May 15, 2019 at 4:31 p.m.
Oneida County committee to transit commission: Get an audit, or else
Hintz blasts commission leadership; audit to review possible conflicts of interest
Oneida County committee to transit commission: Get an audit, or else
That action, the letter by assistant corporation counsel Thomas Wiensch states, would likely include Oneida County's withdrawal from the transit commission.
The administration committee's vote to send the letter demanding an audit followed a blistering assessment of the transit commission's leadership by county board chairman Dave Hintz, who also chairs the administration committee.
Hintz said "the tone at the top"of the transit commission had to change, and the letter was intended to force that change.
"Basically, what the 30-day letter says is, 'You have 30 days to get things in order and to contract for an audit,'" Hintz said. "I'm tired of waiting. We have to draw a line in the sand."
And if the transit commission refuses the request for the audit?
"Let's say we are on day 35 and they say, 'No, we're not going to hire an auditor,' then I think this committee should recommend to the full county board that the county withdraw from the transit commission," he said. "That's the line in the sand."
During the meeting, committee member and supervisor Bob Mott, who also serves as the transit commission's vice chairman, offered a robust defense of the transit commission, though he allowed that its operations had not always been perfect.
However, Mott said he would not oppose the audit, which is required by the transit commission's charter, and assured the other members of the administration committee that the transit commission would comply with the request.
In the letter, Wiensch reminded the transit commission of its obligation under the charter to have an annual audit performed by an independent certified public accountant. Wiensch also observed that audits performed by the Wisconsin Department of Transportation, which the transit commission has argued are sufficient, are not performed every year and are limited in scope.
In addition, Wiensch wrote, no audits of the transit commission have been performed, though the commission was created in 2016.
"The committee has asked me to advise you that it must insist that the commission contract with a certified public accountant within thirty days of the date of this letter, for an audit to be started within a reasonable amount of time, and to be completed within 90 days of inception," Wiensch wrote. "The audit must include all years since the creation of the commission, through the year 2018."
What's more, Wiensch continued, the audit must include an examination of any potential improprieties that may have existed, or that still do.
"Also, the audit scope must include a review of any potential or actual conflicts of interest that currently exist, or have existed since the creation of the commission," he wrote. "Conflicts of interest include but are not limited to commissioners or employees receiving funds from the commission, or directing that transportation services be created or altered for their benefit, or the benefit of their relatives."
The need for an audit
As he unveiled the letter he wanted Wiensch to send, Hintz offered a litany of reasons a rigorous audit needed to be performed.
He first went through a list of "excuses" that he said had been used to argue against the need for an annual independent audit. At one point, Mott asked if Hintz would call them "reasons' rather than 'excuses' for not wanting an audit.
"There's a connotation that goes with that," Mott said, referring to the word "excuses."
"Call it what you like, reason or excuse," Hintz said. "I prefer the word 'excuse.'"
Then Hintz turned to what he called the other side of the page - why an audit was needed.
"Some of these are very current events and some date back a bit," he said.
Hintz said he had seen buses go off route, saying he lived about three-and-a-half miles off the route but saw a bus near his house last month. While he was informed that the law requires buses to deviate by up to three-quarters of a mile, this was close to three miles, Hintz said.
Hintz seemed to question the ridership potential.
"I've seen many buses, and it seems like there are no riders on the buses, or very few," he said.
Hintz said everyone had seen the transit commission's assets sitting idle.
"We've seen buses sitting, their new buses and not quite sure who owned them and how they should be paid for," he said. "They have had unpaid bills - in the past their fuel bills with the county have been delinquent, I believe up to six months, and their payments for insurance also delinquent."
Hintz said conflict of interest issues had arisen. He also said he had received a call from Chad Reuter of the state Department of Transportation and held a conversation about what a state audit would accomplish.
"I described what would be included in an audit done by a CPA, and he described what a state audit by the DOT would do, and we talked about gaps in the audit coverage and we talked about timing," Hintz said.
What was interesting, Hintz said, was Reuter's response when Hintz mentioned the need to explore alleged conflict-of-interest rumors.
"He said, 'Oh you mean getting checks at his (transit commission chairman Erv Teichmiller's) house for the rent on the building (office space leased by the transit commission).' I did not put those words in his mouth, I only mentioned conflict of interest reviews," Hintz said.
The building in which the transit commission leases space is owned by Community Mental Health Services Holding Company, whose only reason for being is to hold the property, collect rent, and turn over net proceeds to Community Mental Health Services Inc. Both are not-for-profit corporations.
According to its 2017 Form 990 return, Teichmiller is the principal officer of the holding company, serving then as both its treasurer and chairman.
However, Teichmiller has said the company only holds the property in trust for the CMHS and he receives no benefit or compensation from the corporation. The checks no longer go to his house.
While the DOT could pick up part of the tab for an audit, Hintz said Reuter told him they would not pay the conflict-of-interest, or opinion, portion of an independent audit because they do not perform that kind of review.
Uncooperative with law enforcement
Hintz also pointed to the recent sheriff's department investigation of the transit commission for an alleged open-meetings law violation. (The Lakeland Times filed the complaint prompting that investigation.)
"That has been completed and produced by the sheriff's office, and they did find that they were in violation of open-meeting rules," he said. "When sheriff Hartman released that report to me, he explained that the transit commission and their manager were not cooperative during this review, and that's another reason I think we need an audit."
In the past, Hintz said, there have been bad financial situations, such as running out of money. And, Hintz said, the commission keeps switching between accrual accounting and cash accounting methods, which he said is not appropriate.
"They go back and forth to not keeping their books on a consistent basis," he said.
Under cash accounting, revenues and expenses are recorded only when money is received, or a bill is actually paid, while in accrual accounting income is marked when it's earned, no matter if it is yet received, and expenses are marked when they are incurred or billed but not paid.
"You should be on one basis or the other, and not switch back and forth," Hintz said.
Hintz said there had been problems with transit commission funding earlier this year.
"In January, Darcy (Oneida County finance director Darcy Smith) worked out the funding, and I agreed to quarterly funding of the commission," he said. "They came back three days later and went to their committee of jurisdiction and were funded for the whole year."
The tone at the top
Beyond what Hintz called the transit commission's excuses for not wanting an audit and what he said were multiple reasons for needing one, Hintz offered a withering assessment of the transit commission's leadership.
"I'm a retired CPA, still with a license in retirement status and also a retired certified fraud examiner," he said. "Fraud examiners use the words 'tone at the top.' It's kind of a management concept."
To explain the concept, Hintz offered up a hypothetical example of a construction company. In his fictional company, Hintz says the owner ignores all safety rules: The owner doesn't wear a seat belt, and refuses to wear a hard hat or safety glasses, or steel-toed boots.
"What sort of attitude or safety performance do you think you would find at that construction company?" Hintz asked. "It would be down. People wouldn't care about safety. They would say, 'Well, the owner doesn't wear a hard hat or seat belt. I'm not going to wear steel-toed shoes. The owner doesn't wear them.' So the top person sets a tone for the organization."
The same goes for the transit commission, Hintz said.
"This [example] is safety, and it's the same way for following accounting practices and accounting rules," he said. "I feel that the tone at the top of the transit commission is kind of setting the pace and that has got to change."
To set that change in motion, Hintz said he had instructed Wiensch to draft the 30-day letter.
Mott defends
During discussion, Mott defended the transit commission, its work, and its progress, and he said he could not grasp the absolute insistence upon an audit.
"To a certain extent, this audit thing absolutely mystifies me in that it has grown to such a large proportion that we are talking about eliminating a service that almost everybody in the nation agrees is needed, and that's quality rural transportation," Mott said. "The transit commission has come in and taken over the aging department's role in handicapped and aged transportation. The funds that are funneled through them come to transit to carry on those jobs efficiently and effectively, as far as I can tell."
Mott cited an article in the newspaper stating that there are 4,000 one-way rides per month being provided to all kinds of citizens.
One example was Nicolet's donation of $10,000 in local fund money so that anyone riding to Nicolet College can ride the bus for free.
"There are people that go for dialysis and other doctor appointments, or shopping, or going to visit their granddaughters," he said. "Many people do not have reliable transportation, and that is what it is for."
Mott said he had just visited Dublin, Ireland, and there were buses everywhere.
"What they are trying to do is eliminate private cars because of congestion in the city," he said. "We don't have that problem in Rhinelander, we don't have traffic jams in Rhinelander, but we do have a need for transportation."
Mott said he believes that the budget and audit issues would not have grown to such a large magnitude if Hintz had not been a professional accountant.
"I personally want to be as transparent as possible," he said. "I have been on this commission for three-and-a-half to four years and I was on the aging committee before that, and I firmly believe that transit is doing a good job."
At the start, the commission did have growing pains, Mott acknowledged.
"I will freely admit that there were a lot of things that we were not told by the state, like buses, for example, we signed the contract for buses and we had to pay all the money in advance and we were not told that initially or else the contract was not written carefully enough," he said. "When we found that out, we came to the county, and that loan was paid off short-term in 28 days."
Often in start-up groups, Mott said, people don't know the "ins and outs."
"You don't know the best way to do things," he said. "There are growing pains."
Mott also said the initial person hired as transit manager did not have an expertise in finance.
"It didn't work out as well as we had hoped," he said. "The person we have now I think is doing well."
The transit commission has been working diligently to establish a good system, Mott said, including consultations with Oneida County finance director Darcy Smith and bringing in the manager of the Bay Area Rural Transit, or BART, which has operated in the Ashland and Bayfield area since 1981.
"They have never had an audit done like this," Mott said.
But Mott said he did not want to resist the idea of an audit any longer.
"I didn't resist it at all," he said. "We told Dave (Hintz) we found out now we can budget for it and put it in next year's budget because our budgets are very tight if it has to come from local funds. Now, again, we heard at first that there was no money (for this) that could be done through grants, that it would all have to be local monies, which are fares, which are donations, which are things from the aging department that are used for local transportation."
Now, Mott said, in a letter from the DOT, the DOT says some grant monies can be used for a portion of the audit, and he said that was another revelation that was news to the transit commission.
"So we get one answer one day and one answer on a different day, which is also difficult," he said.
To address the shortage in a $500,000 budget initially, Mott said the agency fell something like $15,000 to $20,000 short.
"It's not very much," he said. "It was overspending early in the year. Darcy pointed it out in June or July. We tried to make those changes. We directed our manager to make those changes and we did have to cut back on service. We thought we were going to have to shut down."
Mott also said the amount of money coming into the commission isn't really quarterly, as they believed it would be.
"Quarterly to them [the federal level] means you will get your first quarter funds three-quarters of the way through the year, so we had to take local monies and, it turned out, short-term loans, a line of credit, to carry us," he said.
That gap in funding caused the delayed payment for fuel from the county, Mott said.
"As I recall, it wasn't clear if it was going to be carried on, because we have this gap in funding, until those quarterly monies came in late October or November, and then that was paid off," he said. "But we have never failed to pay any bills."
So what's driving the whole thing? Mott asked.
"I believe 100 percent, Dave, that if you did not have the background that you have, we would not be here talking today," Mott said, directing that comment to Hintz.
Nonetheless, Mott said, the transit commission would do as Hintz was requesting and comply with the audit demand.
Mott also read from a letter by Chad Reuter of the DOT's Bureau of Transit, which summarized Reuter's conversation with Hintz about the transit commission. In it, Reuter defended the transit commission's integrity.
"WisDOT has been involved in many discussions over the past few years regarding financial issues with the commission," Reuter wrote. "These issues, however, appeared to WisDOT to be caused by funds not being available early in the year due to delays at the federal level, and over-exuberance for providing transit services within Rhinelander and the surrounding parts of the counties - not from fraudulent behavior or a lack of interest in paying commission bills."
Reuter also said that, in their conversation, Hintz agreed that transit was a valuable service to the two counties.
Hintz: Mistake to push for Teichmiller re-appointment to transit commission
County board chairman says 'many more issues have surfaced'
Back when county board chairpersons were busy making their normal appointments to county committees and commissions, Oneida County board chairman Dave Hintz was especially busy: He was not only making his own appointments, he was also trying to influence a Vilas County appointment.
Specifically, Hintz picked up the phone and called Vilas County chairman Ronald DeBruyne to ask DeBruyne to keep Erv Teichmiller as a Vilas County appointee to the transit commission.
"Yes, I did call him," Hintz told The Lakeland Times last week. "At the time, Ron was making decisions on who should be appointed to the transit commission, and I did place a phone call to Ron and I said please consider Erv because of his historical perspective and that he had been with the transit commission for a number of years and had that background."
Now, with all the controversy swirling around the transit commission and Teichmiller, Hintz says that's a decision he regrets.
"In retrospect, it was a mistake to give that advice knowing what we know now," he said. "But at that point I did call Ron and talk to him about keeping that historical perspective on the board. It was Ron's decision to do that, but I did offer that perspective."
At the time, there were rumblings that Teichmiller might not be reappointed. It's unknown whether DeBruyne was considering removing Teichmiller - he did not confirm that to The Times last week - but Hintz said he received a call from an Oneida County supervisor on the transit commission asking him to call DeBruyne.
"[Supervisor] Bob Mott had called me and explained that Ron was making his appointments and that Erv was really needed on the transit commission for his background and historical perspective and so I called," Hintz said.
Hintz said that at the time he was not aware of the controversies that have since engulfed the commission, having only heard some rumors.
"They are concerning, and there are many more, and many more issues that have surfaced, and that's why we are pushing so hard for an audit to be conducted," he said.
Hintz told The Times the county had been getting pushback from the transit commission in the county's quest for an independent audit.
"So Oneida County is taking a strong stand that we absolutely need this audit conducted," he said. "These issues that have surfaced and gotten stronger are one of the very reasons we really need that audit."
On Tuesday (see related story) the county's administration committee voted to send a letter to the transit commission demanding that the commission contract for an independent audit within 30 days. Hintz said if the commission did not do so, the committee would likely recommend that the county withdraw from the commission.
The letter also requires that the scope of the audit include "a review of any potential or actual conflicts of interest that currently exist, or have existed since the creation of the commission, that include commissioners or employees receiving funds from the commission, or directing that transportation services be created or altered for their benefit, or the benefit of their relatives."
"Oneida County is going to take a very strong stand on this audit issue," Hintz said. "They (the transit commission) have been trying to substitute an audit done by the DOT, and that's just not a comprehensive audit like we need. I was an auditor and a retired CPA, and we need an audit to look at these issues and others we have on our list."
Hintz reiterated he made a mistake in recommending Teichmiller.
"I do admit to making that phone call to Ron," he said. "In hindsight, knowing what I know now, I would never have made that. We all make mistakes."
At the Oneida County administration committee meeting Tuesday, Hintz said he had again spoken to DeBruyne, this time about the audit, and that DeBruyne firmly supports an audit and Oneida county's position that an audit must be done.
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