TRAVERSE CITY — Grand Traverse County is entering into new territory as commissioners seek more answers from treasurer Jamie Callahan, requesting he provide a second report under oath at their Oct. 7 meeting.
The county board unanimously approved a series of motions Wednesday related to the ongoing issues within the treasurer’s office, requesting a second sworn report — under Michigan’s MCL 46.11(k) — from Callahan that is expected to include a number of materials they say they haven’t received.
Board chair Scott Sieffert said Thursday he’s unsure of the county’s history in requiring an elected official to provide a sworn report to the board more than once. In his time as a county commissioner, a second report under oath is a first.
“This is a new road,” Sieffert said. “As we move forward, this should be something that other elected officials should take notice of.”
Commissioners are seeking all missing pages from the previous report, all subsequent Internal Revenue Service correspondence, an exact amount for recent payments, as well as what those payments settled with the federal agency.
“We all recall that we did not get a complete packet the day we received the report from the treasurer,” board vice chair T.J. Andrews said during Wednesday’s discussions. “We didn’t receive any of that documentation, I understood we were going to be getting that information.”
Commissioner Fern Spence also noted she expected an explanation regarding sensitive information — account and PIN numbers — that weren’t redacted before the report was made public, which were later removed.
“Those missing pages should have been put into this update and I was really disappointed to not see them,” Spence said. “And there was sensitive information that was shared at our last board meeting that I think warrants an apology and an explanation.”
Further motions indicated commissioners are also seeking an update on reconciliations that are still outstanding, including a total aggregate amount, a total number of items, as well as the reason the items remain unresolved. The board also expects the treasurer to provide a proposed plan and timeline for addressing the outstanding reconciliations.
County administrator Nate Alger told commissioners Wednesday that ongoing communication is taking place with the Michigan Municipal Risk Management Authority to receive more information on a performance bond, which protects the county’s assets.
Another motion directed attorney Matt Nordfjord to provide legal advice on the removal process of elected officials. Alger confirmed Thursday the board is seeking clarity on what that process looks like under the Michigan statute.
On Thursday, Andrews clarified that the legal advice will be useful information the board uses moving forward with any elected county officials.
“It’s not limited to this situation,” she said. “It wouldn’t be a bad thing to have on the books, anyway.”
While the board and county administration seeks further counsel, officials agree the county may be at risk for substantial financial liability and Wednesday’s movement is intended to protect the county and its taxpayers.
“I think we’re at a tipping point,” Sieffert said Thursday. “There’s been a grace period and that time is over. The potential for negative financial impact is very high. It’s a do-or-die moment if we’re going to mitigate that.”
The vice chair echoed Sieffert’s opinion, noting the risk to the county continues to rise.
“I think we are vulnerable and exposed to issues that lead to potential liability,” Andrews said. “The fact that we’ve got IRS penalties is proof of our exposure.”
Callahan’s update provided in Wednesday’s agenda noted a long list of unreconciled transactions, Andrews added.
“That is, in my mind, a significant vulnerability,” Andrews said. “I think we are at risk. … Those vulnerabilities create significant risk when it comes to so many transactions and the amount of money we’re talking about and the length of time that we’ve been in this situation.”
County finance director Dean Bott answered board questions Wednesday as he and his department continue to work with the treasurer’s office under a memorandum of understanding that dictates specific tasks Bott and his staff can help expedite within Callahan’s office.
According to the director, a meeting with the IRS took place last week and payments were made — over $90,400 — on Sept. 11, which included late fees.
PAST TREASURY EXPERIENCE
City treasurer and finance director Heidi Scheppe served as the Grand Traverse County treasurer for more than a decade. As the county’s treasurer, she and the office’s staff aimed to provide as much information as possible to county officials and administration.
“My annual report grew over the years and I always provided any information requested when asked,” Scheppe told the Record-Eagle.
Scheppe explained that the county treasurer’s office was not understaffed during her tenure and that staff worked within the office and its processes for a long time. As processes changed, the team helped develop improvements for standard processes, internal controls and an order of when tasks needed to be completed.
“The duties are very cyclical,” Scheppe said, adding the county’s current treasury staff experienced turnover in recent months and are actively learning the processes while trying to get caught up.
One process — reconciliations — is currently still behind within Callahan’s office, something Scheppe agreed can be time consuming. She added the county’s enterprise resource planning software — Workday — doesn’t make the process easier.
“There are many processes, like payroll and credit card transactions, that can be very difficult,” she said. “When the process runs, it doesn’t post transactions where they should be, requiring an additional process to post the data accurately.”
Scheppe called reconciliations a “housekeeping item,” and that if the current county treasurer and staff are behind, the process only becomes more difficult to untangle.
“If you keep up on it, it can be manageable, but if you get behind — or the ledger is not maintained properly — it would be hard to keep up,” Scheppe said. “We always reconciled in a timely manner and never got written up by the auditors or received a warning.”
The county treasurer’s office has received repeat findings from auditors the past few years, in addition to the IRS correspondence and notices. Scheppe concurred that the IRS is “not the most responsive entity,” but during her time as county treasurer, correspondence with the federal agency was very infrequent and often was due to a timing error that was corrected within the time allowed.
“I do not recall ever having to pay a significant penalty,” she added.
CALLAHAN’S CURRENT FOCUS
The treasurer’s office is still making progress, Callahan said Thursday, adding that tasks are continually falling off the staff’s to-do list.
“Through the very hard work of our amazing team in the department, we have made great progress in getting caught up with our reconciliations,” he added.
The office staff have dwindled the list, Callahan said, to “just over 1,000 items after six weeks of intense effort.” That number is down from over 24,000 items the treasurer said have come through for reconciling in 2026.
Callahan noted last week’s meeting with the IRS also indicated progress, highlighting that the county has received a $52,000 reduction from appeals and fines have been paid. Staff are currently revising tax payment submissions to eliminate additional errors, he said, ensuring those payments are electronically processed the same day they’re submitted.
The office is also creating a standard operating procedure for the process of payroll submission and Form 941 reporting. The procedure also includes instituting “a double-check system where I will review and sign off on the submission for payroll and quarterly filings, to catch any unintended errors,” he added.
Callahan said a turnover in staffing and training new staff added to the issues the office is currently trying to correct, noting it took longer than expected to fill open positions with experienced people.
“It is like when a bridge washes out due to an event or series of events,” Callahan said. “Rebuilding the bridge takes time … . We had a large chunk of our staff depart in a relatively short period of time, which created a number of backlogs that we are now getting caught up with, while also working to keep current with all of the office operations at the same time.”
Callahan acknowledges oversight on his part in compiling his sworn report provided to county commissioners Sept. 2 and that their expectations to receive the missing documents are “legitimate.” He also noted the need for better protocols when sensitive tax and account information is provided.
“An additional set of eyes outside our office was not consulted for scrubbing of the information,” he said. “It should have been. Though much of this data can be tracked down online, it does not offset the need for better protocols.”
He also acknowledged oversight in not including the missing documents within Wednesday’s report, adding that “the focus was on compiling all the updates on department operations and that request from the prior meeting was missed.”
Callahan also said it’s the board’s prerogative to require a second sworn report from him and his office will continue working to provide answers.
“Our priorities are to finish getting caught up with reconciliations so we can close our 2026 books on time and be ready for the next audit,” he said, and that operational changes are still taking effect to improve workloads.
The treasurer said he will also “continue to advocate for the additional staff member we have asked for earlier in the year.”
County commissioners will hold their annual meeting and receive the treasurer’s report under oath at 9 a.m. Oct. 7 at the Governmental Center, 400 Boardman Ave., in Traverse City. The public is welcome to attend.