Auditor of State Dave Yost today placed the Village of Mount Sterling in Madison County in a state of fiscal emergency due to substantial deficit fund balances.
A fiscal analysis conducted by the Auditor of State’s Local Government Services Section (LGS) identified deficit balances in village funds totaling $340,491 and $269,437 as of Dec. 31, 2016, and April 30, 2017, respectively.
“Mount Sterling is still reeling from a heavy financial blow inflicted by corrupt former officials and employees,” Auditor Yost said. “While the courts determine their fate, the village must move forward and rebuild. My office stands ready to help.”
Former Village Administrator Joseph Johnson was sentenced in March to 10 years in prison for stealing more than $724,000 from the village to buy vehicles, auto parts, TVs and other items for his personal use between 2012 and 2016. Later that month, Victoria Sheets, the village’s former bookkeeper, pleaded guilty to falsification for helping Johnson obtain his state pension benefits early, before investigators could freeze the account.
In April, former Mayor Charles Neff was indicted on charges related to the Johnson investigation, including theft in office and falsification. Bonnie Liff, a former administrative assistant and utilities clerk, also was indicted in April on charges of theft in office. Robert Smith, assistant chief legal counsel for the Auditor’s office, was appointed special prosecutor for the cases.
The village will now come under the oversight of a financial planning and supervision commission. Within 120 days of its first meeting, the village must develop a plan to eliminate the fiscal emergency conditions. The Auditor of State serves as the financial supervisor to the commission.
A village is placed in fiscal emergency if any one of the six conditions described in Section 118.03 of the Ohio Revised Code exists:
- Default on a debt obligation;
- Failure to make payment of all payroll;
- An increase in the minimum levy of the village which results in the reduction in the minimum levy of another subdivision;
- Significant past due accounts payable;
- Substantial deficit balances in village funds; and
- A sizeable deficiency when the village’s treasury balance is compared to the positive cash balances of the village’s funds.
Incomplete financial records have prevented auditors from conducting an audit of the village since its 2011-2012 audit was released in November 2013. This prompted Auditor Yost to place the village on the "unauditable" list in April 2015.