How could the City of Vero Beach – a municipality with a veteran city manager, a professional finance staff, one of the nation’s largest accounting firms as its outside auditor, and a City Council to ask questions and provide oversight – have gotten itself into the current financial mess?
In the past week, Vero Beach 32963 has tried to reconstruct the sequence of events leading up to state agencies blocking Vero’s access to at least a quarter-million dollars in state funds, and putting $32 million of grants in limbo.
At midnight on Sept. 30, 2022, the City of Vero Beach concluded one fiscal reporting year and started the next. Soon after, then-Finance Director Cindy Lawson began readying the city’s books for the upcoming 2021-22 audit with accountants from Cherry Bekaert, a national firm hired a dozen years ago to perform the annual independent review of city finances.
After the bulk of that audit was concluded, Lawson announced her retirement. City Comptroller Kelley Brost was tapped as Interim Finance Director while City Manager Monte Falls advertised the job and vetted candidates. On April 18, 2023 the Vero Beach City Council approved a resolution switching the official bank signatory from Lawson to Brost.
The day before her April 21, 2023 departure, Lawson delivered the city’s fiscal 2021-22 financial reports, along with the audited financial statements from Cherry Bekaert, to the Vero Beach City Council so those could be filed with the Florida Auditor General’s Office well ahead of the June 30, 2023 deadline.
Falls had some difficulty finding eager, qualified applicants to replace her, so Brost remained as interim finance director until Steven Dionne was hired on June 19, 2023. Dionne had served as finance director for the Palm Beach County Health Department, an agency with a $108 million budget, so the state’s audit filing requirements and deadlines should have been no secret.
Brost, upon stepping down from the interim position, was promoted to assistant finance director and that summer Brost and Dionne produced the city’s budget, which by law must be finalized by Sept. 30.
Before that fiscal year ended, however, Brost resigned and on Sept. 25, 2023, a new assistant finance director, Hana Juman, was hired.
Once the 2022-23 fiscal year closed, Dionne delegated the task of preparing the city’s books for the annual audit to new employee Juman, according to Falls.
While the annual audit had long been presented to the City Council for approval in either March or April each year, those months came and went in 2024 with no audit – and no one on the council asking when they were going to see it.
In June 2024, when it became evident that Vero was not going to meet the June 30 deadline for presenting the completed audit to the Florida Auditor General, Dionne requested a 90-day extension, stating on the request form:
“The entire Senior Management Team for the Finance Department of the City of Vero Beach has turned over in the past year. Current management is working their way through the daily activities as well as producing the financial statements for audit and preparing FY 24-25 budget.
We expect completion of the final close out of FY 22-23 no later than September 2024.”
The June 30, 2024, deadline was missed. And while the deadline was extended, the new Sept. 30 deadline was missed as well.
On Oct. 8, 2024, as Hurricane Milton was headed toward Florida’s East Coast, Falls declared a local state of emergency, and the following day, Vero was hit by devastating tornadoes.
The Joint Legislative Auditing Committee (JLAC), which is tasked with enforcing financial reporting requirements on counties, cities, state agencies, school districts and special taxing districts, on Oct. 29, 2024 sent a notice of non-compliance to Mayor John Cotugno (copied to Falls and Dionne), requesting written acknowledgement of the notice, and setting a drop-dead deadline of Jan. 15, 2025, for filing 2022-23 financials.
No one ever responded to the JLAC notice. Asked about this, Falls said Dionne “was out that day,” so he forwarded the notice to new Assistant Finance Director Juman.
No one informed the City Council, either, that the Vero was out of compliance, or that city funding was in jeopardy.
Tracey Zudans, who was serving on the City Council at that time, said the council knew nothing about all this. She said she was never told the staff had missed the filing deadline, and that the city risked losing state funding.
“If Mayor Cotugno and the city manager knew about this and didn’t bring it to the attention of city council until it was too late, that seems like bad judgment to me. I worry sometimes about the common sense and competence in local government,” Zudans said when informed about the problem this past Sunday.
Then on Nov. 18, 2024, Juman – who supposedly had been tasked with getting things ready for the FY 2022-23 audit – resigned. Her position remained empty for two months.
In December 2024, City Manager Falls sought help from Rehman Consulting regarding the city’s accounting needs. On Jan. 13, 2025, new Assistant Finance Director Lisa Burnham was hired.
Two days later, Vero missed the JLAC’s drop-dead deadline to file the 2022-23 financials, or to submit a detailed explanation of non-compliance. The City of Vero Beach was listed in an agenda packet of the JLAC as one of 34 Florida municipalities facing enforcement action for failing to file its 2022-23 financial reports and audit.
At its Feb. 10 meeting, JLAC members voted to give the non-compliant municipalities until Feb. 28 to get into compliance or be referred to the Florida Department of Revenue for further action.
Vero Beach 32963 covered the Feb. 10 JLAC proceedings in case matters pertaining to the Indian River Hospital District arose during the meeting, and was surprised to learn that Vero was in trouble with state regulators. On Feb. 11, the newspaper phoned Falls to get to the bottom of the problem.
The following day, Falls and Cotugno received an official notice of the JLAC’s action. Rather than disclosing the problem to the other four members of the Vero Beach City Council, however, Falls contacted Florida House Rep. Robbie Brackett, a former Vero mayor, and asked for help getting an extension of time from JLAC.
Meanwhile, Vero Beach 32963 contacted Vero Utilities Director Rob Bolton to ask how the JLAC enforcement might impact state grant funding for city utility projects. No one had told Bolton of the city’s noncompliance in filing the financial reports.
Falls finally returned a phone call to Vero Beach 32963 on Feb. 19, with City Attorney John Turner on the call, to explain that the city was trying to secure an extension of time, with Brackett’s help. Falls said he had informed the City Council of the noncompliance problem and potential loss of state funding on Monday, Feb. 17.
On Feb. 20, tVero Beach 32963 sent a series of questions to the JLAC staff about the City of Vero Beach’s status, and was told no exceptions to the new deadline would be made. This information was shared with Falls and Turner.
Finance Director Dionne submitted his resignation to Falls on Feb. 20.
On Feb. 25, Falls was scheduled to give a full report of the events to date, and reasons for the pending loss of state funding, to the Vero Beach City Council at its regular public meeting.
On Friday, the JLAC’s Feb. 28 final deadline to comply will pass, as Falls estimated the audit won’t be completed until April.
On March 3, the JLAC staff will forward notice to the Florida Department of Revenue to begin withholding most state funding to the City of Vero Beach, following a 30-day grace period, to begin March 4.
In early April, the City of Vero Beach will begin to lose access to most state funding.
On April 15, the city will forfeit one month’s draw from Vero’s share of the optional half-penny sales tax (approximately $125,000). By state statute, according to JLAC, those funds will be returned to the State of Florida’s general fund and cannot be recouped.
Auditors Cherry Bekaert estimated that 2022-23 audited financials will be completed and submitted to the Vero Beach City Council on April 30 – if all goes perfectly.
On May 15, the city will forfeit a second monthly payment of the City of Vero Beach’s share of 1/2-cent sales tax collected while the city was out of compliance (approximately $125,000). On June 15 the city may forfeit a third monthly draw of sales tax funding should it still not be in compliance.
On June 30, the State of Florida will close its books for the 2024-25 fiscal year. Everything needed to restore and disburse any funds temporarily withheld from the City of Vero Beach must accomplished before the fiscal year closes on June 30.
After June 30, any state revenue sharing Vero might have been entitled to recoup would be forfeited.
