Hawthorn Woods orders audit to account for special service funds

Hawthorn Woods officials have ordered a forensic audit of the village's Special Service Area program for road projects, because money that should have been earmarked is missing from the fund.

The village is supposed to set aside a minimum of $200,000 each year from its general fund for the roadwork, but somehow that money was never allocated during two of the six years the SSA program has been running.

"At the end of the day, it wasn't in the budget and that budget was approved by the entire village board," Hawthorn Woods Mayor Keith Hunt said. "Where did the money go? I want to know what the hell went on."

Officials also now have to figure out how to pay for the rest of the road project. The village doesn't have the roughly $2.7 million it will take to finish nearly 10 miles of road improvements in 2009.

Hunt cast the tiebreaking vote at a recent board meeting to hire Chicago-based McGovern and Greene to audit the SSA's finances for a fee of up to $15,000.

Under the original plan, the road improvements were to be funded through $10.6 million in borrowed money, $5 million paid over time by developer Toll Brothers, $200,000 in yearly general fund revenues, motor fuel tax revenues amounting to roughly $200,000 annually, and any accumulated interest.

Some of that interest money is unaccounted for, Hunt said.

"I want to know exactly how much money should have been in there with accrued interest, how much money is there now, and if in fact there is a deficit, exactly how much it is," Hunt said. "We don't want projections. We don't want guesstimates. We ought to know to the penny exactly where it's at."

The overall SSA budget is about $19.5 million, of which the village has spent roughly $17 million through 2008.

Village Trustee Steve Riess said it's the board's fault for not monitoring the SSA finances more closely.

"We have never been given any kind of accounting or tally sheet that represents where we are, how much money was in the SSA," Riess said. "The board of trustees has never been provided anything more than year-end summaries of what was spent that particular year. We haven't been given a formal report about what money is left."

Riess said concerns raised by the village's finance committee about the SSA funding were never conveyed to the board until a potential shortfall was revealed in June.

"We should have seen this coming," Riess said. "If we were doing our jobs in terms of reporting and keeping track of what's going on, we would have known about this a long time ago."

Hunt said former staff members led the board to believe the road improvement program was on track and within budget.

"Is the village board to blame for not watching this more closely? There are those who would say we are and ultimately that buck stops with me," Hunt said. "If somebody is giving us bad information, then we are going to make bad decisions."

The audit is expected to be completed by the end of October.

Riess said it has no value because the ship has already sunk.

"We are not suddenly going to discover it (the money) in some bank account we forgot about," he said. "It's gone. Really, what we need to focus on, in my mind, it isn't so much where the money went, but what are we going to do about it now."