Fair Board May Ask for State Audit : Finances: The general manager says errors and indecipherable ledgers make it impossible to tell how much money has been lost since 1987.

The Ventura County Fair’s financial records are in such disarray that its board is considering seeking a state audit to nail down how much money it has lost in recent years, an official announced Tuesday.

Mike Paluszak, the fair’s general manager, said the board has instructed him to ask auditors at the Department of Food and Agriculture to begin an inquiry within two months. If the state cannot begin an audit in that time, the fair will consider hiring a private firm to audit its financial records, Paluszak said.

The fair board is scheduled to vote on the audit at its November meeting, he said.

Meanwhile, the fair will not release financial statements from this year’s fair until the accounting mistakes are corrected, he said.

Paluszak said that before his appointment in December, the fair had routinely inflated attendance figures, under-reported fair expenses and covered up operational deficits. He said he is trying to clean up the mess.

“We have put in almost a year’s worth of housecleaning,” Paluszak said, promising that once the audit is completed, the fair’s financial situation will be clear.

The financial problems began in 1987, when the fair added a satellite-wagering facility to its year-round operations, Paluszak said.

The wagering posted profits of about $150,000 in 1987, $1.5 million in 1988 and $1.2 million in 1989, according to fair records. This year, the fair is projecting a $1.8-million profit from the satellite wagering.

The fair board earmarked the profits from the wagering for much-needed improvements at the fairgrounds, Paluszak said, but instead most of the money was used to cover a mounting deficit built up by the fair’s other operations--including the annual three-week county fair in August and other shows and expositions.

Although the board earmarked $500,000 to pay for part of the construction of a $4.8-million satellite-wagering building and $1.5 million for the paving of a large parking lot on the west side of the fairgrounds, it does not have the money to pay for the improvements, the fair director said. At the end of 1989, the fair had just over $900,000 to pay for the improvements, fair records show.

Excluding the money made from satellite wagering, the fair’s operations showed a $28,304 profit in 1986, fair records show. By the next year, fair operations--excluding the off-track betting--were $204,804 in the red, and the deficit had increased to $645,817 by last year, the records show.

“We’ve become far too dependent on our satellite-wagering profits,” Paluszak said. “It’s a problem we need to correct.”

Until this year, board members said, they were unaware of the hole they were digging themselves into because they could not decipher the accounting ledgers of the fair’s previous manager, Jeremy Ferris, who resigned last October after more than four years on the job.

“The board did not have all the information,” board President Don Leach said. Because the fair did not computerize its records until this year, the board could not keep tabs on how much money the fair staff was spending, Leach said.

“Basically, the people were doing the accounting the old-fashioned way,” Leach said.

“When I took over,” Paluszak said, “the books were sloppy and incomplete. I had to start from scratch.”

Ferris could not be reached for comment.

In the three years before he arrived, Paluszak said, fair attendance figures were inflated and expenses under-reported.

Last year, for example, the county fair lost about $367,000, instead of the $145,000 that was reported, Paluszak said. The previous year, the fair reported a loss of $467,000 for the annual event, but Paluszak said the actual loss was closer to $555,000.

Fair attendance figures also were reported inaccurately, Paluszak said. Last year, the fair reported an attendance of 306,040, but Paluszak said attendance was really 275,128.

Even after Paluszak took over as fair director, the 1990 fair’s press brochure repeated the inflated fair-attendance figure for the annual event the year before.

And last month, Tim Muskel, the fair board’s treasurer, announced preliminary figures showing that the annual event had lost $150,000 this year. But Paluszak, in announcing that the board is investigating whether to conduct an audit, said the losses may be greater.

Paluszak said the preliminary report had failed to account for a number of expenses, including some salaries and ticket sales.

Paluszak said he does not expect the fair to overcome its operating deficit until next year at the earliest. But he predicted that this year’s budget will show that the fair board has begun to turn things around.

For one thing, the fair’s budget has been cut by $600,000 to $4.7 million, the fair director said.

“When I came in,” Paluszak said, “the fair was like a runaway train. First we have to slow it down before we can stop it and turn it around.”