As Winona Lake Town Council President Ashley McGinnis (second from right) reads the prepared statement from the council on the State Board of Accounts compliance report, (L to R) new town manager Pamela Howard, retiring town manager Craig Allebach and Council Vice President Austin Reynolds listen. Photo by David Slone, Times-Union.

By David Slone
Times-Union

WINONA LAKE —The State Board of Accounts compliance report on Winona Lake issued in June is a black eye to the town, resident Jim LeMasters told the town council Tuesday, July 15 during floor topics.

He was one of four members of the public who directly commented on the audit during the meeting. The meeting was the council’s first regular meeting since the release of the audit report. Toward the end of the meeting, Council President Ashley McGinnis read a two-page statement from the council on the SBOA audit, which found numerous issues with the town from Jan. 1, 2019, to Dec. 31, 2022, ranging from poor record keeping to misuse of town credit cards and town funds paying for employees’ personal items.

“I have no idea how you guys got into the mess you got into because, at (Warsaw Community Schools), the credit cards are checked out, you have to know what you’re buying, you can’t just have credit cards. Nobody has a credit card. That’s number one,” LeMasters, WCS director of maintenance and grounds, told the council. “I’d like to know what you guys are going to do. You’ve got this report. We have a black eye. Winona’s got a black eye. Everywhere I go people talk about it because they know I live in this town. So you’ve got to fix the problem.”

He said the other problem is that somebody has to be in charge, but he wasn’t sure right now who that is in Winona Lake. Once it’s figured out who’s in charge in the town, LeMasters said they need to let the people know because they are taxpayers.

“I don’t like some of the things I read through that report. Whether it was intentional or unintentional, people shouldn’t be able to go buy things without being approved,” he said, in part, adding it didn’t seem like the town was “planning” things. “You may want to look at how you do things so these people feel like we’re informed.”

Craig Nayrocker said, on the past transactions, he didn’t know if anyone willfully misappropriated funds and maybe people were doing what they thought was the best thing, but “because these are tax dollars” the town employees who spent town funds for their own use “needed to make the town whole on those transactions.”

Jerry Nelson, resident, said he’d like to hear from the clerk-treasurer as to what changes and adjustments have been made. “I’d like to hear some real solid ‘what we did to address it,’ ” he said. He also wanted to know if there was going to be a criminal referral on the person (former deputy clerk-treasurer Meghan Hawn Lincoln) who paid for their car rental in Hawaii with the town credit card as that appeared to be more than an accident or situation where a person doesn’t understand what a town credit card is used for.

“Everybody knows that the town of Winona Lake is not going to pay for their car rentals in Hawaii while they’re on vacation. So I’d like to see or hear from our town attorney or whoever is going to make a statement on that directly what kind of action is going to be taken with regard to that person’s and that money in Hawaii,” Nelson said.

Lynn Howie, in part, asked, “What will happen to the monies that are being discussed? And will those be accounted for by various people or will this just be determined as, ‘Well, we’re go forward from here and nobody meant anything wrong.’ ”

She said she knows some of the money was paid back, and that was reported on, but there were some monies not discussed but she was told they were paid back. If they were paid back, Howie said she wanted to see accounts receivable so the town people will know.

When the SBOA report became available, the Winona Lake Town Council released a statement to the media regarding that report, McGinnis said. At Tuesday’s meeting, she read a new council statement on the SBOA audit.

“As your elected town council, we want to take a moment to publicly address the State Board of Accounts audit findings, specifically the clarification of accountability, recommendations related to potential repayments due from certain individuals or departments, and the purchase of wells to support residential development,” she said.

“First and foremost, we want to affirm that we take the audit findings seriously. The SBOA recommendations are issued as part of a well-established state oversight process designed to promote fiscal responsibility, transparency and public trust in local government operations. We owe it to our residents to respond with integrity and to do so with care.

“It is important to remember that the purpose of the State Board of Accounts audit is to evaluate compliance with state standards and best practices in municipal operations — not to assign blame or question character. The findings in this report reflect areas where the town fell short of proper compliance, internal controls and documentation expectations,” she continued.

“While the report highlights serious matters that require correction, it is equally important to note that this audit was reviewed twice by the SBOA’s internal charge committee and at no point was it escalated for further enforcement action. This reflects the state’s determination that the issues are administrative and procedural in nature.

“There is no question that improvements must be made — and we are committed to making them. But we must approach this process with fairness, recognizing that oversight and accountability are about learning and strengthening operations, not vilifying individuals who were working within imperfect systems.”

On the well purchases and the town manager’s role, the letter states, “We want to take a moment to provide the full context surrounding the audit finding related to the purchase of private wells. “The town was actively engaged in a water line extension project for a new residential development. That project experienced delays, preventing homes from accessing water service. The use of Tax Increment Financing funds to purchase the wells was a practical, legal and economically responsible solution that enabled the sale of homes, supporting both the developer and the town’s growth.”

It continues, “The compliance issue identified in the audit regarding this action was the absence of a formal resolution by the council to approve the use of TIF funds for this purpose. That is a procedural oversight, not an indication of wrongdoing. This procedural step was inadvertently missed, and it is being addressed to ensure similar actions follow all required steps moving forward. The town manager did not act inappropriately and, in fact, acted within his administrative role in coordination with council leadership. Each well purchase was submitted through the town’s normal claims process, documented on Accounts Payable Vouchers and reviewed for approval and signed by members of the town council. This situation highlights the importance of consistent procedures and documentation, and we are taking steps to strengthen those processes going forward.”

The council statement says at this time, no final decision has been made regarding any repayment recommendations in the report. The council is awaiting further guidance from their financial advisor to “ensure we fully understand the scope of the recommendations and any legal or financial implications involved.” Once the council has received final input from their financial advisor, the council “will reconvene at our next monthly meeting to determine a path forward that reflects both the financial best interest of the town and our values as public servants.”

After hearing the statement, Nayrocker told the council, “On the issue of wells and TIF, that’s kind of concerning since you guys all saw this report May 15 and then had the opportunity to respond to the (SBOA). It would have been in the report, like (former clerk-treasurer) Laurie Renier’s matter.” He said without mauling the statement over, it sounded like “these are statements to minimize and contradict” the SBOA report.

To read the full statement click here.