The president of the GVR Board of Directors said Friday that the organization ended 2018 with a nearly $600,000 surplus and that the staff has “just been hanging on to it” instead of letting the board decide how it should be spent.
Charlie Sieck, who was named board president earlier this year, said the surplus over the past three years has been underreported by about $1.6 million.
Sieck said the Corporate Policy Manual indicates “if there's a surplus, it's up to the board to decide the disposition of that – do you put it in some of the reserves, do you spend it on something – and they've just been hanging on to it and not letting the board make that decision,” he told the Green Valley News.
He said the surplus money has been in an operations account that the Board of Directors has no control over. Sieck said it's not clear how the money is being spent or whether it's directly benefiting members.
He said the issue stems from expenses that are being reimbursed from reserves without the reimbursement being accounted for, which results in any surplus looking less than it actually is.
GVR staff said they had no comment on Sieck’s remarks. CEO Kent Blumenthal was out of town Friday and didn’t answer a request for comment.
Sieck released the surplus data in an email to GVR members Friday evening, where he wrote, “The Board will decide what to do about this additional reported surplus,” adding it could be applied to the Maintenance, Repair and Replacement Reserve, which he said is “significantly below the targeted funding level.”
Whether there will be any repercussions from money being underreported and left out of the board's control is unclear and "only time will tell," Sieck said.
Sieck's comments came days after an outside financial consultant shared her findings with the board.
Accountant Susan Vos, a partner with Regier Carr & Monroe in Tucson, was hired in June after the Fiscal Affairs Committee and staff disagreed over key numbers, including whether GVR had a surplus or deficit for 2018.
Vos made 13 recommendations, including creating four separate budgets – operating; initiatives reserve; emergency reserve; and maintenance replace and reserve – and making reporting easier to understand for directors and members.
The board voted, 10-1, to implement her recommendations Sept. 25, and to retain Vos to help see them through. Blumenthal backed the decision, saying, "it would be money well spent."
Sieck said Friday that the issue of whether GVR had a deficit last year has now been settled. According to the surplus/deficit calculator data, 2018 ended with a $596,193 surplus. He said GVR staff had reported a negative surplus of about $385,000 in 2018, when actually there was a $596,193 surplus. He cited similar discrepancies for 2016 and 2017.
Sieck said the funds were kept out of the control of the board. He agrees four budgets will clarify where GVR funds are and how they are being used.
GVR staff released a statement to the Green Valley News about Monday's meeting with Vos before Sieck made his comments on the surplus.
"She reviewed the format GVR uses for budgeting," the emailed statement said of the meeting. "Also, she presented a formula for calculating any annual surpluses."
GVR spokesman Miles Waterbury declined to answer followup questions about the surplus discrepancies.