A report by Waukegan Finance Director Juan Garcia about delays in filing required audits with the state and disclosures to the federal government was met with concern by members of the City Council.
Mayor Sam Cunningham assured the council members that the problem had been discovered and a plan had been developed to remedy the situation. Ald. Thomas Hayes, 9th Ward, worried aloud about the veracity of the annual budget.
“Do we have any confidence in the budget that was presented last year?” Hayes said. “If we’re being presented with a budget which has huge buckets of numbers, are we able to rely on those numbers?”
Garcia said the budget for the fiscal year ending April 30 — the 2027 fiscal year starts May 1 — is a reliable financial document. Though some of the numbers were not precise, the city remains on sound financial footing, he said.
“We have confidence in the budget that was presented last year,” Garcia said. “In this respect, there are a lot of numbers that don’t really change from year to year. There are increases in contracts. That is a lot that can be determined ahead of time.”
Garcia gave the council an update Monday at City Hall on the audit the city is required to file with the state by Oct. 31, and the disclosure with the U.S. Securities and Exchange Commission a month later, as the finance department works toward closing the gap.
Cunningham recognized the council members’ concerns, assuring them a plan was in place to “make sure these things are presented in a timely manner.”
“We understood there were some things that were missing,” he said at the meeting. “They’ve been corrected. We have a plan to make sure they’re going to be aligned with what we’re doing on a timely basis.”
After the meeting, Cunningham made it clear that the city is on sound financial footing and delays arising from staff shortages are not putting the city in a precarious position.
“No, we do not need to be concerned,” he said.
Garcia said after the meeting, his office is on track to complete and file the audit by Oct. 31 and the disclosure by Nov.30.
When Cunningham took office on May 5, the finance department was operated by interim Finance Director Don Schultz. Cunningham said Schultz’s primary focus was on preparing the budget. A permanent head of the department focusing on all aspects of the job was mandatory.
A one-time senior accountant for the finance department, Garcia left several years ago to become the assistant finance director in Schaumburg. Cunningham and City Treasurer John Schwab reached out to Garcia. He was hired as finance director on May 18.
“We knew how important the audit was,” Cunningham said. “We uncovered some gaps in the skill sets and knew we had to catch up and get information to the auditors. We needed a permanent leader to take us through the transition.”
Delays in filing the audit and disclosure began with the 2021 fiscal year, which was due by Oct. 31, 2021. Garcia said the delays were violations of Illinois law and regulatory deadlines. It was 20 days late that year.
Though the delay was 16 days in 2022, the situation was compounded over the next two years. The prolongation was 242 days in 2023 and 346 days in 2024, according to the report.
Part of the challenge for the city finance department is reconciling more than 90 accounts each month. Garcia said the accounts are reconciled through December, and his staff is working on January. Temporary accountants were hired to assist. They may not be needed much longer.
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“We’re getting close to that point where we can train staff to be able to take over,” Garcia said. “About May, we’ll be good to go. Our audit starts in June.”