Based on the sources provided, the City of Stockbridge has experienced a series of significant accounting mistakes, a pattern of filing audits late, budget shortfalls, and a lack of transparency over several years. These issues are detailed in independent audit reports and were discussed at length by city council members.
Pattern of Late Audits and Recurring Accounting Errors
The city has demonstrated a pattern of filing its annual financial reports late and failing to correct significant accounting deficiencies year after year.
- Late Filings: State law requires the city to publish its audited financial statements within six months of the end of the fiscal year.
- The audit for the fiscal year ending December 31, 2022, was due by June 30, 2023, but the auditor’s report was not issued until November 13, 2023.
- Similarly, the audit for the fiscal year ending December 31, 2023, was due by June 30, 2024, but was not issued until July 10, 2024.
- Recurring Material Weaknesses: Independent audits for both 2022 and 2023 identified several “material weaknesses,” which are deficiencies in internal controls creating a reasonable possibility that a major financial misstatement will not be prevented or detected in a timely manner. Many of these were repeat findings from previous years, indicating a failure to implement corrective actions. Key recurring errors include:
- Improper Capitalization of Assets: For both 2022 and 2023, the city failed to properly record millions of dollars in capital assets. In 2022, this included over $954,000 in governmental assets and over $1.5 million in Amphitheater construction and equipment costs. In 2023, another $2.25 million in governmental assets were improperly excluded. This was an unresolved finding from 2021 through 2023.
- Improper Interfund Activity: The city repeatedly failed to correctly state transactions between its various funds. This required multi-million dollar adjustments to correct the books. Council discussions revealed this practice was used to conceal amphitheater expenses by moving them to an unrelated “citywide projects” fund without council approval. This was also an unresolved finding from 2021 through 2023.
- Mismanagement of Receivables and Revenue: For at least three consecutive years (2021-2023), audits found the city did not properly adjust its receivable and revenue accounts, requiring numerous corrections.
- Worsening Conditions in 2023: The 2023 audit identified four material weaknesses and a significant deficiency, an increase from the prior year. New issues included failures in managing prepaid assets and reporting accrued liabilities. The city also failed to comply with federal reporting requirements for a Public Safety (COPS) grant.
Budget Shortfalls and Lack of Control
The city has struggled with a severe lack of budgetary control, leading to large overspends and the use of unbudgeted funds.
- Departmental Overspending: Numerous city departments had actual expenditures that exceeded their approved budgets.
- In FY 2022, the Police Administration department spent $824,064 over budget, and City Events spent $429,790 over budget.
- In FY 2023, multiple departments were again over budget, including Police ($351,030 over) and Municipal Court ($256,619 over).
- Unbudgeted Expenditures: A significant issue was spending money for which no budget had been approved by the council.
- The city’s finance director noted that a prior budget year had over $32 million in expenditures with no corresponding budgeted revenue.
- T-SPLOST funds were being spent despite having a zero-dollar budget. The finance director stated that some funds with revenues were never brought before the council for budget approval.
- ARPA funds were improperly co-mingled with the general fund, leading to an initial demand from the federal government for the city to return $2.2 million.
Lack of Transparency and Misleading Information
Council members have repeatedly stated that they were given inaccurate financial information and that their requests for accurate data were ignored or obstructed.
- Inaccurate Financial Reports: The city’s finance director acknowledged that in the past, “two sets of reports were being made” and the inaccurate ones were provided to the council for decision-making, effectively misleading them. Council members received reports suggesting the city was breaking even or had a minor loss of $65,000, when in reality, spending was millions of dollars higher. One council member noted a report showed only $2.3 million in spending through August 2023, but the year-end total was actually $10 million.
- Withholding Information and Open Records Issues: Several council members described a culture of non-transparency.
- Councilwoman Yolanda Barber stated, and I witnessed her censure, as she was consistently “shut down” and “fought on every turn” when asking for financial data, to the point of having to hire her own attorney to submit a demand letter for information. She also stated it took her 10 months to receive the 2022 audit results.
- Another council member highlighted that open records requests from the public were being redacted beyond standard practice at the direction of the legal department, without the full council’s knowledge.
- The consensus among several council members was that despite all of them asking for financial information, the reports they received were erroneous and concealed the city’s true financial condition.
Based on the source from the September 30 Stockbridge City Council meeting, the city’s finance director, Mr. Malazi, provided a budget update covering January through the end of August 2024. The presentation was a summary, with more detailed departmental reports and a significant budget amendment planned for October.
Overall Financial Reporting Status
- Catching Up: The finance department has caught up on bank reconciliations through the end of August 2024, allowing for the presentation of a credible financial report.
- Past Misinformation: Mr. Malazi acknowledged that in the past, “two sets of reports that were being made” and the inaccurate ones were given to the council for decision-making, effectively misleading them. The current reports are intended to provide a more transparent view.
- Upcoming Corrections: A budget amendment will be presented on October 13, 2024, to address numerous funds that had expenditures but no approved budget. This issue was previously highlighted when an audit noted over $32 million in expenditures without corresponding budgeted revenue.
General Fund Performance (January – August 2024)
- Budget vs. Actual: The General Fund had a budgeted revenue of $29.2 million for the year. As of the end of August, the city had collected $14.2 million. Expenditures were also at approximately $14 million.
- Delayed Major Revenues: Mr. Malazi noted that while revenues appear low, the largest revenue streams for the General Fund arrive late in the year. These include insurance premiums ($3.5 million expected in November), property tax ($7.4 million expected in December), and sales tax.
Issues with Unbudgeted Funds and Spending
A significant theme of the update was the ongoing effort to correct years of spending from funds that were never formally budgeted by the council.
- T-SPLOST: The T-SPLOST fund had a zero-dollar budget for expenditures, yet money has been spent from it. A budget amendment will correct this by formally budgeting both the revenues already collected and the expenditures.
- ARPA Funds: The American Rescue Plan Act (ARPA) fund was budgeted with zero revenue and has shown significant expenditures. This is because the funds were improperly “co-mingled into general fund” instead of being accounted for separately. The city must continue to fund ARPA-designated projects until the program ends in 2026. Mr. Malazi confirmed that the city was previously asked to return $2.2 million due to improper accounting but was able to resolve the issue by complying with federal requirements and did not have to return the money.
- Other Funds: Other funds, like the Property and Evidence fund and the new Red Speed fund, also had revenues or expenditures that were not included in the original 2025 budget and will be corrected via the upcoming amendment.
Enterprise Fund Performance
The finance director expressed concern about the performance of the city’s enterprise funds.
- Revenues Are Down: Revenues for all enterprise funds—Water, Sewer, Sanitation, and Storm Water—are down. The department plans to assess the reasons for this decline.
- Conference Center: The Conference Center’s expenses are inflated because personnel costs for the City Events department (approximately $500,000) are currently budgeted under the Conference Center. This will be corrected to reflect the true cost of each department.
- Amphitheater: The Amphitheater had a budgeted revenue of $2.6 million and had collected $1 million through August, with more concerts scheduled. The budget amendment will transfer money from the General Fund to “make up for the shortfalls in revenues”.
From the transcript of this September 30th, 2025 work session video:
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There were two sets of reports that were being made, and the reports that were being given
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to you to make wise decisions were not.
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So we misled you.
There must be an investigation into why two sets of books were kept, leading to a vastly over budget amphitheater, and how we’re going to claw back our money.
