Financial graphic

Failure to publish required semiannual financial statements in The Salem News will be investigated by a third party, city administrator Ray Walden announced in a news release emailed to the newspaper Monday morning.

The Salem News reported last week that the City of Salem had failed to publish semiannual revenue and expenditure statements for the past two years, in violation of state statutes.

Walden’s release states in full, “Recently, an issue regarding the publication of semiannual financial statements was brought to the attention of the Board of Aldermen. In response, the Board of Aldermen is directing the semiannual financial statements for the time periods of January 1, 2019 thru December 31, 2020 to be published in The Salem News. Further, the City of Salem will be seeking an independent third party to conduct an investigation into this matter.”

Revised statute of the state of Missouri 79.160, which is for Class 4 cities, calls for the board of aldermen to twice a year provide combined statements of revenues and expenditures and changes to the fund balances that would appear in a newspaper in the city, The Salem News reported last week.

The statute reads in full: “The board of aldermen shall semiannually each year, at times to be set by the board of aldermen, make out and spread upon their records a full and detailed account and statement of the receipts and expenditures and indebtedness of the city for the half year ending with the last day of the month immediately preceding the date of such report, which account and statement shall be published in some newspaper in the city.”

The city ran the above-described semiannual statements Jan. 31, 2017 (statement as of Dec. 31, 2016); Aug. 22, 2017 (statement as of June 30, 2017); Aug. 14, 2018 (statement as of June 30, 2018); and Feb. 26, 2019 (statement as of Dec. 31, 2018).

No statement has been published nor received by The Salem News since the February 2019 statement for 2018, according to a search of the newspaper archives and its bookkeeping system. The legal notice in the newspaper also requires a notarized affidavit.

State statutes also require the city not to disburse any money until the statement is published, meaning the city has been in violation during all of 2019 and 2020.

Statutes also say any treasurer violating the provisions of the statute “shall be deemed of a class A misdemeanor.” Class A misdemeanors in Missouri can result in up to one year in jail and a fine up to $2,000.

An email questioning the overdue semiannual statements was sent to city clerk Mary Happel Feb. 12. She responded with an email 10:21 a.m. Feb. 15 requesting The Salem News publish four statements in that week’s edition. The statements were for six months ending June 30, 2019; six months ending Dec. 31, 2019; six months ending June 30, 2020 and six months ending Dec. 31, 2020.

The Salem News was unable to publish the statements on short notice. An email back to Happel that same day asked for verification that the semiannual statements should be published despite how old they were and suggested that legal advice be sought by the city before publishing the semiannual statements.

Happel did not respond, but Walden’s emailed release Monday requested the semiannual statements from Jan. 1, 2019 through Dec. 31, 2020, be published, and they will appear in the March 2 edition of The Salem News.

A lack of combined semiannual statements of revenues and expenditures and changes to the fund balances placed in The Salem News by legal notice coincides with utility billing issues that have plagued the city since October 2019, when the city switched billing systems. Since then billing has run months behind. Bills received this month are from October 2020 usage.

Lack of transparency by the city over the financial impact of the billing problem led The Salem News to file a public records request Oct. 27, 2020 asking for “the City of Salem’s monthly financial statements for all of 2019 through September 2020. Each statement should include a balance sheet and monthly totals for income, expenses and debt.”

Those monthly financial statements and the combined semiannual statements of revenues and expenditures and changes to the fund balances are two different reports.

The Salem News Feb. 11 filed a Sunshine Law complaint with the state attorney general’s office, claiming lack of response for the monthly statements.

Happel on Feb. 16 sent 21 months (all of 2019 and the first nine months of 2020) of city monthly financial information numbering 882 pages. The information is being evaluated to see if it meets the Sunshine Law request.