Hyattsville has a thinner financial cushion to cover day-to-day expenses than recent budgets have shown, according to a recent audit of the city’s finances.
The audit shows the balance of the city’s general fund — the primary account for covering operations and services — dropped 71%, from $24.5 million to less than $7 million, from fiscal year 2023 to 2024.
The report has reignited yearslong tensions over the city administration’s bookkeeping and its transparency about finances.
As a result, one City Council member is calling for changes in city leadership. And a former council member is calling for the treasurer and city administrator to be fired.
“There’s no question that the treasurer should be immediately fired, and so should the city administrator,” said Patrick Paschall, a council member from 2013 to 2017 who later worked for the city’s finance department.
“This is a dereliction of their fiduciary obligations,” he said. “They lied and misled the City Council, and each day we continue to allow these people to manage our finances is another day that we are increasing our level of risk.”
Tracey Douglas, the city administrator, said she understands the frustration over the change in fund balance amounts. But “it is untrue” to characterize the change as evidence the city lied, she said.
Douglas attributed the audit’s findings to differences in approach between the city’s old auditor and its new one — public accounting firm Zelenkofske Axelrod.
“So no missing funds, no misappropriation, none of that,” she said. “It’s just a matter of interfund transfers, because this is the way this auditor does business.”
Douglas declined to comment on the call to fire her and Treasurer Ronald Brooks, citing the city’s policy of not commenting on personnel matters.
She doesn’t expect the audit results will lead to changes in the budget for fiscal year 2027, which began July 1.
“Just like with a savings account, if you have $100,000 in there and now you find out you got $30,000, you might just be a little more careful,” she said. “But we’re careful anyway.”
Maryland law generally requires local governments to complete audits within four months of the close of each fiscal year in June.
But it’s not uncommon for municipal governments to fall behind. For fiscal year 2024, 26 local governments, including Hyattsville, hadn’t filed their reports as of the following April.
For more than a decade, Hyattsville has been behind by multiple audits, according to the city administrator.
Although the recent audit shows Hyattsville’s fund balance has declined, the amount is above the recommended balance set by the Government Finance Officers Association, which advises that local governments maintain enough reserves to cover at least two months of operating expenses.
Douglas, the city administrator, said Hyattsville “absolutely” has enough cash on hand to cover its expenses for two months.
“I recognize that there is likely some trust that has been lost in the community because of a lack of understanding. So it is very important to me, to my staff and to the council that we make sure that the community understands their finances,” she said.
In recent years, the city has adopted budgets in which spending was expected to exceed revenues. That required officials to draw down from the general fund account to balance the budget.
Council members may have approved higher levels of spending because they believed the city had a fund balance of well over $20 million from which to draw, Paschall said.
In fiscal year 2024, for instance, the city approved a budget that included nearly $6 million from the general fund balance.
This latest audit has raised questions about how officials have presented the city’s balances to council members.
“Having accurate and reliable information is the only way that you can expect those charged with making budgetary decisions to make good ones,” City Council member Danny Schaible said. “And we simply didn’t have it.”
In responding to criticisms that she and her team haven’t been forthcoming and claims that they misled the City Council, Douglas maintained the city has been prudent in its financial management.
But she said she and her team could have offered more explanation to council members, who serve part time.
“They’re not professional accountants, either. So they don’t necessarily always know the questions to ask,” she said. “Could we have been more helpful in leading them to those questions or making sure that there was more clarity? I would say so.”
Schaible, however, said city officials have failed to provide “essential information” to him and his colleagues, who are responsible for approving the budget presented to them by the city treasurer.
He said the treasurer has claimed the city has a healthy balance in its general fund without clearly stating that his calculations also showed the city was carrying a large deficit in a separate fund used to finance large capital expenses, including building new facilities, repairing roads and purchasing new vehicles.
Douglas said the city has used general fund dollars to pay capital costs when it was unable to secure a bond or grant to do so or to cover cost overruns.
She said the fund balances may not have reflected the interfund transfers because of the treasurer’s bookkeeping approach.
She said Brooks has tracked spending across various funds annually and planned to reconcile the balance once the city got up to date on its audits. But it hasn’t caught up on its audits in the 13 years Brooks has been in the role.
“City leadership continues to downplay these issues and has lost the credibility needed to address them,” Schaible said in a statement. “A change in leadership is essential moving forward.”
The council and the mayor are responsible for hiring the city administrator, but they don’t have direct oversight of the treasurer.
Mayor Robert Croslin did not respond to requests for comment. Nor did eight of the city’s 10 council members. Council President Joseph Solomon declined to comment when reached by phone Thursday.
Questions — and accountability — remain for council members, Schaible said. He believes the audit will likely impact future spending decisions, though he’s not sure exactly how.
Answers may become clearer as the city and its new auditor push to get up to schedule on the annual reports. The fiscal year 2025 audit, which was due last October, is expected next year, though the city hasn’t received a definitive timeline from the auditor.
“We have, I’d say, a much more accurate snapshot of our financial situation than we’ve had in — maybe since I’ve been on the council, and I’ve been on the council seven years,” Schaible said. “But it’s still two years late.”
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