Financial improprieties regarding contracts and expenditures

Another massive problem with the WLT Board actions over the last 18-24 months concern financial mismanagement and improprieties. This has come into sharp focus after COMW public data requests were finally responded to.

The budget overruns found in the 2020 and 2021 financial reports finally obtained have been the most shocking findings to date, since initially finding the special meetings where the board secretly decided to only pursue municipal water and the intent to keep the proceedings, decisions and actions taken at those 2 special meetings hidden from the public.

Also covered in the section on open meeting law violations, part of why these financial overruns have not already come to light is the standing practice on the part of the WLT board to not disclose the details of the financial expense statements at the regular monthly meeting where they are approved. The public is given a generic summary of bank account balances, but the board has access to the detail expenditures being approved at the meeting. MN Statute requires the information available to the public and to the WLT board to be identical at the meetings. This was consistently the case for the 24-month period of regular meeting packets and minutes reviewed by COMW.

Digging into the details, in calendar year 2020, the WLT board overspent the township’s annual budget by approximately $149,000. Below highlights 5 budget items that represent 111% of the $149,000 shortfall. In other words, there would have been a budget surplus if not for these 4 significant expense overruns.

Take note of the following:

• WLT had no major litigation issues (attorney fees) in 2020. Why were the township attorney expenses almost 3X over budget?
• WLT Board never shared in writing or verbally these spending deficits with the public at Town Board meetings.
• WLT Board never amended the budget to cover these shortfalls.
• WLT Board raised the 2022 Tax Levy by 13% at March 2021 Annual Township Meeting without explanation.

For calendar year 2021, unfortunately, the budget also appears to be on track for spending overruns. Even with increased amounts budgeted, as of 7/31/2021 there are line items already running over budget and WLT seems to be on pace to have an even greater deficit than 2020.

Some observations from the year-to-date financial report obtained by COMW as of 7/31/2021:

• Again, WLT had no major litigation issues (attorney fees) as of 7/31/21 (COMW filed suit on 9/3/2021) yet township attorney expenses are already over budget again by 168%.
• Roads were not included (summer road work not billed yet), but appear to be headed for significant shortfall based on the approximately $147,000 RCM Specialties contract awarded June 7, 2021. More on this below.
• WLT annual budget for township engineer Stempski is fully spent with 5 months to go in the year
• Again, the WLT Board has not shared in writing or verbally these spending deficits with the public at Town Board meetings and WLT Board has not amended the budget to cover these growing shortfalls

Based on the observed financial information, standing practice to not share monthly expenditure details at public meetings and the overall lack of communication, it seems apparent that the WLT board has intentionally hidden 2020 and 2021 budget shortfalls from WLT citizens. 2020 finished with a budget deficit, the 2021 financials appear to be on a bad trajectory with no indication they are going to get better. Now WLT residents are now saddled with a 13% tax increase for 2022 and no apparent change in direction by the WLT board regarding financial management.

Beyond general budget over runs, there are major concerns with how the WLT board represents expenses and awards expenditure contracts. Two examples are the following: 

In early 2020, the 3M co-trustees provided $25,000 from the 3M settlement funds to WLT to be used for projects and expenses related to pursuing a municipal water plan. (After the illegal, hidden decision on 2/27/2020 to pursue ONLY a municipal water plan). This was later increased to $40,000 in October 2020. The Township financial reports reveal 100% of these funds were committed by the WLT Board to Ryan Stempski of Focus Engineering. This information was not disclosed in any of the regular town meetings where expenses are reviewed and approved.

Further, beginning in December 2020 through July 2021, 6 additional, different municipal water related contracts totally approximately $44,000 were awarded ostensibly using the same $40,000 3M settlement appropriated funds. During this time, in multiple special meetings as the contracts were approved (illegally), board chair Kyllo informed the public these contracts were being paid by the 3M settlement funds. However, the WLT board knew that 100% of those funds were already committed to Stempski (Focus Engineering). In short, as of 7/31/21, the WLT board knowingly overspent the $40,000 allocated by the 3M settlement by approximately $44,000 and purposefully hid this from residents. In addition, all these contracts were passed without findings or resolutions illegally as actions in special meetings which renders these contracts arbitrary and capricious.

Another significant example of arbitrary and illegal contract awards was for 2020 and 2021 crack sealing road contracts. In the May 11, 2020 regular meeting, the WLT board acted on a non-agenda item and awarded a contract to RCM Specialties to provide spray patching of roads for approximately $137,000. Based on the meeting minutes, this contract was awarded with a simple motion without findings of fact or a resolution. It was also awarded without any competitive bids secured as required by state law. As a reminder, the 2020 budget for roads ran over by approximately 50% to a deficit of $86,302.79.

Then on June 7, 2021, the WLT Board approved a contract award to RCM Specialties for spray patching for approximately $147,000. Again, based on the meeting minutes, this contract was also awarded with a simple motion without findings of fact or a resolution and was awarded without securing any other competitive bids as required by state law.

Of note, the statutes violated by these actions indicate those in violation are guilty of a misdemeanor and must leave office.