Returned checks become a point of contention in Centre County Treasurer’s race. What to know

Centre County treasurer is typically a lower-profile race in a municipal election, but it has heated up in recent weeks with the challenger alleging mishandling of taxpayer dollars and the incumbent defending her record.

Democrat Colleen Kennedy was elected county treasurer in 2019 and Republican Justin Behrens, who unsuccessfully ran for the open seat for Pennsylvania House District 82 last year, is running against her. Earlier this month, Behrens began a string of posts on his campaign Facebook page showing checks written by Kennedy returned for insufficient funds. “Is this the work of a competent treasurer?” Behrens wrote in an Oct. 12 post. Kennedy maintains that she’s properly performed her duties, and the returned checks were due to outside circumstances.

The county treasurer receives and disburses county money as prescribed by the county controller and the county commissioners, according to the county website. The office also acts as an agent of the state to sell hunting, fishing and dog licenses. The treasurer serves on the Retirement Board, which administers the County Retirement Fund, and receives the county’s Hotel Room Sales Tax, as well.

During Kennedy’s tenure, at least five checks were returned for non-sufficient funds (NSF), according to information provided by the county via a Right to Know request. The checks ranged from $13.42 to $152,576 and were from various accounts, including the Hotel Sales Tax Fund, Centre County Court Account and the Centre County Treasurer account.

Why were checks returned?

Kennedy said the checks are shown as non-sufficient funds due to a timing issue or other reasons — not because the money wasn’t there. She pointed to a $10,794.90 check written from the county’s Hotel Sales Tax Fund on March 8, 2023 to the Centre County Government for the January hotel tax administration fee as an example.

Per the county’s hotel tax ordinance, the county can collect a 4% administrative fee of the total collections, which is what the check was for. Kennedy said in this instance, a fee was charged to the county’s hotel sales tax account the previous month, before a deposit was made, so the account started at a negative amount in March. That caused the check to show as non-sufficient funds, she said.

A deposit was made into the account on March 8, so it was a quick turnaround, she said.

“It was just really a matter of timing. Like I said, that balance is always essentially zero. So if anything unexpected happens, or you don’t time it perfectly, you can end up with an overdraft. But no hanky, no panky, nothing weird,” Kennedy said.

The hotel tax fund is like a “holding account” because money comes in and quickly goes out, and a $5 minimum balance is maintained in the account, Kennedy said.

Another instance of a check shown as non-sufficient funds occurred with a $152,576.28 check written on May 6, 2021 to the Happy Valley Adventure Bureau for the March 2021 Hotel Tax, out of the county’s Hotel Sales Tax Fund. Kennedy said this was again due to timing. The check was written on May 6 but the HVAB didn’t process it until later in the month.

The bank statement shows the item is paid, Kennedy said, and only shows non-sufficient funds activity because it resulted in an overdraft. In only one instance was the payment returned by the bank, and that was resolved quickly.

“They’re NSF activity because they resulted in an overdraft but all of them were paid. And they incurred fees, the fees were reversed right out. So the net effect was nothing,” Kennedy said.

The county controller, also an elected official, is responsible for the management and administration of the county’s fiscal affairs, the county’s website states. Controller Jason Moser, a Democrat, declined several interview requests for this article.

Other checks that resulted in an overdraft — which was later reversed — include:

• March 3, 2023: a $7,219.41 check to the Centre County Government for “PA DOC pmt rec’d in error” from the Hotel Tax fund.

• June 1, 2021: a $4,270 check to the state Department of Agriculture for “May Comm,” from the treasurer’s account.

• April 6, 2021: A $13.42 payment to an individual from the Centre County Court Account. This account is used for juror and witness payments, and this occurred when the office first initiated its debit card program. Kennedy said she didn’t account for the debit card program’s fees when she made the transfer, causing it to overdraft.

Kennedy said those concerned about this should look at her record.

“(The record) is showing that all of these payments were actually paid by the bank right out, right off the bat. Only one of them was actually returned, and everything was resolved very quickly,” Kennedy said. “You know, in four years, it was a handful of checks.”

But Behrens, Kennedy’s opponent, said regardless of how the county may or may not have been impacted, or what types of accounts they are, he still has “great concerns” about how the office is run.

“If you bounce a check the first time and you came out, said it publicly and talked about it, people are gonna understand,” he said during an interview with the CDT. “But doing it six times? I have questions. I have questioned the capability of her as being treasurer, and that’s why I want to run.”

How common is this situation?

To see how other Pennsylvania counties compare, a similar Right to Know request was sent to Blair and Franklin counties, as Blair is a neighboring county and Franklin has a comparable population size. As the Centre Daily Times did with Centre County, a request for “electronic copies of all NSF/non-sufficient funds checks written by the county treasurer’s office on accounts within its jurisdiction between Jan. 1, 2019 and July 13, 2023” was filed with Blair and Franklin counties.

Blair and Franklin counties both said such records do not exist.

At least one similar occurrence happened under former Centre County treasurer Richard Fornicola, according to records obtained via a Right to Know request. A check for $368,300.64 written on Aug. 30, 2019 to the Central Pennsylvania Convention & Visitors Bureau for July 2019 Hotel Room Tax, July 2019 was returned.

Kennedy said according to the records, all of the revenue went into the hotel tax fund and Fornicola cut a check out to the visitors bureau, but one of the hotel’s checks bounced so it overdrew the account and caused the entire check to be returned.

Fornicola, who served for five terms, said it isn’t a “totally uncommon occurrence” for individual hotel or Airbnb checks to bounce.

“There were over 100 people who paid their hotel taxes by check. Sometimes some of their checks, for legitimate reasons, didn’t clear. They thought they had the money there, but they didn’t get their deposit in, in time,” he said. “So it’s kind of a complicated scenario sometimes getting all these checks for all the hotel taxes, then depositing them in one account, turn around and writing a check out of that account to send to the visitor’s bureau, and then having one of those providers have their check not clear.”

To avoid this from happening, Kennedy said they now hold onto the checks for a few days longer to make sure everything goes through. Other safeguards include having online access to the accounts to ensure funds are available and staying on top of things. But some things, like when fees are charged to the account, are beyond her control, Kennedy said.

Every county has its own way of handling things, so processes vary across Pennsylvania. Cambria County’s treasurer, Lisa Kozorosky, said her office works closely with the controller’s office and “we do not pay anything unless we have the money in those accounts.”

Is there any oversight?

As an elected official, the treasurer has control over their accounts. The controller’s office does the reconciliation on all the accounts, so there is oversight, but the controller isn’t part of the approval process, Kennedy said.

“We’re following good accounting practices. And we have an annual audit every year to make sure that we have good internal controls in place. ‘Internal controls’ is an accounting phrase for all of those checks and balances you put in place to protect resources,” Kennedy said. “So for instance, having a different office doing the reconciliation of my bank accounts is an internal control to make sure that I don’t have sole control, I can’t just put money in and take money out at my whim.”

Among other responsibilities, the county controller is responsible for internal audits, which “assess the adequacy of controls, legal and contractual compliance and good business practices,” according to the county website.

Commissioner Steve Dershem, a Republican, has expressed concerns about the checks and said a full internal audit would be a helpful explanation. Moser did not respond to a request for information from the CDT about when the last audit was performed for the treasurer’s office.

Centre County Commissioners Mark Higgins and Amber Concepcion, both Democrats, stressed that row offices, like the treasurer, are independent elected officials and the board of commissioners don’t have oversight of those offices.

“To the best of my knowledge, every single one of these checks was made good. To the best of my knowledge, the county was charged no fees in any of these circumstances. And have you, yourself personally, ever had to write tens of thousands of checks on an annual basis? I believe this happened to the prior treasurer as well. I mean, a part of it is just the job. There are a lot, a lot, a lot of checks,” Higgins said.

Concepcion said there hasn’t been a situation where a bill wasn’t paid in a timely manner or there were fees for any returned checks. Therefore, there hasn’t been a reason for the commissioners to be involved.

Higgins wondered why it was “suddenly an issue” leading up to the election and praised Kennedy’s work as treasurer. She and Moser worked together to drastically reduce county fees within the county retirement board and to increase the county’s interest earnings, Higgins said.

“Treasurer Kennedy has kept the office functioning with only three people all the way through the pandemic, and ... also does a tremendous amount of paperwork. The deer licenses, the dog licenses — I believe she took the dog process online recently, which was a huge service and potential time saver for county residents,” he said.

But Dershem feels differently about the situation.

“I think it’s important that payments and reports are timely and accurate. And the good faith and reputation of Centre County is at stake whenever checks are written, so it’s important that they’d be written accurately and that there be balances in the bank to cover the checks that are written,” he said.

And although the row offices are independent of the board, he said the commissioners control a lot of the processes that ensure the county government is run accurately.

“I think there were a number of times where there were checks bounced and that should be of concern to anyone who has a fiduciary responsibility for an organization,” Dershem said. “And it’s difficult for me to go back into the financial records and actually ascertain the full explanation of what occurred. Looking at the treasurer’s financial records as I have … it’s raised many questions in my mind.”

In social media posts and candidate interviews, Kennedy has continued to point to her record as county treasurer, and recently highlighted Centre County’s interest earnings on unreserved funds reaching a record breaking $2.19 million. Behrens said he hopes to bring more transparency and accountability to the office.

The municipal election is Nov. 7.