about to occur, however, it does not prevent the transaction from occurring and it doesn’t route it to someone else for override approval. The warning is simply an information screen that allows staff to proceed with payment, leading to the overspending. Mr. Reagan stated that is a flaw in the automated control system and the failure to have a compensating manual control to stop the transaction from occurring.
Mr. Ness reiterated that they are referring to the schools overspending in categories as the County has a process to avoid their overspending.
Chairman Haynie asked if the information was easy to obtain from the School Division.
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Ms. Ness stated that everyone was always willing and happy to meet with them, but they always feel resistance with any audit because they are giving staff additional workload in which staff members may already only have a part-time schedule. It’s not that staff wouldn’t want to help, it’s just that there are only so many hours in a day. Ms. Ness did state that the tone at the School Division was different than the tone at the County. When the auditors found a finding, the County side immediately fixed the concern as staff wanted to invest their time in energy into making sure things were done correctly. Ms. Ness stated that they did not receive this same response from the management at the school.
Mr. Reagan reiterated that as far as getting information to them, he believes that both the school and County staff did their best to provide it in a timely manner.
Vice Chairman Brann asked if the school follows the same procurement policy as the County. County Administrator Tadlock stated that the small purchase policy and procurement policy is in place for the County, and he’s not aware of the school’s purchase policy that they have. Mr. Tadlock explained that the school’s policy is separate from the County.
Vice Chairman Brann asked how the school system, and other departments who use County funds, could be put under one singular purchasing and procurement policy.
Mr. Tadlock stated that this is something they could take a look at if the Board wishes to do so. Mr. Reagan stated that he’s generally seen different policies and procedures between counties and schools although they are similarly designed. He suggested that the Board require the school to present purchases to the Board that are over a certain amount of dollars.
Chairman Haynie mentioned a finding related to some fund 5 accounts “hidden” at the schools. Mr. Haynie stated that the money should be in one account or should all be put into the budget rather than having “unseen” monies.
Mr. Reagan stated that his belief is that any funds, whether they are grant funded or locally funded, should appear in a budget that gets presented to the School Board for approval and then later to be presented to the Board of Supervisors for review and approval.
Supervisor Williams asked for the particulars of the fund 5 accounts.
Ms. Ness explained that the fund 5 accounts were ESSER grant monies. She further explained that consistently there were millions of dollars missing. Initially, they could not figure out why the budget on the school side didn’t match the budget that was approved with the Board of
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Supervisors, then they realized it was those federal grant monies that were not being presented in the budget.
Mr. Reagan believes this occurred because the ESSER monies were new, so when the original budget was developed, no one knew that ESSER existed. However, as soon as it became apparent that federal funds existed, the Superintendent should have presented a budget modification to the School Board and brought that over to the Board of Supervisors for its review. Mr. Reagan stated that every year the schools anticipated receiving federal grant funds, they should have come up with their best estimate of funds to be received and use that figure until more accurate numbers were available to present to the Board of Supervisors as a budget modification.
Chairman Haynie stated that the missing dollar amounts should have been picked up when reconciling between the school’s account and County’s account every quarter.
Mr. Reagan stated yes, but it’s because they segregated these funds into a totally separate fund. Mr. Reagan believed this to be appropriate and he would even encourage anyone to have a separate grant fund because it gives that level of accountability for the reporting required. Vice Chairman Brann had no problem with them having a separate fund account for the ESSER monies, however, those funds should be shown as a revenue.
Mr. Reagan agreed.
Supervisor Williams asked the auditors’ opinion on whether they believe zero-based budgeting would be a good strategy to use in Northumberland County.
Mr. Reagan stated that it’s probably the most detailed and meaningful budget build that exists, but it takes a lot of time and effort to implement and monitor. He informed the Board that very few governments use this method for budgeting because it is administratively intense. Supervisor Williams asked if zero-based budgeting would require new hires in the County. Mr. Reagan and Ms. Ness confirmed that it would. They stated that the Board would have to decide whether the personnel expense is worth the additional quality, timeliness, and rigor of the numbers they receive from the zero-based budgeting.
Chairman Haynie mentioned a finding related to the lack of appropriate record keeping at the school and asked how it was going to be corrected.
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Mr. Reagan stated that he believes it is in the process of being corrected. He doesn’t think that any staff members are going to go back and try to recreate or organize the documentation from 2019-2022, but there’s certainly been improvement in 2023.
Supervisor Williams asked what positions need to be concentrated on for succession planning. Ms. Ness stated Ms. Dodson as the Bookkeeper and Benefits Administrator because she’s been doing it so long and so well. She explained that a transition into that position will take some time, and they will need to be trained slowly over time. Ms. Ness continued stating that Finance Director Tara Booth also needs someone to shadow her position.
Ms. Ness informed the Board that there are also a lot of approvals going back and forth between the County Administrator and Ms. Dodson, and it would be helpful to have another individual as part of this process, so one employee isn’t managing the entire process on their own. She explained that having a secondary person would reduce human errors as well.
Mr. Reagan stated that a lot of the controls in place are still ones that were present in a more manual time. He explained that at some point the Board could consider future enhancement to their computers and accounting systems which will allow them to take advantage of the automated controls of technology and reduce the manual administrative burden.
Vice Chairman Brann asked if department heads have access to the RDA system to manage their budgets.
County Administrator Tadlock stated that they do not. Mary sends the department heads their budgets on a monthly basis.
Vice Chairman Brann asked how the auditors believe the School Division should present their budget to the Board this year.
Mr. Reagan believes they should present their spending to its entirety. He stated that their grant funds should also be presented to the Board of Supervisors exactly the way they manage it internally in their ledger.
Mr. Reagan informed the Board that the best way to respond to their recommendations is to develop a corrective action plan.
Supervisor Long asked Mr. Reagan and Ms. Ness if they spoke with the Superintendent and School Board on the findings in the audit report.
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Mr. Reagan stated that they briefed the Superintendent, but not the School Board, however, they do have the final report.
Dr. Curran, District V School Board member, stated that he is unaware of the forensic audit report. He expressed his concern about the audit being an attack on the School Board even though it was a countywide audit. He asked who was going to be held responsible. Chairman Haynie stated that the school system will be held responsible for correcting any of the audit findings on their side.
Dr. Curran stated that they’ve already corrected their problems in the school system. Chairman Haynie moved on and brought attention to the findings found in the Treasurer’s Office. Mr. Haynie stated that in the report it states that the management response was making an effort to correct the problems. He believes that is all you can ask staff to do and that is what they expect from the School Division as well.
Mr. Reagan stated that he does agree that the school is working to correct the problem. He gave the School Board staff credit for the work that has been done to significantly improve the quality and timeliness of the data presented through 2023. He explained that he could not speak to 2024 or 2025 as those years were beyond their scope of work. Mr. Reagan also stated that he cannot speak to whether the School Board staff briefed the School Board on any of the information in their final report, but he’s more than willing to present the information to the School Board if requested by the County as that is his contracting office.
Vice Chairman Brann asked who received copies of final report.
County Administrator Tadlock explained that the report was made public on the County website. Mr. Tadlock made the Board aware that he also emailed the report to Superintendent Wargo, Finance Director Booth, Treasurer Pam King, Chief Deputy Treasurer Gail Dungan, and Bookkeeper and Benefits Administrator Mary Dodson.
Supervisor Fisher explained that the Board was not looking for fraud or the taking of monies. He’s proud that the auditors did not come to that conclusion.
Mr. Reagan stated that unfortunately, he doesn’t know that he can reach that conclusion because of the lack of documentation, but that in itself is a finding, because the purpose of the documentation is to report the spending that occurred.
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Chairman Haynie stated that the Superintendent received a copy of the final report, so she is responsible for forwarding it to the School Board members.
Vice Chairman Brann announced to the Board that it is their responsibility to make sure the recommendations in the report are put into action.
Action, Information: B. Corrective Action Plan
Motion to request staff to create a corrective action plan for all County departments and the School Division in relation to the findings of the forensic audit by the regular meeting on February 13, 2025.
Motion by: Richard F. Haynie, second by: James W. Brann.
Final Resolution: Motion Carried
Aye: James M. Long, Richard F. Haynie, James W. Brann, Chip Williams, AC Fisher, Jr. Action, Information: C. Grant Approval Process Policy
Motion to have staff draft a policy on the grant approval process to include a timeline of the receipt of grant monies and the department's spending plan by the regular meeting on February 13, 2025.
Motion by: Richard F. Haynie, second by: James W. Brann.
Final Resolution: Motion Carried
Aye: James M. Long, Richard F. Haynie, James W. Brann, Chip Williams, AC Fisher, Jr. Action, Information: D. Budget Overspending
Chairman Haynie asked if Treasurer King had any comments related to the final audit report. Treasurer King explained to the Board that the warning about overspending does show up in their system, but unless they are told not to pay the invoices, they move forward with the payments.
Motion to authorize the Treasurer's Office to not approve payments when overspending in categories and/or line items.
Motion by: James W. Brann, second by: AC Fisher Jr.
Final Resolution: Motion Carried
Aye: James M. Long, Richard F. Haynie, James W. Brann, Chip Williams, AC Fisher, Jr.
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Ms. Mary Dodson made the Board aware that some of the school’s payments could include payroll as the Treasurer’s Office does not see every invoice/bill that is being paid on their side. The school brings checks over for approval; however, it’s a total amount being spent out of the appropriate category as they are under categorical spending. Ms. Dodson and Chief Deputy Treasurer Gail Dungan wanted to be sure the Board was aware that the payments they hold could include payroll, benefits, etc.
Vice Chairman Brann stated that if a payment comes up that relates to payroll and it requires overspending, he asked that the Treasurer’s Office contact the County Administrator so that he can notify the Board for further discussion. Mr. Brann does not want to be involved with holding someone’s pay.
The Board asked Mr. Tadlock to inform the Superintendent on this matter, so they are aware of the new procedure.
Chairman Haynie stated that they’d like the County and school to be on the same software to make things a little easier.
Mrs. King stated that the school and County staff are on the same software (RDA). Chairman Haynie asked how long RDA would be around and if they need to get additional modules.
Ms. Dodson stated that they do have more modules that staff can look at, but they are not cheap. Staff discussed the software they use now and are concerned with transitioning to one software for all offices because they may be good in one area, but not the other.
County Administrator Tadlock stated that they have started evaluating different software, but they need some more time to look at the different packages.
4. County Administrator Items
Information: A. FY26 Budget
County Administrator Tadlock provided the Board with a draft budget calendar for FY26. The Board set the next Joint Finance Committee for February 5, 2025 at 5:30 p.m. in the General District Courtroom.
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The Board offered the public to make any comments on the forensic audit report at this time. Dr. Karen Pica thanked the Board for taking the time on the forensic audit. She offered to help the Board or staff put together a corrective action plan or any other information that may be useful to help the County get where it wants to be.
Mr. Maurice Johnson stated that it’s okay if an issue has been solved, but it still needs to be included in the corrective action plan, so it is documented. Mr. Johnson informed the Board that he used to design systems of systems, so he’d be happy to help put together an integrated package that everyone can be comfortable with.
Dr. Dave Curran believes that they do need to look at the way they do business but doesn’t agree with blaming anyone. He’d like to move forward in addressing the problems in the community. He mentioned working with Dr. Pica to address the issues and make this a better County.
5. Closing of Meeting
Action: A. Adjournment
Motion to adjourn.
Motion by: James W. Brann, second by: AC Fisher, Jr.
Final Resolution: Motion Carried
Aye: James M. Long, Richard F. Haynie, James W. Brann, Chip Williams, AC Fisher, Jr.