Better management of county cash needed options

Although there are any number of reasons Erie County ran short of cash last week, it should never be allowed to happen again.

Newly minted Erie County Comptroller Stefan Mychajliw spent his first days on the job sounding the alarm on the county’s inability to pay a $15 million bill.

The cash shortage was the result of the lag in receiving property taxes and other revenue due to begin showing up in late winter. Last year, the county borrowed $75 million through a revenue anticipation note to help cover expenses, including a $15 million bill related to Erie County Medical Center that the state said would be debited from the county’s bank accounts this week.

Mychajliw said the county had only $9.6 million on hand to pay bills at the end of last year – far less than the $41 million his office calculates should have been available. That raises the troubling question of why the books were so far out of balance, and why wasn’t it spotted sooner?

Mychajliw met with County Executive Mark C. Poloncarz, and swiftly worked out an agreement with ECMC to delay the $15 million payment until March 12, when the comptroller’s office expects the cash balance to improve.

That solved the immediate problem, but the situation should never have gotten to the alarm stage. It is the job of the comptroller to manage the cash, examining cash flows and comparing predictions to results.

Mychajliw defeated David Shenk in a special election in November to fill the unexpired term of then-Comptroller Poloncarz. Shenk was appointed to the post after the office had been empty at the beginning of last year. In essence, the county went without sharp oversight for a period of time.

Under good cash management principles, the county should be able to forecast well ahead of time whether it is going to run short on cash. The county should always file for reimbursements and pay its bills in a timely manner. If it needs to make adjustments along the way to account for low cash periods, such as the end of one fiscal year and the beginning of the next before property taxes come in, that’s a management function that should happen within the comptroller’s office.

Mychajliw brought this situation involving the previous comptroller to light. Now he should make sure this sort of thing doesn’t happen on his own watch.