Cities, towns told to pay up
Source: By Philip Marcelo, Providence Journal (RI), Thursday, November 30, 2006
Eight municipalities in northern Rhode Island have lost their fight not to cover a $1.6-million debt left when a state and federally financed job-training program went belly up more than eight years ago. ……. The council, which at one point had as many as 40 employees working out of its three offices in Lincoln, Pawtucket, and Woonsocket, hired contractors to run job and computer training sessions for hundreds of people looking to break into the customer-service, hospitality, food, and other industries. But the managers of the council overspent the $3 million in federal and state money that kept the organization afloat, because, they say, they relied on flawed auditing reports by KPMG Peat Marwick, the accounting firm hired to formulate the annual budgets. ……… The state shut the operation down in 1998 after a $200,000 budget shortfall was discovered. That led to the full-blown investigation of the company’s finances that disclosed a bigger financial mess. ….. But when the debtors came looking for their money, council officials pointed to the municipalities that benefited from the organization’s services to foot the bill.