The City of Salem’s cash position dropped $1.5 million from Dec. 31, 2019 to Dec. 31, 2020, according to a financial report from the city sent to The Salem News.

See the reports here.

Salem had cash and investments of $6.3 million as of Dec. 31, 2019, and by the end of 2020, that number dropped to $4.8 million, according to the City of Salem Combined Statement of Revenues, Expenditures and Changes to Fund Balances, which state statutes require to be published in the newspaper semiannually. That is a drop of 24 percent in one year. 

Article first reported here

The city sent those reports to The Salem News Feb. 15 after the newspaper reported that the city had failed to publish semiannual revenue and expenditure statements for the past two years. Those past-due reports will be published in the March 2 print edition and were placed on today at the request of the city.

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

The city ceased to pay any bills, including payroll, soon after The Salem News reported last week the city’s failure to publish the semiannual statements in the newspaper, city administrator Ray Walden said Thursday. He said the city would resume bill payments as soon as city attorney James Weber says the city is in compliance with state statutes.

Salem had $4.8 million in cash on hand at the end of 2019, and at the end of 2020, that number dropped to $4 million, according to the semiannual report. Investments dropped from $1.5 million to $820,000 during the same time span.

During 2020, the fund balances for electric, sewer and water dropped $900,000, according to the most recent semiannual statement.

The General Revenue Fund, from which bills are paid, showed a balance of $3,556 at the end of 2020. The General Revenue Fund is the primary operating fund of the city.

The semiannual reports do not include figures on accounts receivable or total debt. It is expected that the more than year-long issue with the dispersal of city utility bills contributed to the drop in cash position, though the city has not provided a financial statement summary as requested through a public records request by The Salem News in October of 2020.

Electric revenue is paramount to city finances. In the year ending June 30, 2019, $1.5 million was transferred from the Electric Fund, according to the June 30 audit report done by K Deluca Audit Services of St. James. No audit report has been completed for the July 1, 2019-June 30, 2020 period.

Auditor Kristen Deluca said Thursday she recently received the documents needed to begin the city of Salem audit and would now work it into the schedule. She could not give a timeline for completion. She said normally she receives information for the audit in October and tries to complete it by December, and added that several entities are late providing information this year.

The city announced Monday that the failure to publish required semiannual financial statements in The Salem News will be investigated by a third party, according to a release from Walden.

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 had been published nor received by The Salem News since the February 2019 statement for 2018.

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.

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.”

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.

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.

This is a developing story and will be updated at and in the March 2 print edition of The Salem News.