Toledo finance director resigns after $8.2M sat idle – Toledo Blade

Toledo’s finance director resigned Wednesday in the wake of nagging questions about why more-than-$8 million sat idle in a fund for five years, when the Hicks-Hudson administration knew about that money, and if the cash was moved properly.

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George Sarantou, who was hired as finance director in January, 2014 by then Mayor D. Michael Collins, voluntarily offered his resignation, Mayor Paula Hicks-Hudson said.

Mr. Sarantou’s annual salary is $ 94,813. City spokesman Janet Schroeder said his severance has not yet been calculated, adding he would also be entitled to pay for vacation time that hasn’t been used this year.

“We have to move on and George felt this was an unnecessary distraction,” the mayor told The Blade Wednesday. “He is an honorable man. He is a good man who has worked hard for the city.”

The mayor added: “George has taken this course because of his love for the city, for which I continue to admire him.”

Mr. Sarantou and Debt Commissioner Bryan Benner last month tried to close the chapter on lingering financial questions hammering the mayor’s administration during an election year by asserting the more-than-$8 million was actually known about and “accounted for” during that entire time.

The Blade could find no proof that was true and city officials did not respond to requests for evidence.

Mr. Sarantou and Mr. Benner told The Blade the funding was not an unknown pot of money left over from a previous administration and then discovered in 2016 by the administration of Mayor Hicks-Hudson.

Mr. Sarantou and Mr. Benner said the money — which was in the city’s “general obligation debt-service fund” from 2011 through the end of 2015 and into part of 2016 — was accounted for and in the city’s capital improvement plan budgets during those years.

“Essentially, that $8.75 [million] was part of our CIP calculations and has been part of it because without that money, when you look at the projects that are being proposed and authorized by council and the mayor, we would have to cut $8.75 million out of that prospective budget,” Mr. Benner said

When pressed to show proof, neither Mr. Sarantou nor Mr. Benner could provide documents supporting the claim over the course of two subsequent days.

A review of the Toledo City Council-approved capital improvement budgets for 2014 and 2015 — the first two years of Mr. Sarantou’s tenure as finance director — shows no sign that money was appropriated for any purpose or listed as revenue.

The mayor sent a letter late last month to Ohio Auditor David Yost requesting an audit following disclosure that the millions sat idle for five years and revelations that city officials had for years illegally commingled funds.

The roughly $8 million was moved into the general obligation debt-service fund in 2011 with transfers from the city’s general fund and the worker’s compensation fund during the administration of then-Mayor Mike Bell. At the end of 2011, there was $8.2 million in that fund.

In previous years, millions for debt payments would go into the fund and then be used to pay bills. The balance would be down to amounts like $58,000 in 2007, $90,000 in 2008, $134,000 in 2009, or $244,000 in 2010.

But that $8.2 million stayed in the fund and the year-end balance increased to $8.94 million at the end of 2015.

In December, 2016, the Hicks-Hudson administration transferred less than the amount needed for debt payments into the general obligation debt-service fund — $9.2 million rather than the $19 million like it did in 2015 — which reduced that fund balance from $8.94 million at the end of 2015 to $197,000 at the end of 2016, records show. The amount essentially removed was $8.74 million, which is the number Mr. Benner referred to when speaking to The Blade Tuesday.

The city’s 2016 Comprehensive Annual Financial Report, completed June 31, includes “prior period adjustments” that corrected the accounting maneuvers and shifted the $8.74 million into other funds.

“Recently, the Toledo City Council and I determined that a limited independent review of certain city finances was both advisable and needed,” the mayor’s letter to the state auditor said. “That review was undertaken and a report was provided.”

The mayor was referring to a July 13 report by retired Ohio Supreme Court Justice Andy Douglas, who determined city finance officials had for years violated state accounting laws by commingling funds.

The illegal commingling spanned several Toledo mayoral administrations.

“During this review, it became obvious that a more in-depth audit and analysis of our fiances should be commissioned,” the mayor said in the letter. “This in-depth analysis should include the procedures we follow in our accounting for city funds.”

Mr. Sarantou initially said the money in the debt service fund was tax-increment financing district fund money. He eventually admitted he was mistaken.

Mr. Douglas’ investigation discovered the city never created two tax-increment financing district funds that Mr. Sarantou incorrectly said for weeks were the source of the $8 million-plus in the debt service fund.

The two TIF funds were required by law — one for the “Franklin Park/​Westfield Municipal Public Improvement” TIF that was authorized and mandated by council to be created in 2004, the other for the “Jeep Municipal Public Improvement” TIF that was authorized and mandated by council to be created in 1998.

Instead, TIF money was commingled with the city’s other capital improvement money in the capital improvement fund, Mr. Douglas said.

City Council President Steven Steel credited city Auditor Jake Jaksetic for identifying the $8 million-plus in the debt service fund and for also contesting Mr. Sarantou’s incorrect claims that it was TIF money.

Mr. Steel said council has not been given complete information by the administration regarding fund balances.

The council president inquired about the fund balance after a Blade report in June detailing how the money was ignored, forgotten, or at least not publicly revealed during the same time Mayor Hicks-Hudson was telling voters the city badly needed an income tax increase in 2016.

The Hicks-Hudson administration has not responded to a July 17 Blade request for the balance of the TIF funds, or at least what the funds should contain if they had been created.

Mr. Sarantou, a Republican, was a city councilman for 12 years prior to being hired as finance director. He was chairman of council’s finance committee for about 10 years.

Contact Ignazio Messina at or 419-724-6171 or on Twitter @IgnazioMessina.

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Toledo finance director resigns after $8.2M sat idle – Toledo Blade}