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No deficiencies in Bemidji's 2006 audit; City Council evaluates city manager's performance

Sandy Nelson, a certified public accountant with Bemidji-based Miller McDonald Inc., on Monday reviewed the findings of Bemidji's 2006 audit.

And the results were about as good as they come.

No deficiencies were identified that needed to be reported to the state of Minnesota.

"We did not find anything that needed to be cited as non-compliance," Nelson said.

She did note a few minor infractions in a management letter to city officials.

Included in the management letter were the following:

E First National Bank issued a Certificate of Participation Bond that is rated Baa1. The state requires ratings of either A or AA. But, Nelson said, even without the bond, the city still had enough collateral. "The bank still had you covered," she said.

E A grant payment of $582.08 was never requested.

E There were instances in which an invoice was paid later than 35 days and the required interest of 1.5 percent per month was not included. Miller McDonald recommended that the city pay the invoices within the 35 days or pay the additional interest.

E Even if paid, Nelson said the invoices should be stamped to make it clear that they had in fact been paid. "We recommend that you actually stamp the invoices," she said. Nelson also found one that had been coded incorrectly, saying that her staff "had to look hard" at the journal entries to find even one.

E For payroll, the W-2 forms should include retirement wages.

Councilors seemed pleased with the results.

"These are really inconsequential findings," said Councilor Nancy Erickson.

"That's why I said it would be quick tonight," Nelson said.

Mayor Richard Lehmann said the findings were "pretty innocuous."

Along with pointing out the minor infractions, Nelson also reviewed a few key points of the audit.

Nelson, who also reviews City Council minutes throughout the year, said she knew the council was considering taking on more debt. Because of this, she explained where the city is at in regards to its debt limits.

Bemidji has a debt limit of just under $12.5 million. The city, in 2006, had $930,000 toward its debt limit, which leaves the city with about $11.5 million left before it would breach its legal debt margin, Nelson said.

Councilors then reminded each other that the city is positioned to increase the $930,000 figure as it is set to issue bonds for the new public works facility. Those bonds are expected to be between $4 million and $4.5 million, councilors said.

Nelson also said the city has about five months' worth of reserve funds.

"You're right where you need to be," she said, citing the state auditor's report from 2004 that states that cities should have about five months' worth of reserve funds.

Nelson added, however, that the state is poised to "bump" that to six months.

City manager review

The City Council also conducted the six-month performance evaluation of City Manager John Chattin.

Chattin's review was conducted during a closed portion of Monday's meeting.

According to state law, a public body may close a public meeting to review an employee's performance, but must first identity the employee - and must also provide a summary of the evaluation's conclusions at the body's next meeting.

The results of the evaluation will be recapped during the July 16 City Council meeting.

Jim Brimeyer of Hopkins-based The Brimeyer Group Inc., which conducted the search for a new city manager last year, also attended Monday's meeting.

Chattin began working for the city of Bemidji on Nov. 6. He was selected from a pool of six finalists, replacing David Minke, who left the city at the end of June last year for an administrative position in Castle Rock, Colo.

The council voted unanimously to hire Chattin at an annual salary of $89,000. The contract stipulates that if he receives a satisfactory performance evaluation after six months, his salary would be increased to $92,000. If after one year he again receives a satisfactory evaluation, his salary will increase to $95,000.

Chattin previously worked as the county administrator for Swift and Yellow Medicine counties, where he earned $90,000 annually.