In previous posts, we have looked at the 2002 audit where the county spent $923,000 more than it took in and the 2001 audit that required two blog postings because it is a pretty outrageous financial "record" that provides large volumes of false or misleading financial data about county spending.
Somebody probably should have asked for a refund of the $28,000 that was paid for (wasted on?) the 2001 audit! (See 2001 audit posts of Jan. 4 and Jan. 21).
The 2003 audit that we discuss today is unique--primarily because it was the first audit in recent history performed by someone outside Hamblen County.
I am proud to have had the honor to be the driving force in leading the county commission to hire the state auditors instead of local, private auditors to perform the county audit in 2003, 2004, 2005, and beyond.
I wanted the state to perform the Hamblen County audit for three important reasons:
1. EXPERIENCE. State auditors are more experienced in performing county audits. They know what to look for, and that is a major reason that almost all counties use the state auditors.
2. INDEPENDENCE. I hoped that the actual audit personnel would be more independent since they were less likely to live in Hamblen County and have direct ties with Finance Personnel or local elected officials.
3. SAVINGS. The state charged about $13,000 for the same audit that the local auditors were charging $31,000 for, so I knew there would be a savings of $18,000 by having the state auditors come in.
The first audit by the state auditors proved that the county saved money ($18,000 in SAVINGS) plus the new auditors provided a better audit. The state auditors have tons of EXPERIENCE in performing county audits because they work on county audits throughout East Tennessee almost all year long instead of just performing one county audit each year. In addition, the state auditors, despite some local ties, are more INDEPENDENT than the local auditors were.
How much better was the state-performed audit? Well, the state auditors pointed out problems and violations of state law that had been overlooked, ignored, or missed year after year in previous audits. Most of the violations that the state auditors found were violations that had been occurring (unreported) for years.
Example: There was only one finding in the 2002 audit (the last one performed by the local, private auditors). There were 29 findings in the 2003 audit (the first one performed by state auditors). And, sad to say, some of those 29 separate findings had 4-5 sub-findings.
Almost half (13) of the 29 findings were connected to two offices--the Sheriff's Office (Otto Purkey) and the Office of the County Mayor (David Purkey, Otto's brother). Click here on 2003 audit findings to see the complete list from the audit document.
The Sheriff's Office (Otto Purkey) had 6 findings.
A cash shortage of $14,326.40. Deficiencies and poor record-keeping. Jail receipts unaccounted for. Serious accounting weaknesses for prisoner's funds and personal effects, and weaknesses in controls over cash collections.
The County Mayor's Office (David Purkey) had 7 findings with many sub-findings.
Purchasing deficiencies were noted because there was essentially no purchasing system with blank purchase orders just handed out to departments with no control.
The county's general ledger was not properly maintained or reconciled monthly. Receivables and payables were not accurately reflected.
The state chart of accounts (that is mentioned in the county's financial management contract) was not used as required by law.
There were deficiencies in controls over travel and credit card use.
There were deficiencies in budgeting procedures--where the Mayor did not present a budget to county commission for the drug control fund or the Special Revenue Fund (despite the fact that state law requires this) and where the Mayor expended money from those funds without appropriation or approval of county commission.
In other instances, transfers of appropriations/money were made without the required approval of county commission. This, too, was a violation of state law.
Expenditures and encumbrances (amounts owed at the end of the fiscal year) exceeded the amounts that had been approved by county commission in amounts ranging from $737 to $296,264 in several categories of the General Fund. This, too, was a violation of state law.
There was a fund deficit in the garbage fund of $205,578.
The Capital Improvement (Capital Projects Fund) had a cash overdraft of $34,737.
The Director of Schools had 2 findings:
The Trustee had 3 findings.
The County Court Clerk had 3 findings.
Circuit and General Sessions Court Clerk had 2 findings.
Clerk & Master had 3 findings.
Register's of Deed Office had 1 finding.
Other Findings: 2
More to come on the 2003 audit as the county starts to round the corner.
The county got a "wake-up call" to accountability with the 2003 audit. Most office holders quickly and gladly adjusted to the higher standards and are to be saluted for their work and efforts.
A few office holders who heard the accountability trumpet blaring reacted with silence or fits of uncontrolled rage punctuated by repeated, red-faced public outbursts.
Tuesday, February 28, 2006
Sunday, February 26, 2006
February 26, 2006 State Conflicts of Interest: Money and Influence
Just read an interesting article by Brad Schrade in the Nashville Tennessean on conflicts of interest at the state level (Tennessee Highway Patrol and Deputy Governor Dave Cooley) and how money buys influence.
If you have read any of my past blogs, you know that conflicts of interest in our local government are a specific concern of mine. What happened/happens on the state level points out how conflicts of interest compromise the public trust and undermine the integrity of state and local departments.
The Tennessean reports that Deputy Gov. Dave Cooley has apparently tried to stay involved in politics and promotions at the Tennessee Highway Patrol even after Gov. Phil Bredesen told him to keep out.
Bredesen told Cooley to keep out of THP matters over a year ago following a scandal in which a THP lieutenant fixed a Cooley speeding ticket. Just recently, Bredesen condemned cronyism at THP and forced out its top three officials.
Cooley, however, apparently doesn't understand what "keep out" means. Cooley contacted Gerald Nicely, interim commissioner at the THP's parent agency, the Safety Department, commented about "the mess" the Safety Dept. was in, and then asked for Nicely's personal home e-mail address.
It appears that Cooley wanted to be able to contact Nicely at home (instead of using state e-mail) with the idea that such communications would not be subject to public-record laws.
The Tennessean reports that Cooley was "kept informed" about THP issues by his wife, Melanie Cooley, who was executive assistant to then-Safety Commissioner Fred Phillips. Melanie Cooley was appointed to the Safety Dept. by Bredesen shortly after his election.
While at the Safety Dept, it appears that Melanie Cooley had influence at the Highway Patrol. In e-mails to her husband, she mentions THP promotion rosters and requests for favors. Her e-mails also discuss hiring and promotion requests from citizens-- well-heeled citizens who donated large amounts to the Governor's 2002 campaign.
(According to the article, Nicely did provide his home e-mail address to Cooley, but Nicely has said that the deputy governor has not contacted him at his home e-mail account.)
Apparently, Cooley was the go-to man if you needed a THP favor. The article states that when a THP captain wanted to get his fiancee's niece hired as a trooper, the captain wrote a letter to Cooley.
The captain, Larry W. Rucker, asked for Cooley's help in a letter dated Sept. 23, 2003, telling him any "consideration you can give to her (his fiancee's niece) would be greatly appreciated." Rucker and his fianceé apparently contributed$6,300 to the Bredesen campaign, and Rucker himself has since been promoted twice by the Bredesen administration.
The Tennessean reports that the niece was hired in January 2004 and then fired from the patrol last fall after a random drug test came back positive for amphetamines. The niece is apparently appealing the firing, saying she was under treatment for narcolepsy at the time. Rucker, now the lieutenant colonel, is acting commander of the Highway Patrol.
Melanie Cooley no longer works at the Safety Dept. She has been transferred to another state agency.
Conflicts of interest and money and influence!
Just like the song lyrics, they go together like "a horse and carriage" or, in the case of Dave and Melanie Cooley, they go together like "love and marriage."
If you have read any of my past blogs, you know that conflicts of interest in our local government are a specific concern of mine. What happened/happens on the state level points out how conflicts of interest compromise the public trust and undermine the integrity of state and local departments.
The Tennessean reports that Deputy Gov. Dave Cooley has apparently tried to stay involved in politics and promotions at the Tennessee Highway Patrol even after Gov. Phil Bredesen told him to keep out.
Bredesen told Cooley to keep out of THP matters over a year ago following a scandal in which a THP lieutenant fixed a Cooley speeding ticket. Just recently, Bredesen condemned cronyism at THP and forced out its top three officials.
Cooley, however, apparently doesn't understand what "keep out" means. Cooley contacted Gerald Nicely, interim commissioner at the THP's parent agency, the Safety Department, commented about "the mess" the Safety Dept. was in, and then asked for Nicely's personal home e-mail address.
It appears that Cooley wanted to be able to contact Nicely at home (instead of using state e-mail) with the idea that such communications would not be subject to public-record laws.
The Tennessean reports that Cooley was "kept informed" about THP issues by his wife, Melanie Cooley, who was executive assistant to then-Safety Commissioner Fred Phillips. Melanie Cooley was appointed to the Safety Dept. by Bredesen shortly after his election.
While at the Safety Dept, it appears that Melanie Cooley had influence at the Highway Patrol. In e-mails to her husband, she mentions THP promotion rosters and requests for favors. Her e-mails also discuss hiring and promotion requests from citizens-- well-heeled citizens who donated large amounts to the Governor's 2002 campaign.
(According to the article, Nicely did provide his home e-mail address to Cooley, but Nicely has said that the deputy governor has not contacted him at his home e-mail account.)
Apparently, Cooley was the go-to man if you needed a THP favor. The article states that when a THP captain wanted to get his fiancee's niece hired as a trooper, the captain wrote a letter to Cooley.
The captain, Larry W. Rucker, asked for Cooley's help in a letter dated Sept. 23, 2003, telling him any "consideration you can give to her (his fiancee's niece) would be greatly appreciated." Rucker and his fianceé apparently contributed$6,300 to the Bredesen campaign, and Rucker himself has since been promoted twice by the Bredesen administration.
The Tennessean reports that the niece was hired in January 2004 and then fired from the patrol last fall after a random drug test came back positive for amphetamines. The niece is apparently appealing the firing, saying she was under treatment for narcolepsy at the time. Rucker, now the lieutenant colonel, is acting commander of the Highway Patrol.
Melanie Cooley no longer works at the Safety Dept. She has been transferred to another state agency.
Conflicts of interest and money and influence!
Just like the song lyrics, they go together like "a horse and carriage" or, in the case of Dave and Melanie Cooley, they go together like "love and marriage."
February 26, 2006 Proposals for Openness and Improvements in Hamblen County Government
A Strategic Planning Committee was named by the Chairman of the Commission several months ago. It recently held its very first meeting.
Committee Chairman Edwin Osborne asked each commissioner to submit five suggestions or priority areas for government improvement.
I submitted my ideas on Thursday, February 23.
I will just briefly sketch them here. In future posts, I will provide more detail.
1. Ethics--Formulate a thorough ethics policy and guidelines for Hamblen County government. Lots more to come on this. This will be a complicated, but very important process.
2. Policy Initiatives
A. Open up the solicitation process for professional services of engineers and architects in connection with work for the county by issuing requests for proposals when engineering and architectural services are needed and when the amount involved is significant. Seek input from a number of individuals/firms, examine their qualifications, charges, and experience, and then select the best-qualified individual/firm based upon a complete examination of all criteria. There are many good individuals and firms that should be asked and allowed to offer a proposal on county work.
B. Meetings policy: Provide that all meetings of county government are listed on the HC website and publicized in the newspaper at least 48 hours before they occur-- along with a list of major items to be considered. Eliminate the scheduling of meetings prior to 4:00 or 5:00 pm in order to provide the greatest opportunity for citizens to attend. We serve the citizens and their convenience should be uppermost in scheduling meetings.
C. Provide a county number that can be dialed (like 211 East Tennessee Information and Referral in Knox County) to serve as a one-stop referral service for people needing special assistance from government, health and community services, emergency food, substance abuse counseling, low-cost recreation for families or volunteer opportunities.
3. Financial planning:
A. Calculate the effect that OPEB's ("other post-employment benefits") will have on the upcoming 06-07 FY budget and beyond. Commissioners Osborne and Bruce have indicated that this is a huge cost area in the school system. Examples of OPEB's are where the school system makes a lump sum payment to teachers at the time of retirement and pays a part of their health insurance premium after retirement until they reach Medicare age of 65. Donald Gregg from the school system alone or along with Commissioners Bruce and Osborne could present a report before June 1, 2006, with current and projected costs of OPEB's.
B. Pay down the county's debt. Low interest rates are good but eliminating as much of the county debt as possible is even better and frees up money that would be paid out as interest for useful purposes such as equipment upgrades, employee raises, and the like. Don't borrow and spend or tax and spend and pass on the debt to our children and grandchildren unless it's absolutely necessary.
C. Consider creative solutions to education in Hamblen County.
Discipline: To really address school issues, one needs to address the problems created by children who don't want to be at school, are constantly disruptive, don't care if they or anyone else get an education, and are only there because they cannot drop out yet.
If teachers were allowed more time to teach, students would have a better chance of receiving quality education across the board regardless of funding levels.
The problems of the disruptive students should be addressed through a community-wide effort to provide student mentors, information about sources of help, and adult volunteers.
Curriculum: Requiring more math credits--particularly an additional course or at least a refresher course in the senior year before going to college, trade school, or work.
Block scheduling: Is it effective? Or does it just allow students to earn lots of credits outside of the core areas of math, science, English, and social studies? One weakness (trying to cram certain math courses into a semester) has been addressed by making certain math courses year-round. Should we stay with block scheduling? Should we modify block scheduling even further?
Year-round school: This has been kicked around forever. A study was done once. Nine-week sessions with 2-3 weeks off between and 8-10 weeks off in the summer. Is it effective? Is it desirable? Is it still being considered? What do parents think?
Early intervention: When a child K-3 is experiencing learning problems and is not up to grade level, there needs to be immediate detection and then help (not a label). Sending students on to the next grade when they can't read or perform math at their current grade level is a recipe for continuing academic failure and the growth of discipline problems. The problems don't go away. They just increase. Again, community involvement with help from teacher-ed students at WSCC or Carson-Newman, community volunteers (young and old), and student mentors could be a source of critical help for these students.
4. Openness and accountability: Provide complete detail reports of revenues and expenditures from all funds (not just gen, hwy, and garbage) as a standard practice at least quarterly. Placement and updating of this and certain other county financial data on the Hamblen County (HC) website would allow easy access for commissioners and the public. Place the most recent HC audits on the HC website (or provide a link on the HC website that takes one to the audits for certain years as they appear on the Comptroller's website).
5. Completion and indexing of a Hamblen County Code. I spoke to County Attorney Rusty Cantwell about this many months ago and mentioned this again to Commissioner Phillips in January. Numbering, grouping, and indexing resolutions is the key to an efficient record. Having to look back through an index of county commission minutes over a period of 10 years or more to find out whether there is a county resolution about billboards, or any other topic, is inefficient and should never happen. When we have an organized "code" such as other counties have and such as the state has (Tennessee Code Annotated), then it should be made accessible online as well as in hard copy form.
I have not tried to number these in order of importance. They are all important.
There are plenty of other ideas that should be considered such as a (1) local tipline for reporting fraud, waste, or abuse, and (2) a reward and incentive system for employees who come up with ways to save the county money or to improve services.
One other suggestion--let's invite the public to submit suggestions, too.
Committee Chairman Edwin Osborne asked each commissioner to submit five suggestions or priority areas for government improvement.
I submitted my ideas on Thursday, February 23.
I will just briefly sketch them here. In future posts, I will provide more detail.
1. Ethics--Formulate a thorough ethics policy and guidelines for Hamblen County government. Lots more to come on this. This will be a complicated, but very important process.
2. Policy Initiatives
A. Open up the solicitation process for professional services of engineers and architects in connection with work for the county by issuing requests for proposals when engineering and architectural services are needed and when the amount involved is significant. Seek input from a number of individuals/firms, examine their qualifications, charges, and experience, and then select the best-qualified individual/firm based upon a complete examination of all criteria. There are many good individuals and firms that should be asked and allowed to offer a proposal on county work.
B. Meetings policy: Provide that all meetings of county government are listed on the HC website and publicized in the newspaper at least 48 hours before they occur-- along with a list of major items to be considered. Eliminate the scheduling of meetings prior to 4:00 or 5:00 pm in order to provide the greatest opportunity for citizens to attend. We serve the citizens and their convenience should be uppermost in scheduling meetings.
C. Provide a county number that can be dialed (like 211 East Tennessee Information and Referral in Knox County) to serve as a one-stop referral service for people needing special assistance from government, health and community services, emergency food, substance abuse counseling, low-cost recreation for families or volunteer opportunities.
3. Financial planning:
A. Calculate the effect that OPEB's ("other post-employment benefits") will have on the upcoming 06-07 FY budget and beyond. Commissioners Osborne and Bruce have indicated that this is a huge cost area in the school system. Examples of OPEB's are where the school system makes a lump sum payment to teachers at the time of retirement and pays a part of their health insurance premium after retirement until they reach Medicare age of 65. Donald Gregg from the school system alone or along with Commissioners Bruce and Osborne could present a report before June 1, 2006, with current and projected costs of OPEB's.
B. Pay down the county's debt. Low interest rates are good but eliminating as much of the county debt as possible is even better and frees up money that would be paid out as interest for useful purposes such as equipment upgrades, employee raises, and the like. Don't borrow and spend or tax and spend and pass on the debt to our children and grandchildren unless it's absolutely necessary.
C. Consider creative solutions to education in Hamblen County.
Discipline: To really address school issues, one needs to address the problems created by children who don't want to be at school, are constantly disruptive, don't care if they or anyone else get an education, and are only there because they cannot drop out yet.
If teachers were allowed more time to teach, students would have a better chance of receiving quality education across the board regardless of funding levels.
The problems of the disruptive students should be addressed through a community-wide effort to provide student mentors, information about sources of help, and adult volunteers.
Curriculum: Requiring more math credits--particularly an additional course or at least a refresher course in the senior year before going to college, trade school, or work.
Block scheduling: Is it effective? Or does it just allow students to earn lots of credits outside of the core areas of math, science, English, and social studies? One weakness (trying to cram certain math courses into a semester) has been addressed by making certain math courses year-round. Should we stay with block scheduling? Should we modify block scheduling even further?
Year-round school: This has been kicked around forever. A study was done once. Nine-week sessions with 2-3 weeks off between and 8-10 weeks off in the summer. Is it effective? Is it desirable? Is it still being considered? What do parents think?
Early intervention: When a child K-3 is experiencing learning problems and is not up to grade level, there needs to be immediate detection and then help (not a label). Sending students on to the next grade when they can't read or perform math at their current grade level is a recipe for continuing academic failure and the growth of discipline problems. The problems don't go away. They just increase. Again, community involvement with help from teacher-ed students at WSCC or Carson-Newman, community volunteers (young and old), and student mentors could be a source of critical help for these students.
4. Openness and accountability: Provide complete detail reports of revenues and expenditures from all funds (not just gen, hwy, and garbage) as a standard practice at least quarterly. Placement and updating of this and certain other county financial data on the Hamblen County (HC) website would allow easy access for commissioners and the public. Place the most recent HC audits on the HC website (or provide a link on the HC website that takes one to the audits for certain years as they appear on the Comptroller's website).
5. Completion and indexing of a Hamblen County Code. I spoke to County Attorney Rusty Cantwell about this many months ago and mentioned this again to Commissioner Phillips in January. Numbering, grouping, and indexing resolutions is the key to an efficient record. Having to look back through an index of county commission minutes over a period of 10 years or more to find out whether there is a county resolution about billboards, or any other topic, is inefficient and should never happen. When we have an organized "code" such as other counties have and such as the state has (Tennessee Code Annotated), then it should be made accessible online as well as in hard copy form.
I have not tried to number these in order of importance. They are all important.
There are plenty of other ideas that should be considered such as a (1) local tipline for reporting fraud, waste, or abuse, and (2) a reward and incentive system for employees who come up with ways to save the county money or to improve services.
One other suggestion--let's invite the public to submit suggestions, too.
Thursday, February 16, 2006
February 16, 2006 A New Political and Personal Direction
I am not running for re-election to county commission in 2006. I went back and forth on whether or not to run for the past several weeks. The decision was finally made last night.
Although many people encouraged another run and family and supporters were ready to hit the campaign trail, I made the decision not to run so that I can devote more time to my family and start using my law license to help people. I will continue to work on local accountability issues. However, I will simply do so in ways other than serving on county commission.
I will continue to use this blog as one way of getting the continuing message of accountability out.
In looking back and in looking forward to the remaining seven months of my term, I can say that I did what I said I would do and that I will continue to do so. I have never wavered, and I achieved my campaign goals. Among the many achievements were the following:
1. The state, instead of a local private auditor, now performs the yearly county audit. The savings to the county have been huge--$18,000/year. During the past 3 years, that has meant a total saving to the county of over $54,000 plus a better overall audit.
2. County Commission meetings are now taped and televised on Charter and Adelphia cable television. This was a big push on my part because of my belief in open government and knowing that sunshine acts as a "purifier" in the conduct of the public's business. Charter Cable Company donated video equipment, and Commissioner Phillips and I secured and donated audio equipment and microphones. My husband Ron provided materials free of charge and donated his own time to build a platform where the camera operator could sit. If you can't get to the commission meeting, you can watch it at home.
3. I made a proposal in November 2002 to have the county provide the financing for HVAC units (heating, venting, and air conditioning units for Lincoln and Meadowview Schools) so the schools could accept the low equipment bid and save $60,000. Although the schools chose not to let the county provide financing on the HVAC units at that time and thus gave up a possible savings of $60,000, the school system later accepted the idea of county financing on purchases such as buses and has saved money.
4. One of the most dramatic savings--to the tune of $1.1 million dollars for the county taxpayers-- occurred when I did not just blindly accept the state calculation of the Hamblen County certified (post-appraisal) tax rate in July 2005. All commissioners were sent packets from the County Mayor with the new state-certified tax rate along with local budgets that had been prepared by the Mayor's Finance Department using the proposed state tax rate.
I looked at the rate and the related budgets that had been prepared by the County Mayor and knew that something was wrong with both. The rate that the state had sent to Hamblen County, the rate that the Mayor's Finance Department had used to prepare a revised county budget in July 2005, was too high.
I called the Assessor and told him what I had found--that the state certified tax rate was incorrect and that the new tax rate should be about 11 cents less. After a phone call, the state provided a corrected, lower tax rate, and the resulting savings benefited the taxpayers of Hamblen County to the tune of about $1.1 million dollars.
Trust but verify has been my motto in connection with pushing for accountability for tax dollars. The importance of checking everything was proven big-time with my review of those state tax calculations. For me, doing that check was nothing special. I try to check as much county financial information as I possibly can because public service means working to save the taxpayers every dollar and being accountable in seeing that every dollar that is spent, is spent wisely.
I have served my constituents and tried to address their concerns--from having a tree removed that obstructed the view at a dangerous intersection, to saving the taxpayers $18,000/year on the county audit, to saving Hamblen County taxpayers over $1.1 million dollars by checking the state's certified tax rate.
I would like to express my sincere thanks to the voters of the 14th district who supported and elected me to the Hamblen County Commission in 2002. Serving the people of my district during the past four years has been a great honor, and I can never adequately express my appreciation for the trust that was placed in me.
At this time, however, I need to devote more time to helping my family, and I need to use my law degree to help others. I will stay involved, and I will continue to be a guardian for taxpayers. I will continue to attend meetings, and I will speak out about controlling taxes and controlling spending just as I did before I was elected.
I do not rule out the possibility of a future run for office or some other sort of involvement in government.
The taxpayers and everyday citizens of Hamblen County deserve an open and accountable government. That requires constant vigilance and a careful watch over county spending.
On a very personal note, I want to thank my family for their love and support. My husband Ron, my son Will, and my daughters Jenny and Katie have supported me through three years of law school, helped in my campaign for office in 2002, and have listened and provided input as I have come up with proposals to save the county money and to balance county budgets.
I have been blessed with very special parents, Bill and Helen Catron, who have been a source of strength and support in whatever I have attempted. My father passed away in May 2005, but his legacy of hard work, integrity, and honesty remain. I strive to live up to the example that he set. I also want to thank my sisters--Laura Catron and Lisa Catron Bible. I can not say enough about their encouragement and support and the many memories and experiences we have shared.
In future posts, I will explain the events that led up to entering law school and that resulted in my run for county commission in 2002.
In the meantime, I will continue to be the voice of fiscal conservatism and a watchdog for the citizens of Hamblen County.
Although many people encouraged another run and family and supporters were ready to hit the campaign trail, I made the decision not to run so that I can devote more time to my family and start using my law license to help people. I will continue to work on local accountability issues. However, I will simply do so in ways other than serving on county commission.
I will continue to use this blog as one way of getting the continuing message of accountability out.
In looking back and in looking forward to the remaining seven months of my term, I can say that I did what I said I would do and that I will continue to do so. I have never wavered, and I achieved my campaign goals. Among the many achievements were the following:
1. The state, instead of a local private auditor, now performs the yearly county audit. The savings to the county have been huge--$18,000/year. During the past 3 years, that has meant a total saving to the county of over $54,000 plus a better overall audit.
2. County Commission meetings are now taped and televised on Charter and Adelphia cable television. This was a big push on my part because of my belief in open government and knowing that sunshine acts as a "purifier" in the conduct of the public's business. Charter Cable Company donated video equipment, and Commissioner Phillips and I secured and donated audio equipment and microphones. My husband Ron provided materials free of charge and donated his own time to build a platform where the camera operator could sit. If you can't get to the commission meeting, you can watch it at home.
3. I made a proposal in November 2002 to have the county provide the financing for HVAC units (heating, venting, and air conditioning units for Lincoln and Meadowview Schools) so the schools could accept the low equipment bid and save $60,000. Although the schools chose not to let the county provide financing on the HVAC units at that time and thus gave up a possible savings of $60,000, the school system later accepted the idea of county financing on purchases such as buses and has saved money.
4. One of the most dramatic savings--to the tune of $1.1 million dollars for the county taxpayers-- occurred when I did not just blindly accept the state calculation of the Hamblen County certified (post-appraisal) tax rate in July 2005. All commissioners were sent packets from the County Mayor with the new state-certified tax rate along with local budgets that had been prepared by the Mayor's Finance Department using the proposed state tax rate.
I looked at the rate and the related budgets that had been prepared by the County Mayor and knew that something was wrong with both. The rate that the state had sent to Hamblen County, the rate that the Mayor's Finance Department had used to prepare a revised county budget in July 2005, was too high.
I called the Assessor and told him what I had found--that the state certified tax rate was incorrect and that the new tax rate should be about 11 cents less. After a phone call, the state provided a corrected, lower tax rate, and the resulting savings benefited the taxpayers of Hamblen County to the tune of about $1.1 million dollars.
Trust but verify has been my motto in connection with pushing for accountability for tax dollars. The importance of checking everything was proven big-time with my review of those state tax calculations. For me, doing that check was nothing special. I try to check as much county financial information as I possibly can because public service means working to save the taxpayers every dollar and being accountable in seeing that every dollar that is spent, is spent wisely.
I have served my constituents and tried to address their concerns--from having a tree removed that obstructed the view at a dangerous intersection, to saving the taxpayers $18,000/year on the county audit, to saving Hamblen County taxpayers over $1.1 million dollars by checking the state's certified tax rate.
I would like to express my sincere thanks to the voters of the 14th district who supported and elected me to the Hamblen County Commission in 2002. Serving the people of my district during the past four years has been a great honor, and I can never adequately express my appreciation for the trust that was placed in me.
At this time, however, I need to devote more time to helping my family, and I need to use my law degree to help others. I will stay involved, and I will continue to be a guardian for taxpayers. I will continue to attend meetings, and I will speak out about controlling taxes and controlling spending just as I did before I was elected.
I do not rule out the possibility of a future run for office or some other sort of involvement in government.
The taxpayers and everyday citizens of Hamblen County deserve an open and accountable government. That requires constant vigilance and a careful watch over county spending.
On a very personal note, I want to thank my family for their love and support. My husband Ron, my son Will, and my daughters Jenny and Katie have supported me through three years of law school, helped in my campaign for office in 2002, and have listened and provided input as I have come up with proposals to save the county money and to balance county budgets.
I have been blessed with very special parents, Bill and Helen Catron, who have been a source of strength and support in whatever I have attempted. My father passed away in May 2005, but his legacy of hard work, integrity, and honesty remain. I strive to live up to the example that he set. I also want to thank my sisters--Laura Catron and Lisa Catron Bible. I can not say enough about their encouragement and support and the many memories and experiences we have shared.
In future posts, I will explain the events that led up to entering law school and that resulted in my run for county commission in 2002.
In the meantime, I will continue to be the voice of fiscal conservatism and a watchdog for the citizens of Hamblen County.
Tuesday, February 14, 2006
February 14, 2006 Investigative Audit: Tn School Boards Assn.
Audits come in many sizes and varieties.
The type of audit that I have been discussing in recent posts is a simple "financial" audit involving a limited examination of a very small number or sampling of financial transactions (such as occurs
with the required audits of all Tennessee counties).
Another type of audit is an "investigative audit" and one such audit just made big news in Tennessee. As a result of a tipster's report to the state, an investigative audit of the Tennessee School Boards Association (TSBA) was performed.
An investigative audit is special. It is far more extensive than a financial audit. The investigative auditor actually searches out information and looks for fraud and illegalities (unlike the routine random examination of a small sampling of transactions that occurs in a financial audit).
In a very simplistic way, the two audits can be compared as follows: A financial audit just looks at a few checks to see if everything adds up. An investigative audit goes deeper and attempts to find out if the checks and financial data are correct and whether the checks were ever legally authorized.
Obviously, there's a lot of difference in having an auditor come in, look at a few checks, and say everything "adds up" (financial audit) and having an auditor come in, look at several checks in depth, and find that there are checks that shouldn't have been written at all and that illegal payments were made (investigative audit).
So what did the in-depth investigative audit of the TSBA (Tennessee School Boards Assn.) find? Well, for starters, the audit reported that John Evans, program manager of the TSBA Risk Management Insurance Trust, had received over $500,000 in unauthorized commissions and interest.
It also stated that Dan Tollett, former executive director of TSBA, had received more than $400,000 in improper payments from the taxpayer-funded organization. Tollett resigned as a director of the Risk
Management Trust on Jan. 31.
Evans was recently questioned about his actions by the House-Senate Education Committee of the Tennessee Legislature.
Auditors found that payment of $492,694 in special commissions to Evans had not been authorized. Although auditors reported that board members could not recall any authorization and records reflect no such approval, Evans said that all fees and commissions were authorized and that three board members now recall the authorization. The records, he said, are "being reconstructed."
Evans admitted that he was involved, until 1999, in the establishment and operation of an insurance trust fund that subsequently went bankrupt and cost the governments involved more than $4 million. Evans also admitted that he had at least 52 insurance licensing violations levied against him in Kentucky.
Tollett, who declined to appear before the Committee, "retired" from TSBA in 1994 and drew state retirement benefits totalling $276,856 from 1994-2000.
During his "retirement," however, he was still employed by TSBA through a separate TSBA entity that he had created just prior to "retiring."
The audit says that Tollett misled TCRS (Tennessee consolidated Retirement System). Instead of making Tollett repay the "retirement" benefits, Tennessee School Boards (through TSBA) refunded the benefits owed back to the state retirement system.
TSBA members face a huge credibility challenge. Corporate scandals in recent years reveal numerous cases of board members who didn't know squat about the organization's financial arrangements and didn't try to find out. Blind ignorance is no longer a good defense.
The individual members of the TSBA — and in particular TSBA board members — are responsible for the efficient operation of schools in 136 districts across Tennessee.
Tax money used to fund TSBA appears to have been abused as TSBA leaders drew retirement benefits while continuing to draw a TSBA salary through a "sham" organization.
Taxpayers across the state can only hope that local School Boards are more careful with the tax money used to run their local schools than these same local School Boards have been in monitoring the tax money they provided to fund their Tennessee School Boards Association (TSBA).
The type of audit that I have been discussing in recent posts is a simple "financial" audit involving a limited examination of a very small number or sampling of financial transactions (such as occurs
with the required audits of all Tennessee counties).
Another type of audit is an "investigative audit" and one such audit just made big news in Tennessee. As a result of a tipster's report to the state, an investigative audit of the Tennessee School Boards Association (TSBA) was performed.
An investigative audit is special. It is far more extensive than a financial audit. The investigative auditor actually searches out information and looks for fraud and illegalities (unlike the routine random examination of a small sampling of transactions that occurs in a financial audit).
In a very simplistic way, the two audits can be compared as follows: A financial audit just looks at a few checks to see if everything adds up. An investigative audit goes deeper and attempts to find out if the checks and financial data are correct and whether the checks were ever legally authorized.
Obviously, there's a lot of difference in having an auditor come in, look at a few checks, and say everything "adds up" (financial audit) and having an auditor come in, look at several checks in depth, and find that there are checks that shouldn't have been written at all and that illegal payments were made (investigative audit).
So what did the in-depth investigative audit of the TSBA (Tennessee School Boards Assn.) find? Well, for starters, the audit reported that John Evans, program manager of the TSBA Risk Management Insurance Trust, had received over $500,000 in unauthorized commissions and interest.
It also stated that Dan Tollett, former executive director of TSBA, had received more than $400,000 in improper payments from the taxpayer-funded organization. Tollett resigned as a director of the Risk
Management Trust on Jan. 31.
Evans was recently questioned about his actions by the House-Senate Education Committee of the Tennessee Legislature.
Auditors found that payment of $492,694 in special commissions to Evans had not been authorized. Although auditors reported that board members could not recall any authorization and records reflect no such approval, Evans said that all fees and commissions were authorized and that three board members now recall the authorization. The records, he said, are "being reconstructed."
Evans admitted that he was involved, until 1999, in the establishment and operation of an insurance trust fund that subsequently went bankrupt and cost the governments involved more than $4 million. Evans also admitted that he had at least 52 insurance licensing violations levied against him in Kentucky.
Tollett, who declined to appear before the Committee, "retired" from TSBA in 1994 and drew state retirement benefits totalling $276,856 from 1994-2000.
During his "retirement," however, he was still employed by TSBA through a separate TSBA entity that he had created just prior to "retiring."
The audit says that Tollett misled TCRS (Tennessee consolidated Retirement System). Instead of making Tollett repay the "retirement" benefits, Tennessee School Boards (through TSBA) refunded the benefits owed back to the state retirement system.
TSBA members face a huge credibility challenge. Corporate scandals in recent years reveal numerous cases of board members who didn't know squat about the organization's financial arrangements and didn't try to find out. Blind ignorance is no longer a good defense.
The individual members of the TSBA — and in particular TSBA board members — are responsible for the efficient operation of schools in 136 districts across Tennessee.
Tax money used to fund TSBA appears to have been abused as TSBA leaders drew retirement benefits while continuing to draw a TSBA salary through a "sham" organization.
Taxpayers across the state can only hope that local School Boards are more careful with the tax money used to run their local schools than these same local School Boards have been in monitoring the tax money they provided to fund their Tennessee School Boards Association (TSBA).
Thursday, February 09, 2006
February 11, 2006 Ethics Legislation at the State
A brief post on the state ethics legislation that passed this past Monday.
It is unfortunate that it takes a political crisis, such as the Tennessee Waltz indictments, to lead to legislation and efforts to restrain lawmakers from using their offices for personal gain.
That, however, appears to be the nature of politics at the present time. Get as much as you can for you and for your family before someone blows the whistle.
Having looked at summaries of the new ethics legislation, my feeling is that the new legislation is an improvement. And, let's face it, just about anything would have been an improvement. However, the laws regulating lobbying and conflicts of interest are still not strong enough.
My personal feeling is that special interest groups wield too much influence in Nashville. Too much influence is exerted by dollars, political contributions, and wining and dining instead of through open and public discussion and consideration in committee and legislative meetings.
The more that is disclosed about legislators, lobbyists, committee and legislative votes, the more open and responsive all legislators will be--both to groups and to individual constituents.
One of my primary concerns in government at all levels (local, state, national) is conflicts of interest. When someone takes office and then puts 3 or 4 or more family members on the government payroll, that official is starting down a slippery slope. Eventually, the situation gives the appearance of using one's office and the public trust for the financial benefit of one's family.
Of course, there is also a problem of conflicts of interest where family members serve in numerous elected or appointed positions.
This is a problem at the local level, and I have discussed conflicts on the county commission previously such as when School Board member Carolyn Spoone Holt comes to County Commission and requests that her brother Commissioner Joe Spoone provide funds for an International School for non-English speaking students.
Or when Paula Bruce Combs, an asst. principal and school system employee, sits in the audience at a County Commission meeting or watches the tape at home as her brother Commissioner Ricky Bruce votes on funding issues that will affect the amount of pay and benefits that Paula receives.
Or when Charlene Spoone, who works as a computer technician for the school system, sits at home with her county commission husband Joe Spoone, and school funding comes up.
Or when Witt principal Stan Harville sits in the audience at a commission meeting as his father Commissioner Herbert Harville votes on school funding that will affect both Stan's and his wife's pay and benefits.
Before anyone gets too upset at the mention of these names, let's remember that these are simply facts and the most well-known relationships. Having pointed out the facts and the relationships, this is not to say that Carolyn Spoone Holt shouldn't serve on the school board or that Joe Spoone shouldn't serve on county commission or that Charlene Spoone shouldn't be a school board employee.
Perhaps, however, Joe should abstain from the vote when school funding issues are presented.
Conflicts are found at the state level as well. There has been a lot of reporting recently about the Tennessee Highway Patrol. One report was about the "fixing" of a speeding ticket that had been given to Deputy Governor Dave Cooley. As the story began to unfold, it was reported that Melanie Cooley (Dave Cooley's wife) had recently served as executive assistant to the safety commissioner who is over the THP, but she was transferred to another government job after her husband's ticket scandal was reported.
Other reports have questioned whether conflicts of interest exist where Speaker of the House Jimmy Naifeh's wife works as a highly paid lobbyist trying to sway votes in the Tennessee legislature. She represents a lot of different companies and groups. Is there a legal conflict of interest in lobbying her own husband and trying to sway votes in the Legislature? Perhaps not. Is there a moral and ethical conflict of interest? In my opinion, there is.
An elected official occupies a position of public trust. Many officials find it extremely difficult to resist the temptation to use their office for financial gain for themselves and their family. And likewise family members of elected officials find it difficult to resist using the political connections of their relative to seek financial gain for themselves and their family.
We've all heard the statement that you can't legislate ethics and morality. However, you can enact laws that prohibit conflicts of interest and you can provide punishment for those who abuse the public trust and who use their offices for financial gain.
There are already a number of laws on the books in this regard. Additional prohibitions on conflicts of interest and abuse of offices of public trust would strengthen the standards that we set for elected and appointed officials.
Instead of trying to stay just within the bounds of the law, officials should strive to meet the highest ethical standards and should avoid even the appearance of ethical or moral impropriety.
At times, that might necessitate that one recuse himself or herself from voting where there is a potential conflict or the appearance of impropriety.
It is unfortunate that it takes a political crisis, such as the Tennessee Waltz indictments, to lead to legislation and efforts to restrain lawmakers from using their offices for personal gain.
That, however, appears to be the nature of politics at the present time. Get as much as you can for you and for your family before someone blows the whistle.
Having looked at summaries of the new ethics legislation, my feeling is that the new legislation is an improvement. And, let's face it, just about anything would have been an improvement. However, the laws regulating lobbying and conflicts of interest are still not strong enough.
My personal feeling is that special interest groups wield too much influence in Nashville. Too much influence is exerted by dollars, political contributions, and wining and dining instead of through open and public discussion and consideration in committee and legislative meetings.
The more that is disclosed about legislators, lobbyists, committee and legislative votes, the more open and responsive all legislators will be--both to groups and to individual constituents.
One of my primary concerns in government at all levels (local, state, national) is conflicts of interest. When someone takes office and then puts 3 or 4 or more family members on the government payroll, that official is starting down a slippery slope. Eventually, the situation gives the appearance of using one's office and the public trust for the financial benefit of one's family.
Of course, there is also a problem of conflicts of interest where family members serve in numerous elected or appointed positions.
This is a problem at the local level, and I have discussed conflicts on the county commission previously such as when School Board member Carolyn Spoone Holt comes to County Commission and requests that her brother Commissioner Joe Spoone provide funds for an International School for non-English speaking students.
Or when Paula Bruce Combs, an asst. principal and school system employee, sits in the audience at a County Commission meeting or watches the tape at home as her brother Commissioner Ricky Bruce votes on funding issues that will affect the amount of pay and benefits that Paula receives.
Or when Charlene Spoone, who works as a computer technician for the school system, sits at home with her county commission husband Joe Spoone, and school funding comes up.
Or when Witt principal Stan Harville sits in the audience at a commission meeting as his father Commissioner Herbert Harville votes on school funding that will affect both Stan's and his wife's pay and benefits.
Before anyone gets too upset at the mention of these names, let's remember that these are simply facts and the most well-known relationships. Having pointed out the facts and the relationships, this is not to say that Carolyn Spoone Holt shouldn't serve on the school board or that Joe Spoone shouldn't serve on county commission or that Charlene Spoone shouldn't be a school board employee.
Perhaps, however, Joe should abstain from the vote when school funding issues are presented.
Conflicts are found at the state level as well. There has been a lot of reporting recently about the Tennessee Highway Patrol. One report was about the "fixing" of a speeding ticket that had been given to Deputy Governor Dave Cooley. As the story began to unfold, it was reported that Melanie Cooley (Dave Cooley's wife) had recently served as executive assistant to the safety commissioner who is over the THP, but she was transferred to another government job after her husband's ticket scandal was reported.
Other reports have questioned whether conflicts of interest exist where Speaker of the House Jimmy Naifeh's wife works as a highly paid lobbyist trying to sway votes in the Tennessee legislature. She represents a lot of different companies and groups. Is there a legal conflict of interest in lobbying her own husband and trying to sway votes in the Legislature? Perhaps not. Is there a moral and ethical conflict of interest? In my opinion, there is.
An elected official occupies a position of public trust. Many officials find it extremely difficult to resist the temptation to use their office for financial gain for themselves and their family. And likewise family members of elected officials find it difficult to resist using the political connections of their relative to seek financial gain for themselves and their family.
We've all heard the statement that you can't legislate ethics and morality. However, you can enact laws that prohibit conflicts of interest and you can provide punishment for those who abuse the public trust and who use their offices for financial gain.
There are already a number of laws on the books in this regard. Additional prohibitions on conflicts of interest and abuse of offices of public trust would strengthen the standards that we set for elected and appointed officials.
Instead of trying to stay just within the bounds of the law, officials should strive to meet the highest ethical standards and should avoid even the appearance of ethical or moral impropriety.
At times, that might necessitate that one recuse himself or herself from voting where there is a potential conflict or the appearance of impropriety.
Monday, January 30, 2006
January 30, 2006 The 2002 Audit Bottom Line: The county spent $923,000 more than it took in
As I continue to report on Hamblen County audits starting with the year 2001, we move to 2002 with this reminder. County financial audits have a certain usefulness, but they are very limited in scope and they are not designed to detect fraud, waste, or abuse, according to the State Comptroller's Office--the state department that monitors all audits of county government.
The title of this post tells the big headline story for 2002.
According to the 2002 audit (the last one performed by the private, local auditors), the county spent $923,000 more than it took in.
Unfortunately, there was nothing new about the county spending more than it took in---in fact, going all the way back to 1992, 2002 was the 7th year that the county spent more than it took in.
One dramatic difference, however, was the size of the deficit---$923,000. The previous high deficit was $815,666.
Another dramatic difference was that with this huge deficit, the county ended up with its lowest fund balance as of 6/30/02-- an ending fund balance of just $389,568.
The third important item to note is that the county found itself in this financial mess less than three years after a wheel tax was started "to build up the general fund balance."
There was only one major finding or accounting irregularity reported in the audit and that was to state that the Finance Department spent more than county commission had appropriated out of the General Fund, Garbage Fund, and Highway Fund. This is a violation of state law.
(This one reported finding by the local auditors will contrast dramatically with the 29 reported "findings" in the next year's 2003 audit that was performed by state auditors at a significant financial savings to the county and that will be the subject of a future post.)
The local auditors also stated that Hamblen County operated on a cash basis in 2002 when officials should recognize that "Hamblen County is required to report on the modified accrual basis." Accrual is an accounting term that in general means that you put income and expenses in the year where they belong even if you haven't yet received the income or written the expense check.
The reply to this audit finding from the Finance Department was that Hamblen County had "consistently" been using the cash basis of accounting in previous years.
So why hadn't this problem been reported in prior audits and corrected?
These two statements seem odd.
Did the auditor tell the County Mayor and the Finance Department during the many prior years that he had been performing the county audit that they were required to operate on the modified accrual basis?
1. If the auditor did tell the county repeatedly that it must operate on the modified accrual basis, why did the county (according to the Finance Department) say it had "consistently" been using the cash basis of accounting instead?
2. If the auditor did not tell the county that it was required to report on the modified accrual basis during the many prior audits, then why did he suddenly bring this up in the 2002 audit?
More on 2002 next time.
Any comments may be sent to noe4accountability@yahoo.com. If you would like to have your comments published, please include your name, address, and phone number for contact and verification.
The title of this post tells the big headline story for 2002.
According to the 2002 audit (the last one performed by the private, local auditors), the county spent $923,000 more than it took in.
Unfortunately, there was nothing new about the county spending more than it took in---in fact, going all the way back to 1992, 2002 was the 7th year that the county spent more than it took in.
One dramatic difference, however, was the size of the deficit---$923,000. The previous high deficit was $815,666.
Another dramatic difference was that with this huge deficit, the county ended up with its lowest fund balance as of 6/30/02-- an ending fund balance of just $389,568.
The third important item to note is that the county found itself in this financial mess less than three years after a wheel tax was started "to build up the general fund balance."
There was only one major finding or accounting irregularity reported in the audit and that was to state that the Finance Department spent more than county commission had appropriated out of the General Fund, Garbage Fund, and Highway Fund. This is a violation of state law.
(This one reported finding by the local auditors will contrast dramatically with the 29 reported "findings" in the next year's 2003 audit that was performed by state auditors at a significant financial savings to the county and that will be the subject of a future post.)
The local auditors also stated that Hamblen County operated on a cash basis in 2002 when officials should recognize that "Hamblen County is required to report on the modified accrual basis." Accrual is an accounting term that in general means that you put income and expenses in the year where they belong even if you haven't yet received the income or written the expense check.
The reply to this audit finding from the Finance Department was that Hamblen County had "consistently" been using the cash basis of accounting in previous years.
So why hadn't this problem been reported in prior audits and corrected?
These two statements seem odd.
Did the auditor tell the County Mayor and the Finance Department during the many prior years that he had been performing the county audit that they were required to operate on the modified accrual basis?
1. If the auditor did tell the county repeatedly that it must operate on the modified accrual basis, why did the county (according to the Finance Department) say it had "consistently" been using the cash basis of accounting instead?
2. If the auditor did not tell the county that it was required to report on the modified accrual basis during the many prior audits, then why did he suddenly bring this up in the 2002 audit?
More on 2002 next time.
Any comments may be sent to noe4accountability@yahoo.com. If you would like to have your comments published, please include your name, address, and phone number for contact and verification.
Friday, January 20, 2006
January 22, 2006 2001 Spending Reported to/by the Tribune
Before you read this post, it would be helpful to review previous posts of January 4th, 20th, and 22nd for background information on county spending figures as reported in the official 2001 audit.
This is the text of an article that appeared in the Citizen-Tribune on April 16, 2002.
The 2002 primary elections were about 3 weeks away.
The article refers to and compares county spending in 1997 and in 2001 (the year that the audit of county spending showed hundreds of end-of-year adjustments).
The headline is shown in red.
------------------------------------------------------------------------------------
Purkey: County Spending within Bounds
BY ROBERT MOORE
Tribune Staff Writer
Political candidates and interested bystanders who say Hamblen County government spending is out of control are wrong, county officials say.
Between 1997 and 2001, expenditures on county government-- not counting the school system-- grew at a slower rate than the rate of inflation, Hamblen County Executive David Purkey reported Monday afternoon.
During that five-year period, county government grew by 5.8%. In the same period, the inflation rate was 8.5%, according to statistics compiled by Trustee Bill Brittain.
"The answer is the management of money," Purkey said. "It's very simple. I get real upset when I hear people in the community and candidates who are running against us wail and gnash their teeth about spending being out of control. That's not true. We do a lot of things here in the courthouse and in county government to share duties. Employees are being shared."
The audited numbers indicate that the 1997 non-school budget was $14.1 million. The non-school budget in 2001 was $14.8 million. Purkey's comments came at a county commission work session Monday afternoon.
The school system's budget is not included in the report because it has its own board that decides how money should be spent. Also, once the county commission allocates money to the school system, the county commission has not spending oversight function.
The numbers take into account general-fund expenditures, garbage and highway funds and debt service, including the initial debt service on the $34.7 million school spending program, according to Brittain.
"They tell me that spending in county government is out of control as the accusations have been made," the trustee said. "We're providing quality service for a reasonable price. It insults me for people to go out there and say that spending is out of control when every day we try to find ways to be more efficient and save money."
------------------------------------------------------------------------------------
If you automatically accept the statement in this front-page "news" article that 2001 expenditures were $14.8 Million without any checking or verification, then you would think that county spending increased by only $700,000 (5.8%) between 1997-2001.
But if instead you decide to check and verify the 2001 expenditures by actually looking at the 2001 audit, you will find that the total of 2001 audited expenditures for those four funds is approximately $16.5 million (not $14.8 million as reported).
I put out this information with a cautionary note: Questions about the difference in the 2001 reported spending and the 2001 actual spending have been asked and ignored. A citizen told the entire commission that she had asked County Mayor David Purkey to tell her what the true total of 2001 audited spending really was in the four funds. No response other than a threat to sue her.
My expenditure total of $16.5 Million is based on the total of expenditures for each of the four funds as found in the 2001 audit. (The expenditure total as shown in the audit would be even higher, but I deducted the amount used to pay back tax anticipation notes at the end of the year).
After you review the audit, everything that was said and reported to commissioners and to the public changes significantly.
County spending appears to have increased by $2.4 million (not $700,000 as reported).
County spending appears to have increased by 17% (twice the rate of inflation and not the 5.8% increase that was reported) jumping from $14.1 Million to $16.5 Million.
"Trust but verify" applies everywhere.
Nowhere is verification more important than in situations where the government or government officials are providing the facts and figures and have a vested interest in what is reported and how and when.
Political spin ---taking actual facts and actual figures about 2001 county spending and "spinning" them to present the best possible appearance--is one thing. That's a bit like the expected "huffing and puffing" by a car dealer in describing the vehicle he has for sale.
But why are incorrect facts and figures about 2001 county spending put out publicly to the commission, to the press, and to the citizens of Hamblen County nine months after the 2001 fiscal year had ended?
What is the correct figure? Is it $16.5 million? Or is there something that doesn't show in the audit?
Everyone makes mistakes. Small ones are usually ignored. I have certainly made my share of mistakes.
But what exactly was going on in 2001 in connection with Hamblen County finances?
Surely at some point truthfulness about the county's finances is important. Was the audit wrong? Is there an accurate record anywhere of the county's expenditures in 2001?
The next post will be about the 2002 audit, the last audit by the local, private auditors. At the end of fiscal year 2002 on 6/30/02, the county showed its largest spending deficit since 1992 as the county spent $923,000 more than it took in.
And isn't it ironic that this huge $923,000 deficit came on 6/30/02 ----- just 10 weeks after Tribune headlines trumpeted that county spending was "within bounds"!
This is the text of an article that appeared in the Citizen-Tribune on April 16, 2002.
The 2002 primary elections were about 3 weeks away.
The article refers to and compares county spending in 1997 and in 2001 (the year that the audit of county spending showed hundreds of end-of-year adjustments).
The headline is shown in red.
------------------------------------------------------------------------------------
Purkey: County Spending within Bounds
BY ROBERT MOORE
Tribune Staff Writer
Political candidates and interested bystanders who say Hamblen County government spending is out of control are wrong, county officials say.
Between 1997 and 2001, expenditures on county government-- not counting the school system-- grew at a slower rate than the rate of inflation, Hamblen County Executive David Purkey reported Monday afternoon.
During that five-year period, county government grew by 5.8%. In the same period, the inflation rate was 8.5%, according to statistics compiled by Trustee Bill Brittain.
"The answer is the management of money," Purkey said. "It's very simple. I get real upset when I hear people in the community and candidates who are running against us wail and gnash their teeth about spending being out of control. That's not true. We do a lot of things here in the courthouse and in county government to share duties. Employees are being shared."
The audited numbers indicate that the 1997 non-school budget was $14.1 million. The non-school budget in 2001 was $14.8 million. Purkey's comments came at a county commission work session Monday afternoon.
The school system's budget is not included in the report because it has its own board that decides how money should be spent. Also, once the county commission allocates money to the school system, the county commission has not spending oversight function.
The numbers take into account general-fund expenditures, garbage and highway funds and debt service, including the initial debt service on the $34.7 million school spending program, according to Brittain.
"They tell me that spending in county government is out of control as the accusations have been made," the trustee said. "We're providing quality service for a reasonable price. It insults me for people to go out there and say that spending is out of control when every day we try to find ways to be more efficient and save money."
------------------------------------------------------------------------------------
If you automatically accept the statement in this front-page "news" article that 2001 expenditures were $14.8 Million without any checking or verification, then you would think that county spending increased by only $700,000 (5.8%) between 1997-2001.
But if instead you decide to check and verify the 2001 expenditures by actually looking at the 2001 audit, you will find that the total of 2001 audited expenditures for those four funds is approximately $16.5 million (not $14.8 million as reported).
I put out this information with a cautionary note: Questions about the difference in the 2001 reported spending and the 2001 actual spending have been asked and ignored. A citizen told the entire commission that she had asked County Mayor David Purkey to tell her what the true total of 2001 audited spending really was in the four funds. No response other than a threat to sue her.
My expenditure total of $16.5 Million is based on the total of expenditures for each of the four funds as found in the 2001 audit. (The expenditure total as shown in the audit would be even higher, but I deducted the amount used to pay back tax anticipation notes at the end of the year).
After you review the audit, everything that was said and reported to commissioners and to the public changes significantly.
County spending appears to have increased by $2.4 million (not $700,000 as reported).
County spending appears to have increased by 17% (twice the rate of inflation and not the 5.8% increase that was reported) jumping from $14.1 Million to $16.5 Million.
"Trust but verify" applies everywhere.
Nowhere is verification more important than in situations where the government or government officials are providing the facts and figures and have a vested interest in what is reported and how and when.
Political spin ---taking actual facts and actual figures about 2001 county spending and "spinning" them to present the best possible appearance--is one thing. That's a bit like the expected "huffing and puffing" by a car dealer in describing the vehicle he has for sale.
But why are incorrect facts and figures about 2001 county spending put out publicly to the commission, to the press, and to the citizens of Hamblen County nine months after the 2001 fiscal year had ended?
What is the correct figure? Is it $16.5 million? Or is there something that doesn't show in the audit?
Everyone makes mistakes. Small ones are usually ignored. I have certainly made my share of mistakes.
But what exactly was going on in 2001 in connection with Hamblen County finances?
Surely at some point truthfulness about the county's finances is important. Was the audit wrong? Is there an accurate record anywhere of the county's expenditures in 2001?
The next post will be about the 2002 audit, the last audit by the local, private auditors. At the end of fiscal year 2002 on 6/30/02, the county showed its largest spending deficit since 1992 as the county spent $923,000 more than it took in.
And isn't it ironic that this huge $923,000 deficit came on 6/30/02 ----- just 10 weeks after Tribune headlines trumpeted that county spending was "within bounds"!
January 22, 2006 The 2001 Audit--An Official-looking Stamp of Approval to Altered Records of County Spending
Recent posts (Jan. 4th and Jan. 20th) have discussed the 2001 Hamblen County audit with its unbelievably high number of end-of-year alterations and adjustments to county spending records and the odd way these "adjustments" made total spending on numerous items appear like it was exactly what had been budgeted.
The taxpayers paid $28,000 for this audit and in return got a financial report that gave an official-looking stamp of approval to a meaningless and extensively altered record of county expenditures.
Detailed audit information and examples of how expenditure numbers were altered and manipulated in 2001 are already outlined in January 4th and January 20th posts.
Certain statements will be made by various officials and others about these posts. Probably the statements will be that this is no big deal or that making changes at year's end just so it will look like exactly $35,000 was spent on electricity or exactly $72,000 was spent on insurance is standard operating procedure for the county or for the auditors.
Well, what happened in the manipulation of county spending records in 2001 was not standard operating procedure for the county or for the auditors. There are some year-end adjusting entries for all years, but not adjustment after adjustment after adjustment to add or deduct an amount just to make the expenditures seem exact (and meaningless).
I took 7 categories/departments at random for 2001 and found approximately 90 end-of-year adjusting entries. I looked at those same 7 categories/departments in 2002 and found not one end-of-year adjusting entry.
The county's record of expenditures should not be contrived records that have been altered by hundreds of end-of-year adjustments that simply pull out a number ($11,289.42) and add it to spending here or pull out a number ($41,455.21) and subtract it from spending there-- all apparently to make certain departments look better and to shift expenses from the department or category where they were incurred to some other department or category.
A financial record should provide, at a minimum, at least a close record of actual expenditures for each department and for each line item within the department.
Because all the alterations in the 2001 audit seemed to make it a meaningless, but expensive ($28,000), record of county finances, I asked an individual who was involved in the audit process why there were huge numbers of adjusting entries in 2001 that made the expenditures come out even time after time after time. I also asked this same individual in the county finance department whether the expenditures shown in the 2001 audit provided an accurate record of actual spending in 2001.
I was told that this person did not want to answer either of those questions because the answers to those questions might reflect "badly" on someone.
Well, sometimes the answer you don't get reveals just as much or more than the answer you do get.
If you are afraid to answer the question 'Does the 2001 audit provide an accurate record of actual spending in 2001?', then your refusal answers that question loudly and clearly.
And what was being said by county officials about 2001 spending at the time? That will be the subject of the next blog post quoting an article that appeared in the Citizen-Tribune.
The taxpayers paid $28,000 for this audit and in return got a financial report that gave an official-looking stamp of approval to a meaningless and extensively altered record of county expenditures.
Detailed audit information and examples of how expenditure numbers were altered and manipulated in 2001 are already outlined in January 4th and January 20th posts.
Certain statements will be made by various officials and others about these posts. Probably the statements will be that this is no big deal or that making changes at year's end just so it will look like exactly $35,000 was spent on electricity or exactly $72,000 was spent on insurance is standard operating procedure for the county or for the auditors.
Well, what happened in the manipulation of county spending records in 2001 was not standard operating procedure for the county or for the auditors. There are some year-end adjusting entries for all years, but not adjustment after adjustment after adjustment to add or deduct an amount just to make the expenditures seem exact (and meaningless).
I took 7 categories/departments at random for 2001 and found approximately 90 end-of-year adjusting entries. I looked at those same 7 categories/departments in 2002 and found not one end-of-year adjusting entry.
The county's record of expenditures should not be contrived records that have been altered by hundreds of end-of-year adjustments that simply pull out a number ($11,289.42) and add it to spending here or pull out a number ($41,455.21) and subtract it from spending there-- all apparently to make certain departments look better and to shift expenses from the department or category where they were incurred to some other department or category.
A financial record should provide, at a minimum, at least a close record of actual expenditures for each department and for each line item within the department.
Because all the alterations in the 2001 audit seemed to make it a meaningless, but expensive ($28,000), record of county finances, I asked an individual who was involved in the audit process why there were huge numbers of adjusting entries in 2001 that made the expenditures come out even time after time after time. I also asked this same individual in the county finance department whether the expenditures shown in the 2001 audit provided an accurate record of actual spending in 2001.
I was told that this person did not want to answer either of those questions because the answers to those questions might reflect "badly" on someone.
Well, sometimes the answer you don't get reveals just as much or more than the answer you do get.
If you are afraid to answer the question 'Does the 2001 audit provide an accurate record of actual spending in 2001?', then your refusal answers that question loudly and clearly.
And what was being said by county officials about 2001 spending at the time? That will be the subject of the next blog post quoting an article that appeared in the Citizen-Tribune.
January 20, 2006 Some thoughts on local politics and conflicts of interest
Local politics, laced with rumors and the occasional factual comment, is like a long-running TV soap opera.
To get elected:
Talk conservative money management... Then tax and spend or borrow and spend after the election.
Talk about controlling spending... Then vote for every additional spending proposal that comes around after the election.
Talk about conflicts of interest, ethics, openness, and restoring citizen confidence in government... Then proclaim, after the election, that there are no ethical conflicts of interest in voting on funding issues where your wife, husband, son, daughter, brother, or sister is involved.
The plot line of this political soap opera is always the same---get power, get money, get control of tax dollars, and then spend, spend, spend as you dole out favors and jobs to friends, family, and the well-connected to build your political kingdom and your political security.
Oftentimes, large segments of the voting public are not even aware of all the interconnected power relationships--both business and family--that affect how the people's money is spent.
There are a lot of conflicts of interest in the local political world, and they are being discussed.
Thankfully, the emphasis on ethics at the state level appears to have increased concern and awareness of ethical conflicts of interest at the local level.
People are starting to notice and to talk more openly about conflicts of interest and the way these conflicts seem to affect hiring decisions, appointments, and votes.
The "conflict-of-interest" issue was brought up at a county commission meeting on October 20th when a gentleman asked Chairman Joe Spoone and commissioners Herbert Harville and Ricky Bruce to refrain from voting on a school issue because of their close family and economic ties to the school system.
The most serious conflict-of-interest allegation involved Commission Chairman Joe Spoone. Commissioner Joe Spoone is the brother of School Board Chairman Carolyn Spoone Holt.
In fact, School Board Chairman Carolyn Spoone Holt had appeared before commission (and before her brother Joe) prior to October 20th to ask for additional money from the county to start a new International School for Hamblen County students who don't speak English or who have limited English ability.
Carolyn Spoone Holt's public plea to her brother Joe Spoone for more public money is just the tip of Joe's many conflicts.
Joe Spoone actually has three financial and ethical conflicts of interest when school funding issues come before the commission.
Ethical conflict #1 is that Joe Spoone's sister (Carolyn Spoone Holt) is a member of the school board and current school board chairman.
Ethical conflict #2 is that Joe Spoone's brother (James Spoone) is employed by the school system as a bus driver.
Ethical conflict #3 raises the most significant concern about Joe voting on school issues. Joe Spoone's wife (Charlene Spoone) is employed by the school system as a technology assistant.
Since James Spoone and Charlene Spoone are not teachers, they do not have the protection of tenure in their employment. They can be fired or their positions can be eliminated.
Now if Charlene Spoone is concerned about her employment with the school board, her pay, or her benefits--all of which benefit Joe as well--would she mention these concerns to her husband Joe Spoone in discussions at the dinner table, at family gatherings, and around the home?
On October 20th, a citizen asked Joe to refrain from voting on the International School and on all school funding issues because of Joe's ethical and financial conflicts of interest.
Joe denied the obvious ethical conflict of interest and voted in favor of using county dollars to help start an "International School" just like his sister had asked.
Many people spoke at the October 20th meeting and made a simple request that county funding of the International School be put on a public referendum during the already scheduled May 2006 primary elections.
The voice of the people in regard to the International School, however, will not be heard in a referendum.
Joe Spoone, despite his financial and ethical conflicts of interest where school issues are concerned, cast the 8th and deciding vote ensuring that the International School will become a reality next year.
This reality also means that significant future costs will be incurred by Hamblen County taxpayers in continuing and maintaining this new school instead of using existing classroom space to serve these students.
To get elected:
Talk conservative money management... Then tax and spend or borrow and spend after the election.
Talk about controlling spending... Then vote for every additional spending proposal that comes around after the election.
Talk about conflicts of interest, ethics, openness, and restoring citizen confidence in government... Then proclaim, after the election, that there are no ethical conflicts of interest in voting on funding issues where your wife, husband, son, daughter, brother, or sister is involved.
The plot line of this political soap opera is always the same---get power, get money, get control of tax dollars, and then spend, spend, spend as you dole out favors and jobs to friends, family, and the well-connected to build your political kingdom and your political security.
Oftentimes, large segments of the voting public are not even aware of all the interconnected power relationships--both business and family--that affect how the people's money is spent.
There are a lot of conflicts of interest in the local political world, and they are being discussed.
Thankfully, the emphasis on ethics at the state level appears to have increased concern and awareness of ethical conflicts of interest at the local level.
People are starting to notice and to talk more openly about conflicts of interest and the way these conflicts seem to affect hiring decisions, appointments, and votes.
The "conflict-of-interest" issue was brought up at a county commission meeting on October 20th when a gentleman asked Chairman Joe Spoone and commissioners Herbert Harville and Ricky Bruce to refrain from voting on a school issue because of their close family and economic ties to the school system.
The most serious conflict-of-interest allegation involved Commission Chairman Joe Spoone. Commissioner Joe Spoone is the brother of School Board Chairman Carolyn Spoone Holt.
In fact, School Board Chairman Carolyn Spoone Holt had appeared before commission (and before her brother Joe) prior to October 20th to ask for additional money from the county to start a new International School for Hamblen County students who don't speak English or who have limited English ability.
Carolyn Spoone Holt's public plea to her brother Joe Spoone for more public money is just the tip of Joe's many conflicts.
Joe Spoone actually has three financial and ethical conflicts of interest when school funding issues come before the commission.
Ethical conflict #1 is that Joe Spoone's sister (Carolyn Spoone Holt) is a member of the school board and current school board chairman.
Ethical conflict #2 is that Joe Spoone's brother (James Spoone) is employed by the school system as a bus driver.
Ethical conflict #3 raises the most significant concern about Joe voting on school issues. Joe Spoone's wife (Charlene Spoone) is employed by the school system as a technology assistant.
Since James Spoone and Charlene Spoone are not teachers, they do not have the protection of tenure in their employment. They can be fired or their positions can be eliminated.
Now if Charlene Spoone is concerned about her employment with the school board, her pay, or her benefits--all of which benefit Joe as well--would she mention these concerns to her husband Joe Spoone in discussions at the dinner table, at family gatherings, and around the home?
On October 20th, a citizen asked Joe to refrain from voting on the International School and on all school funding issues because of Joe's ethical and financial conflicts of interest.
Joe denied the obvious ethical conflict of interest and voted in favor of using county dollars to help start an "International School" just like his sister had asked.
Many people spoke at the October 20th meeting and made a simple request that county funding of the International School be put on a public referendum during the already scheduled May 2006 primary elections.
The voice of the people in regard to the International School, however, will not be heard in a referendum.
Joe Spoone, despite his financial and ethical conflicts of interest where school issues are concerned, cast the 8th and deciding vote ensuring that the International School will become a reality next year.
This reality also means that significant future costs will be incurred by Hamblen County taxpayers in continuing and maintaining this new school instead of using existing classroom space to serve these students.
January 20, 2006 The 2001 Audit: Unbelievable! (Part II)
My January 4th post discussed numerous oddities in Hamblen County's 2001 audit.
Before I move on to other audit issues, I want to pose some questions that may arise and add a few additional comments to clarify why the 2001 audit is so odd and useless as a record of county spending.
Question #1: Was it perhaps the practice of the auditors to make adjustments to spending figures at year end in order to create exact spending amounts like those reported in the 2001 audit?
NO. The 2000 and the 2002 Hamblen County audits do not show exact spending amounts anywhere close to the number found in the 2001 audit.
Question #2: Does it really matter whether the actual spending reported in the audit is in the right line item or department?
YES.
Why does it matter?
(1) Because the previous year's spending for a department is typically used to prepare the next year's budget for that department. If you don't have accurate spending amounts for the previous year, then you are trying to draw up a budget with useless information. (Garbage in/ garbage out)
(2) Because the state requires that spending be broken down into departments, categories, and account codes (communication, insurance, salaries, repairs, etc.) in accord with the Comptroller's accounting guidelines and to ensure greater accountability in spending of tax dollars.
(3) Finally, because state law and common sense do not allow commission to pass a lump sum budget appropriation for, say, $10,527,800 and then hand it all over to the County Mayor and his Finance Department to spend as they see fit on the departments of their choosing.
There would be serious weaknesses and a lack of checks and balances in any type of lump-sum budgeting. Standard accounting practices and state requirements provide for at least some level of checks and balances in the process of budgeting and spending county funds.
Appropriations are made by the county commission to departments so it is clear who is spending the money. Each department then has to have a line item budget so it is clear where the money is being spent.
These are basic requirements that promote accountability in spending of taxpayer dollars.
If the line item and department spending amounts are altered at year's end (as was done in 2001) so that they do not accurately reflect the true spending amounts, then the audit report and the spending reports themselves are useless because they are inaccurate.
And what does this mean?
The county wasted $28,000 on an audit that reported inaccurate and altered spending amounts as though they were the true and actual spending amounts for county offices and departments.
As always, if anyone has a comment or question, please send your comment of question by snail mail or e-mail me at noe4accountability@yahoo.com. Include your name, address, and phone number. If you have a concern about political, economic, or any other type of retaliation, you may leave your name off or simply ask that your information and comments be kept confidential.
Before I move on to other audit issues, I want to pose some questions that may arise and add a few additional comments to clarify why the 2001 audit is so odd and useless as a record of county spending.
Question #1: Was it perhaps the practice of the auditors to make adjustments to spending figures at year end in order to create exact spending amounts like those reported in the 2001 audit?
NO. The 2000 and the 2002 Hamblen County audits do not show exact spending amounts anywhere close to the number found in the 2001 audit.
Question #2: Does it really matter whether the actual spending reported in the audit is in the right line item or department?
YES.
Why does it matter?
(1) Because the previous year's spending for a department is typically used to prepare the next year's budget for that department. If you don't have accurate spending amounts for the previous year, then you are trying to draw up a budget with useless information. (Garbage in/ garbage out)
(2) Because the state requires that spending be broken down into departments, categories, and account codes (communication, insurance, salaries, repairs, etc.) in accord with the Comptroller's accounting guidelines and to ensure greater accountability in spending of tax dollars.
(3) Finally, because state law and common sense do not allow commission to pass a lump sum budget appropriation for, say, $10,527,800 and then hand it all over to the County Mayor and his Finance Department to spend as they see fit on the departments of their choosing.
There would be serious weaknesses and a lack of checks and balances in any type of lump-sum budgeting. Standard accounting practices and state requirements provide for at least some level of checks and balances in the process of budgeting and spending county funds.
Appropriations are made by the county commission to departments so it is clear who is spending the money. Each department then has to have a line item budget so it is clear where the money is being spent.
These are basic requirements that promote accountability in spending of taxpayer dollars.
If the line item and department spending amounts are altered at year's end (as was done in 2001) so that they do not accurately reflect the true spending amounts, then the audit report and the spending reports themselves are useless because they are inaccurate.
And what does this mean?
The county wasted $28,000 on an audit that reported inaccurate and altered spending amounts as though they were the true and actual spending amounts for county offices and departments.
As always, if anyone has a comment or question, please send your comment of question by snail mail or e-mail me at noe4accountability@yahoo.com. Include your name, address, and phone number. If you have a concern about political, economic, or any other type of retaliation, you may leave your name off or simply ask that your information and comments be kept confidential.
Wednesday, January 04, 2006
January 4, 2006 The 2001 Hamblen County Audit: Unbelievable!
Hamblen County, like all counties in the state of Tennessee, is required to have a financial audit performed each year.
I have discussed audits periodically. Now it’s time to look at our recent county audits—starting with the 2001 Hamblen County audit.
If you have attended commission meetings or watched them on cable TV, you may have heard County Mayor David Purkey label the county audit as our “financial Bible” as though it is the final and accurate source of information about county finances.
In light of what I will present here about the 2001 county audit, it is unlikely that anyone could or should ever consider Hamblen County’s audit as a financial Bible or as an accurate source of information.
With Enron, Worldcom, and other auditing scandals, it is unlikely that the general public (or even auditors themselves) would make a sweeping claim of financial accuracy and infallibility when they know that a financial audit, such as the one performed for the county, is only a review of a small sampling of transactions along with a review of some county commission minutes and a review of compliance with a number of state laws and regulations.
Financial audits, as the Comptroller of the State of Tennessee has stated, are limited in scope and are not intended to detect fraud, waste, or abuse. (See my post of November 2, 2005, quoting the State Comptroller’s Office).
NOTE: While auditors do not look for fraud, waste, or abuse, it is possible that a financial audit, if it just happens to review a questionable transaction among its regular small audit sampling, might make a report of that transaction for further review and additional audit work.
There are a number of people who have been told and who perhaps believe that surely an audit at least provides accurate income and spending records for departments and agencies of county government.
County audits have a function, but the State Comptroller has noted that the function is very limited.
Accounting scandals involving huge companies that were "audited" by top-notch auditing firms indicate that financial audits are only as good and thorough as the auditor, only as complete as the number of transactions that are reviewed, and only as accurate as the information that is provided to the auditor by the county government.
If you take even a brief look at the 2001 county audit (for which taxpayers paid about $28,000 to the previous local private auditors), you will see that the auditor either ignored or encouraged the presentation of useless and false “spending records.”
The spending records provided by the County Mayor, as the county’s chief financial officer, to the auditor in 2001 have been manipulated and altered through multiple adjustments at the end of the year, and the use of these records in preparation of the official county audit of actual spending makes a mockery of the concept of financial accountability.
The 2001 audit is full of spending records that have been purposely altered and adjusted and manipulated at year end apparently for two reasons: (1) to make it appear to the Commission and to the public that numerous spending totals as of 6/30/01 were exactly the same as the perfectly even spending amounts that had been budgeted; and (2) to shift spending amounts around to control spending amounts that were reported for various departments.
Certain year-end audit adjustments are normal--such as when one finds that gasoline has mistakenly been paid out of an insurance line item.
However, what are termed “adjusting entries” in the 2001 audit are more appropriately termed “audit manipulations” in my opinion. The manipulation of line item after line item with these adjustments at the end of 2001 fiscal year (6/30/01) led to the presentation of false and misleading records and reports of county spending within departments.
Here are just a few of the approximately 80 examples of exact spending amounts from the 2001 audit:
Election Commission:
Exactly $1,500 budgeted for travel; exactly $1,500 spent.
Exactly $1,500 budgeted for office equipment; exactly $1,500 spent.
Planning Commission:
Exactly $2,000 budgeted for gasoline; exactly $2,000 spent.
Exactly $7,900 budgeted for office equipment; exactly $7,900 spent.
County Courthouse (buildings):
Exactly $35,000 budgeted for electricity; exactly $35,000 spent.
Property Reappraisals:
Exactly $4,000 budgeted for legal services; exactly $4,000 spent.
Exactly $3,500 budgeted for postal charges; exactly $3,500 spent.
Juvenile Court:
Exactly $3,500 budgeted for evaluation and testing; exactly $3,500 spent.
Exactly $1,000 budgeted for travel; exactly $1,000 spent.
Exactly $2,800 budgeted for office equipment; exactly $2,800 spent.
Sheriff’s Department:
Exactly $70,500 budgeted for health insurance; exactly $70,500 spent.
Exactly $4,000 budgeted for other equipment; exactly $4,000 spent.
Jail:
Exactly $15,000 budgeted for overtime pay; exactly $15,000 spent.
Exactly $72,000 budgeted for health insurance; exactly $72,000 spent.
Exactly $5,000 budgeted for other supplies/mtls; exactly $5,000 spent.
Exactly $6,500 budgeted for other charges; exactly $6,500 spent.
I could go on and on, but anyone with common sense can see what’s up. If anyone thinks that you can budget to the penny and then end up with exact spending totals with absolute, to-the-penny accuracy as shown in the above sampling of audit entries, then I have lots and lots of swamp land in Arizona to sell you.
Just how did the county end up with these "perfect spending” numbers? Through end-of-year manipulation of spending records—manipulations that were given the name “audit adjustments” or "adjusting entries."
Here are two examples of "adjusting entries" that were made at the end of the fiscal year (6/30/01) by the Finance Department in the Office of the County Mayor to make spending amounts appear exact (but inaccurate) in the 2001 audit:
Jail Insurance was $104,284.42 as of 5/25/01.
Then on 6/30/01 there are two entries. One is an adjusting credit entry of $43,573.84. The other is a debit entry of $11,289.42.
$104,284.42 – 43,573.84 + 11,289.42 = exactly $72,000.00 reported as jail insurance costs in the 2001 audit
County Courthouse (buildings) Electricity was $41,455.21 as of 6/8/01.
On 6/30/01, there is an adjusting credit entry of $6,455.21.
$41,455.21 – 6,455.21 = exactly $35,000.00 reported by the auditor as electricity costs in the 2001 audit
When have your household electricity, insurance, travel, or gasoline costs ended up exactly $1,500, exactly $2,000, exactly $6,500, and on and on?
Now about that 2001 Financial "Bible"?
Who manipulated the actual spending records for the General Fund at the end of the year and why? Who gave the financial information to the local, private auditors to report in the audit?
How could an auditor accept and report these obviously manipulated spending numbers as the "actual" record of department spending?
What did each department really spend on these line items and what was the real total of spending for each department?
No wonder the county had deficit spending in 8 of the 12 years from 1992-2003. Apparently, no one was told and no one ever knew what had really been spent in the previous year! And no one asked!
And the County Mayor tells the public that the Hamblen County audit is the source of accurate financial information about the county's finances?
And the County Mayor tells the public that the audit is the county's financial Bible?
More on 2001 tomorrow.
It has not been a pleasant experience in finding out what has been going on. It is very difficult to put this information out. I used to have a great deal of trust in people, and I thought that elected leaders always had the interests of the public and taxpayers foremost in their thoughts.
Now I know that you should continue to have a level of trust in people, but you better verify everything just to be sure that you are not surprised down the road.
As I start on this series, I am prepared for the personal attacks that are inevitable whenever the truth is told about county finances.
I just hope that those who always explode with anger and pent-up rage and personal attacks will count to 35,000 (exactly the number of dollars reported as spent on electricity in the 2001 audit) before they explode.
Hamblen County is in difficult financial times. Our financial problems can be solved, but our ability to find solutions is limited unless we face the truth of what has happened and face our problems with that knowledge.
A willingness by all parties to co-operate in measures that promote accountability and that control spending would be a good first step. A willingness to provide accurate financial information to the county commission and to the public would be an excellent second step. And a willingness to address and deal with facts and not personalities, while avoiding rants, would be a nice idea, too.
I have discussed audits periodically. Now it’s time to look at our recent county audits—starting with the 2001 Hamblen County audit.
If you have attended commission meetings or watched them on cable TV, you may have heard County Mayor David Purkey label the county audit as our “financial Bible” as though it is the final and accurate source of information about county finances.
In light of what I will present here about the 2001 county audit, it is unlikely that anyone could or should ever consider Hamblen County’s audit as a financial Bible or as an accurate source of information.
With Enron, Worldcom, and other auditing scandals, it is unlikely that the general public (or even auditors themselves) would make a sweeping claim of financial accuracy and infallibility when they know that a financial audit, such as the one performed for the county, is only a review of a small sampling of transactions along with a review of some county commission minutes and a review of compliance with a number of state laws and regulations.
Financial audits, as the Comptroller of the State of Tennessee has stated, are limited in scope and are not intended to detect fraud, waste, or abuse. (See my post of November 2, 2005, quoting the State Comptroller’s Office).
NOTE: While auditors do not look for fraud, waste, or abuse, it is possible that a financial audit, if it just happens to review a questionable transaction among its regular small audit sampling, might make a report of that transaction for further review and additional audit work.
There are a number of people who have been told and who perhaps believe that surely an audit at least provides accurate income and spending records for departments and agencies of county government.
County audits have a function, but the State Comptroller has noted that the function is very limited.
Accounting scandals involving huge companies that were "audited" by top-notch auditing firms indicate that financial audits are only as good and thorough as the auditor, only as complete as the number of transactions that are reviewed, and only as accurate as the information that is provided to the auditor by the county government.
If you take even a brief look at the 2001 county audit (for which taxpayers paid about $28,000 to the previous local private auditors), you will see that the auditor either ignored or encouraged the presentation of useless and false “spending records.”
The spending records provided by the County Mayor, as the county’s chief financial officer, to the auditor in 2001 have been manipulated and altered through multiple adjustments at the end of the year, and the use of these records in preparation of the official county audit of actual spending makes a mockery of the concept of financial accountability.
The 2001 audit is full of spending records that have been purposely altered and adjusted and manipulated at year end apparently for two reasons: (1) to make it appear to the Commission and to the public that numerous spending totals as of 6/30/01 were exactly the same as the perfectly even spending amounts that had been budgeted; and (2) to shift spending amounts around to control spending amounts that were reported for various departments.
Certain year-end audit adjustments are normal--such as when one finds that gasoline has mistakenly been paid out of an insurance line item.
However, what are termed “adjusting entries” in the 2001 audit are more appropriately termed “audit manipulations” in my opinion. The manipulation of line item after line item with these adjustments at the end of 2001 fiscal year (6/30/01) led to the presentation of false and misleading records and reports of county spending within departments.
Here are just a few of the approximately 80 examples of exact spending amounts from the 2001 audit:
Election Commission:
Exactly $1,500 budgeted for travel; exactly $1,500 spent.
Exactly $1,500 budgeted for office equipment; exactly $1,500 spent.
Planning Commission:
Exactly $2,000 budgeted for gasoline; exactly $2,000 spent.
Exactly $7,900 budgeted for office equipment; exactly $7,900 spent.
County Courthouse (buildings):
Exactly $35,000 budgeted for electricity; exactly $35,000 spent.
Property Reappraisals:
Exactly $4,000 budgeted for legal services; exactly $4,000 spent.
Exactly $3,500 budgeted for postal charges; exactly $3,500 spent.
Juvenile Court:
Exactly $3,500 budgeted for evaluation and testing; exactly $3,500 spent.
Exactly $1,000 budgeted for travel; exactly $1,000 spent.
Exactly $2,800 budgeted for office equipment; exactly $2,800 spent.
Sheriff’s Department:
Exactly $70,500 budgeted for health insurance; exactly $70,500 spent.
Exactly $4,000 budgeted for other equipment; exactly $4,000 spent.
Jail:
Exactly $15,000 budgeted for overtime pay; exactly $15,000 spent.
Exactly $72,000 budgeted for health insurance; exactly $72,000 spent.
Exactly $5,000 budgeted for other supplies/mtls; exactly $5,000 spent.
Exactly $6,500 budgeted for other charges; exactly $6,500 spent.
I could go on and on, but anyone with common sense can see what’s up. If anyone thinks that you can budget to the penny and then end up with exact spending totals with absolute, to-the-penny accuracy as shown in the above sampling of audit entries, then I have lots and lots of swamp land in Arizona to sell you.
Just how did the county end up with these "perfect spending” numbers? Through end-of-year manipulation of spending records—manipulations that were given the name “audit adjustments” or "adjusting entries."
Here are two examples of "adjusting entries" that were made at the end of the fiscal year (6/30/01) by the Finance Department in the Office of the County Mayor to make spending amounts appear exact (but inaccurate) in the 2001 audit:
Jail Insurance was $104,284.42 as of 5/25/01.
Then on 6/30/01 there are two entries. One is an adjusting credit entry of $43,573.84. The other is a debit entry of $11,289.42.
$104,284.42 – 43,573.84 + 11,289.42 = exactly $72,000.00 reported as jail insurance costs in the 2001 audit
County Courthouse (buildings) Electricity was $41,455.21 as of 6/8/01.
On 6/30/01, there is an adjusting credit entry of $6,455.21.
$41,455.21 – 6,455.21 = exactly $35,000.00 reported by the auditor as electricity costs in the 2001 audit
When have your household electricity, insurance, travel, or gasoline costs ended up exactly $1,500, exactly $2,000, exactly $6,500, and on and on?
Now about that 2001 Financial "Bible"?
Who manipulated the actual spending records for the General Fund at the end of the year and why? Who gave the financial information to the local, private auditors to report in the audit?
How could an auditor accept and report these obviously manipulated spending numbers as the "actual" record of department spending?
What did each department really spend on these line items and what was the real total of spending for each department?
No wonder the county had deficit spending in 8 of the 12 years from 1992-2003. Apparently, no one was told and no one ever knew what had really been spent in the previous year! And no one asked!
And the County Mayor tells the public that the Hamblen County audit is the source of accurate financial information about the county's finances?
And the County Mayor tells the public that the audit is the county's financial Bible?
More on 2001 tomorrow.
It has not been a pleasant experience in finding out what has been going on. It is very difficult to put this information out. I used to have a great deal of trust in people, and I thought that elected leaders always had the interests of the public and taxpayers foremost in their thoughts.
Now I know that you should continue to have a level of trust in people, but you better verify everything just to be sure that you are not surprised down the road.
As I start on this series, I am prepared for the personal attacks that are inevitable whenever the truth is told about county finances.
I just hope that those who always explode with anger and pent-up rage and personal attacks will count to 35,000 (exactly the number of dollars reported as spent on electricity in the 2001 audit) before they explode.
Hamblen County is in difficult financial times. Our financial problems can be solved, but our ability to find solutions is limited unless we face the truth of what has happened and face our problems with that knowledge.
A willingness by all parties to co-operate in measures that promote accountability and that control spending would be a good first step. A willingness to provide accurate financial information to the county commission and to the public would be an excellent second step. And a willingness to address and deal with facts and not personalities, while avoiding rants, would be a nice idea, too.
Tuesday, January 03, 2006
January 3, 2006 Those who ask questions need not apply
Today's post will touch on a certain change in committee membership made by Commission Chair Joe Spoone in November 2005.
Commission Chair Joe Spoone, who is the brother of school board chairman Carolyn Spoone Holt, revised the Hamblen County Commission committees effective with the November committee meetings.
There was one committee where only one change was made. Chairman Joe Spoone removed me from the Audit Committee.
Before I was ever elected to county commission, I did research about county finances.
I ran for office because of my extensive research and concerns about county finances, school finances, deficit budgets, questionable bidding procedures, rising taxes, and the overall lack of accountability for the spending of tax dollars.
I am a fiscal conservative. I have encouraged spending reductions where possible, and I have refused to support deficit budgets.
Commission Chair Joe Spoone, who is the brother of school board chairman Carolyn Spoone Holt, revised the Hamblen County Commission committees effective with the November committee meetings.
There was one committee where only one change was made. Chairman Joe Spoone removed me from the Audit Committee.
Before I was ever elected to county commission, I did research about county finances.
I ran for office because of my extensive research and concerns about county finances, school finances, deficit budgets, questionable bidding procedures, rising taxes, and the overall lack of accountability for the spending of tax dollars.
I am a fiscal conservative. I have encouraged spending reductions where possible, and I have refused to support deficit budgets.
Despite the depth of my research and my knowledge about county finances and audits, Joe Spoone took me off of the county's Audit Committee.
The previous members were Edwin Osborne, Maudie Briggs, Herbert Harville, Ricky Bruce, and Linda Noe.
The members now are Edwin Osborne, Maudie Briggs, Herbert Harville, Ricky Bruce, and Larry Baker.
I did not ask to be taken off of the committee. In fact, I had e-mailed Chairman Joe Spoone on October 5, specifically asking to be left on the Audit Committee as well as the other committees that I served on. Since I had asked to be left on but was removed anyway, I called Commissioner Baker, my replacement, to see if he had perhaps asked to be put on. He hadn't.
So what happened between October 5, when I asked to be left on the Audit Committee, and November, when I was removed from the Audit Committee? Well, there was a commission meeting on October 20th where Joe Spoone got really bent out of shape after comments were made about his multiple conflicts of interest in voting on school issues.
Joe got very upset at the start of the October 20th meeting when a gentleman from the audience brought up Joe's almost never-ending conflicts of interest, family relationships, and economic ties to the School Board.
After pointing out that Joe Spoone's wife (Charlene Spoone) is a school system employee, that Joe's brother (James Spoone) is a school system employee, and that Joe's sister (Carolyn Spoone Holt) is chairman of the School Board, the gentleman asked Joe (along with Herbert Harville and Ricky Bruce who also have close family ties to the school system) not to vote on a school issue that was in front of commission at that meeting and not to vote on school issues at future meetings because of ethical, family, and economic conflicts of interest.
Joe got mad again later in the same meeting when I commented that I agreed with the gentleman's statement that Joe has ethical and economic conflicts of interest in voting on school issues because of not just one, but at least three close personal, family, and economic ties to the School System.
Questions about Joe's conflicts of interest are actually nothing new. They've been raised before by various people and even by other commissioners.
If Joe really believes in his heart that he has no ethical, personal, family, or economic conflicts in voting on school issues with his sister Carolyn Spoone Holt serving as chairman of the School Board and his brother James Spoone and wife Charlene Spoone employed by the school system, then Joe just needs to keep saying that all his family and economic ties to the school system have no effect on him or on his vote whenever a school funding issue comes before commission.
Joe really doesn't need to get mad at those who have a different opinion. The gentleman who spoke about Joe's conflicts (Mr. Dollar) didn't say, and to my knowledge no one is saying, that Joe shouldn't be a commissioner just because of all his conflicts.
All that anyone has said is that it must be impossible, or awfully difficult, for Joe to push aside all thoughts of his wife, sister, and brother and try to forget all of his economic ties to the school system when he votes on school issues.
All Mr. Dollar said was that when there are school issues before the commission, maybe Joe shouldn't vote--to avoid even the appearance of the conflicts of interest that are so obvious to everyone.
I don't know if taking me off the Audit Committee is related to my questioning Joe's apparent conflicts of interest on October 20th. Joe never did call or e-mail me to discuss my October 5th e-mail to him with my request to remain on the Audit Committee.
Taking me off the Audit Committee and putting somebody on who has no interest in that Committee--well, it does make you wonder. Getting taken off the Audit Committee shortly after I said what everyone else knows (Joe Spoone has ethical and economic conflicts of interest in voting on school issues)--well, the timing does make you wonder. But, hey, that's fine.
I'll still attend, ask questions, and provide information at Audit Committee meetings (if there are any).
I'll still ask questions, I'll still be open, and I'll still provide information to the public like I always have.
I will continue to be a watchdog for taxpayers.
I will continue to protect and check on the spending of taxpayer dollars... whether or not I'm a commissioner and whether or not Joe Spoone allows me to serve as a member of the Audit Committee.
I will support paying down the county's debt instead of saddling our children and grandchildren with more and more debt payments.
I will not be a rubberstamp for more and more spending.
I will not be a supporter of higher taxes and deficit budgets.
In singling me out, I guess Joe just didn't realize that other commissioners and citizens make comments about Joe's conflicts of interest all the time--they just do it behind Joe's back.
Because Joe couldn't challenge or refute the truth of what Mr. Dollar had said about Joe's conflicts of interest in voting on school issues, Joe pulled out the old "attack the messenger" trick from the political dirty tricks bag.
But Joe didn't have the guts to attack Mr. Dollar who had brought up Joe's conflicts of interest.
So in response to questions about Joe's conflicts of interest, Joe didn't say that he had no conflicts. Instead, Joe ran to the Tribune to talk about my insurance plan.
Well, the facts are quite simple, but Joe left a bunch of them out.
Six commissioners are covered under the county's insurance plan: Larry Baker, Doyle Fullington, Tom Lowe, Linda Noe, Nancy Phillips, and Bobby Reinhardt.
Joe Spoone apparently had individual coverage under the county plan for about 16 months from about March 2003 to June 2004 and is now covered only under the government-provided school insurance plan of his wife Charlene as her dependent.
The article wasn't clear on whether Joe was covered under two plans (his individual county plan and his wife's school plan) for 16 months before he finally dropped his individual coverage under the county plan or whether Joe was covered only under the county plan for 16 months while his wife Charlene carried health insurance for herself and their children (but not Joe) for that 16 months before Joe finally dropped his county plan and was added as another dependent under Charlene's school health insurance.
Joe didn't mention, and the reporter didn't report, that three commissioners --Guy Collins, Donald Gray, and Herbert Harville-- don't carry county insurance because they are already covered under government-provided Medicare insurance.
Joe didn't mention, and the reporter didn't report, that another commissioner--Dennis Alvis-- is a city government employee who doesn't carry county insurance because he is already covered under the city government insurance.
Apparently 11 of the 14 commissioners, including Joe Spoone, are covered by some sort of government insurance.
So why was Joe talking about insurance and insurance plans? The issue was school-commission conflicts of interest where commissioners have moral or ethical conflicts of interest in voting on school issues because of their family and economic ties to the school system.
Now, if I or any other commissioner had a spouse employed by the school system (like Joe does), then I could see where Joe would run to the paper and cry "foul" about my comments about his school-commission conflicts of interest.
If I or any other commissioner had a brother employed by the school system and a sister who was school board chairman (like Joe does), I could see where Joe would run to the paper and cry "foul" about my comments about his school-commission conflicts of interest.
If I or any other commissioner had insurance coverage through my spouse's insurance with the school system (like Joe does), I could see where Joe would run to the paper and cry "foul" about my comments about his school-commission conflicts of interest.
But I don't have the specific and multiple conflicts that Joe does. So why did Joe run to the paper with a story that wasn't even about the school-commission conflicts of interest that Mr. Dollar brought up?
Maybe Joe just wanted to confuse things and get the discussion away from the real issue and the facts that Mr. Dollar stated so clearly: Joe Spoone has personal and ethical conflicts in voting on school issues.
Having insurance never was the issue--except in Joe Spoone's situation where the insurance is a part of bigger and multiple school-commission conflicts of interest.
With Joe Spoone, his wife's employment by the school system creates a conflict.
With Joe Spoone, his brother's employment by the school system creates a conflict.
With Joe Spoone, his sister's position on the school board creates a conflict.
With Joe Spoone, his conflicts in voting on school issues are all over the place.
joe's wife Charlene is employed by the School System. Her income and benefits such as insurance, retirement, etc. are received by the Spoone household and benefit Joe Spoone.
Joe Spoone's ethical and economic conflicts of interest in voting on school issues are there for all to see.
Joe Spoone is mad about any public mention of his conflicts of interest. Why? Because they are true. Because they are obvious. And because they can't be denied. And, in my opinion, Joe's anger has got the best of him.
Maybe Joe's anger prompted him to remove me from the Audit Committee or maybe it was just coincidence that he removed only me from the Audit Committee right after I spoke out about his conflicts of interest.
Regardless, I hope that the new Audit Committee will meet sometime soon, and I wish it well. The old Audit Committee just quit meeting after an August 2005 meeting where the County Mayor stated that he would not answer 2004 audit questions, among which were questions about his actions in switching money from fund to fund without getting commission approval as required by state law.
There's a lot to do if anyone is paying attention. There's a lot to do if anyone has the courage to tackle the problems that plague our county finances.
January 4, I will start a multi-part blog series on our county finances, and I will start with a look at recent county audits. Here is just a small preview of the information that will be provided.
Although I was not on county commission during the 2001 audit year that ended 6/30/01, I reviewed that audit. I am not a CPA, but frankly it doesn't take a CPA to spot the obvious falsity and the manipulation of county spending records and other questionable reporting in the 2001 audit.
This is why the statement "trust but verify" should be the policy of the Hamblen County Commission and of the citizens and taxpayers of Hamblen County.
Although I was not serving on county commission during the 2002 audit year that ended 6/30/02, I have reviewed that audit. I am not a CPA, but frankly it doesn't take a CPA to spot serious problems when your chief financial officers are telling the public that county finances are OK in April 2002 (Citizen-Tribune article by Robert Moore, headline "County Spending Within Bounds" April 17, 2002) and then when you get the audit for the fiscal year ending June 30, 2002, you find that actually the county spent $923,000 more than it took in.
If county officials thought that spending $923,000 more than you were taking in meant that county spending was "within bounds" in 2002, then you have to wonder what county financial reports really mean.
In that same article it was reported that back in 2001, the audited spending in the county's four major funds (excluding schools) was $14.8 million dollars. That was false. The 2001 audit actually reported that approximately $16.5 million had been spent in the county's four major funds (excluding schools).
In other words, about $1.7 million dollars more had been spent in 2001 than the county officials were reporting. I guess the paper decided to just trust and forgot to verify the factual information it was given and was reporting.
That is why the statement "trust but verify" should be the policy of the Hamblen County Commission and the citizens and taxpayers of Hamblen County.
In the upcoming blog series, I will start with a look at the 2001 audit and then proceed to a review of the 2002 audit, an audit that showed the County with its largest deficit spending in recent history (going back as far as 1992).
How can you have more money and revenues and still end up in the hole--again?
By spending more than you take in--again.
Then we'll move to the 2003 audit, the first audit performed by state auditors. Before I took office, the previous commission had tricked the public ("pick your poison") into approving continuation of the temporary wheel tax. The previous commission, in its last official act in August 2002, then approved a 15-cents property tax on top of the wheel tax extension.
Despite the continued wheel tax revenue and new property tax money, when the new auditors came in to audit the county's books on June 30, 2003, they found that the county general government fund was "broke."
The only reason you didn't hear reports that the county was "broke" on June 30, 2003, was because the state auditors allowed money to be moved from several small side funds into the general fund to get the general fund out of the red.
If the state auditors had not approved dumping money from these other funds into the county government general fund, then the county general government fund would indeed have been officially, instead of unofficially, "broke." Wonder what that would have done for the county's bond ratings?
As it was, even with money from other funds being dumped into the General Government Fund, the General Fund on June 30, 2003, was at its lowest level since 1992.
If you are a voter and a taxpayer, it may be hard to understand how the county could have been in its worst economic position ever on June 30, 2003, when the wheel tax had just been extended and when the old county commission had just passed a 15-cent property tax increase in August 2002 on top of the wheel tax extension.
The answers are simple:
The county spent more than it took in--again.
Revenues increased, but spending increased even more--again.
In January and February, a lot of people will be going to the Courthouse to pay their property taxes. If ever-increasing taxes bother you, if your tax bill is higher than in previous years, if you are concerned about accountability and ethics and openness in government, I invite you to return to this blog in 2006 and see what has been, and is being, done with your money.
I will continue to put forth proposals to provide for more accountability, more openness, better oversight of county spending by county commission, clear identification of county vehicles (other than undercover vehicles), broader citizen involvement on committees and boards, and accurate inventories of county taxpayer property.
It has been difficult, expensive, and time-consuming to get a lot of the financial information that I have. It has required a lot of time to sift through the many documents and reports. But the taxpayers and citizens of Morristown and Hamblen County foot the bill, and they have a right to know how their money is spent.
Whether you're a commissioner or a citizen, you have the right to get government documents, you have the right to know how your money is spent, and you have a right to insist on straight answers from your government.
Monday, January 02, 2006
January 2, 2006 A New Year and Lots of Information for the Public
Happy New Year!
2006: A new year and a new date to remember to print or type on checks and letters. It's always a struggle to do this at the start of the new year. You've just spent 365 days putting "2005" on checks and letters and suddenly you have to switch dates.
Although there's a new date on this blog, the focus of noe4accountability will remain the same---protecting county dollars and promoting accountability and openness at every level of government.
As I have done at committee and commission meetings, this blog will offer commonsense suggestions for improving the financial status of Hamblen County and increasing accountability for the wise spending of county dollars.
If you have suggestions for a topic or if you wish to make a comment, please submit your idea or comment by e-mail to noe4accountability@yahoo.com or you can mail your suggestion or comment to 2343 Joe Stephens Road.
Please be sure to include your name and address and phone number in any communication.
The only exception to the requirement of name, address, and phone number would be where you have knowledge and facts (no rumors) to share about a problem area in county government or where you have a suggestion to improve the functioning of local government but you are concerned about potential retaliation if your name is revealed as the source of the facts or suggestion for improvement.
2006: A new year and a new date to remember to print or type on checks and letters. It's always a struggle to do this at the start of the new year. You've just spent 365 days putting "2005" on checks and letters and suddenly you have to switch dates.
Although there's a new date on this blog, the focus of noe4accountability will remain the same---protecting county dollars and promoting accountability and openness at every level of government.
As I have done at committee and commission meetings, this blog will offer commonsense suggestions for improving the financial status of Hamblen County and increasing accountability for the wise spending of county dollars.
If you have suggestions for a topic or if you wish to make a comment, please submit your idea or comment by e-mail to noe4accountability@yahoo.com or you can mail your suggestion or comment to 2343 Joe Stephens Road.
Please be sure to include your name and address and phone number in any communication.
The only exception to the requirement of name, address, and phone number would be where you have knowledge and facts (no rumors) to share about a problem area in county government or where you have a suggestion to improve the functioning of local government but you are concerned about potential retaliation if your name is revealed as the source of the facts or suggestion for improvement.
Friday, December 23, 2005
December 23, 2005 Merry Christmas To All
Merry Christmas to everyone!
I have not posted to my blog as regularly during December as I would have liked. After several family illnesses in November, everything is just now getting back to normal. I again thank all who have called with words of encouragement and all those who lifted our family in prayer.
This will be my last post until after Christmas, and it will touch on some of the highlights of the regular December meeting of the Hamblen County Commission.
If you received the local newspaper on Wednesday, December 21, you may have noticed something new. On Page A-3 of the paper, there was a list of Hamblen County Commission agenda items. At the December 12th committee meetings, I asked that we have the County Mayor request that the local newspaper publish the Commission agenda each month.
I received a telephone call the next day from Tribune reporter Stan Johnson to let me know that he thought it was a good suggestion and that the Mayor had discussed this with the paper soon after the committee meeting and that it was a "go."
I certainly want to thank the Tribune for agreeing to publish the agenda, and I also want to thank Stan Johnson, who was present at the committee meeting where I introduced the proposal, for his support as well.
Letting people know what is going to be considered at public meetings of the county commission is another indication of openness and a desire to encourage public participation. Openness and public participation are vital to the proper functioning of government at all levels in the United States.
At the beginning of our meeting, two groups of local athletes were honored. The Morristown West High girls cross-country team was recognized for its first place finish in the state. This team has consistently performed well through the years and finished 2005 with a 192-7 record and the AAA state championship. Raymond Farmer and Jan Haney are the girls cross-country coaches. Also honored were students who are members of the local trap shoot club. Several student members of this trap shooting team took individual and group honors at the state level.
In addition, Dr. Cleland Blake, who has served as the county's pathologist, was recognized at the beginning of the meeting for his many years of service to the county.
In the business portion of the meeting, the FINANCE COMMITTEE REPORT was first.
1. The report of checks paid by the Office of the Hamblen County Mayor were approved.
2. A meeting to consider a local Private Act to determine possible uses of the Hospital Debt Fund excess interest monies will be scheduled sometime prior to the regular January 9th committee meetings.
3. A bid was awarded for Entrance Signs to Hamblen County. A grant for these signs was secured about 6-7 years ago. It has apparently taken many years to work out right-of-way problems. No money was requested from commission during the 05-06 budget process for the county grant match of about $10,000, so the problem yesterday was where do you get the matching money now that you have a bid and are ready to get started.
Finance Director Nicole Epps said that the county's employee benefits (insurance) budget was probably going to be under budget and that the $10,000 match could come from a line item there. Sounds easy enough--until you realize that while that one line item may be under, several other line items in the county budget will be over (Finance Director Epps admitted that the medical line item in the jail budget is one item that will be overbudget.) Sounds easy enough until you realize that the county already has a deficit budget and plans to pay its bills by spending all of its current revenues plus taking money out of its fund balance (savings).
The proposed signs are very attractive. I support using the grant money and providing the local match for them, but I voted "no" on taking the matching money out of a line item in the general fund that is under budget when we know that other line items are over and when we know that the general government budget as a whole is in the red. There are other sources for this matching money--one of which is the Hospital Debt Fund which was used for matching grant money for Sheriff Otto Purkey earlier in 2005.
4. The request from M-H Library Board Chair Bill Brittain to provide extra money for the search for a new director failed for lack of a second. County Trustee Bill Brittain, as library board chairman, had asked for $2,500 from the county. The Finance Committee in a 5-3 vote on December 12th had recommended funding $1,000 if money was available in the county's advertising budget. Finance Director Epps reported on December 22nd that the county's advertising budget did not have any money to spare, so no action was taken on the request.
5. Commissioner Harville reported that the Finance Committee had taken no action on the proposal to open up the process in the way the county awards professional services contracts for architectural and engineering work. I mentioned that I would bring this item up again in January because allowing several firms to submit proposals and then choosing the best overall proposal will result in savings to the county and to county taxpayers. Although you can do what the county has been doing and just pick somebody without asking for other proposals and without considering other firms, it is hard to understand why the county doesn't open things up and consider proposals from several firms. There are many firms that can provide these services. The current process, however, is to pick someone and sign a contract with them without considering other firms.
6. A budget amendment to the Hamblen County Schools budget passed to provide for the spending of well over $1,000,000 more money on schools. About $600,000 of the new spending is money that is being pulled out of the school system's fund balance. That makes a total of about $1.4 million of its fund balance that the school system is using this year. Despite new local money and additional state money, the Hamblen County school system has a deficit spending plan for 05-06. Just as I am concerned about the county's 05-06 deficit budget, I am concerned about the school system's deficit budget. The saving grace in this is that most of the $1.4 million that the school system is pulling from its fund balance is geared to one-time expenditures that should not affect the next year's school operating budget. I voted in support of the amendment, but I expressed my concern on the record about pulling more and more from fund balance.
CONSTRUCTION OVERSIGHT COMMITTEE REPORT
1. The Construction Oversight Committee reviewed a written "Facility's Program" report provided by the architect for the 2nd floor jail renovation. The Committee recommended that the architect proceed as per the "Facility Program" outline. This involves the "build-out" of the 2nd floor shell in the previously completed (2004) Justice Center Addition. After Mayor Purkey and Commissioner Nancy Phillips discussed at length the issue of stairs and their location in the facility, I asked that the recommendation to proceed include a provision that the architect submit schematic drawings to the committee so the stairs issue can be discussed and resolved before the architect starts on his drawings. [Although there is an elevator in the plans, obviously a fire or power outage or other problem could render it useless in the event of an emergency. Commissioner Phillips has apparently had several jail employees express a concern about this. ] Fortunately, the commission agreed to include the provision that the architect provide schematics to the committee/commission and that we try and get this resolved before final plans are drawn and the project is put out to bid.
PUBLIC SERVICES COMMITTEE
1. Discussion of a downward revision of the fees charged by the Planning Commission for mobile home permits was put off until additional information can be obtained and further discussion can take place between the Planning Commission and the Hamblen County Commission. Under the old fee schedule, the cost of a single-wide mobile home permit averaged $72.00; a double-wide, $219.00. Under the new schedule which is based on square footage, a single-wide averages $199.00; a double-wide, $358.00.
2. The Commission approved the appointment of two judicial commissioners for General Sessions Court. Each judicial commissioner will be a current employee who will receive $300/month in additional pay out of the current budgets of General Sessions Court and Circuit Court for assuming additional duties.
3. The Commission voted unanimously to have County Mayor David Purkey send a letter to the City of Morristown with a copy to the EPA expressing concern about the sewer odor in Witt and Roe Junction communities and requesting a reply as to what action will be taken. [The committee recommended this on Dec. 12th. The City had an article about this in the paper shortly afterward.]
4. The county's seldom used chipper/shredder will be put out for sale. It doesn't work well with wet wood, and there apparently isn't enough manpower to operate it. I asked that it be put on several surplus property sites, being sure to put it on the state of Tennessee's huge surplus property listing to try and maximize the number of people who see and bid on this item.
5. The Commission approved the purchase of lifters for a garbage truck in order to add an additional truck to current garbage routes and speed up the pick-up process. Road Superintendent Barry Poole said that the money to purchase the lifters could be found in the current garbage budget.
6. The handling of visitor's comments at commission meetings is to be continued at the January meeting of the Public Services Committee. This is a very important issue.
7. Appointment of Jail Inspectors will be considered at the January meeting of the Public Services Committee. I introduced this item at the December committee meeting, so it can be reviewed and a full discussion can take place in January. With the many Jail problems we have had over the past several years, it seems wise to appoint three individuals to act as jail inspectors as allowed by state law.
These individuals could be appointed in January, and among their duties would be inspecting the jail monthly and providing a report to county commission monthly. It seems appropriate to try to handle our jail issues locally and to keep informed on a monthly basis instead of having state inspectors come in and tell us that our jail is de-certified. I hope that a reasoned discussion of this can take place in January although I expect opposition to this very modest proposal from some who will say that commission should just provide money and stay out of the way. I will discuss this more in future posts.
8. As I mentioned earlier, the Tribune was asked and has already agreed to publish commission agendas as a public service before each meeting. Even though it's already taken care of, we voted on this proposal that I brought up in Committee on Dec. 12th just to make it an official part of the minutes and to express our thanks to the Tribune for their co-operation in this.
SEMI-ANNUAL REPORT FORM THE COUNTY MAYOR
During open discussion at the end of the meeting, I asked that the County Mayor, who is required by state law to provide a semi-annual report to the commission, include in that report in January an updated statement and analysis of our revenue and expenditures for the current budget year. I would like to see updated revenue projections (that would indicate whether the county revenue is likely to be within, over, or under the originally budgeted amounts) and updated expenditure projections (that would indicate whether county expenditures are likely to be within, over, or under the originally budgeted amounts).
The purpose in requesting this is to get a picture of where we actually stand at the half-way point of the current fiscal year in connection with revenue and spending.
Surprisingly, or maybe not so surprisingly, the County Mayor did not like this request.
What the Mayor has provided in the past as his semi-annual report (6-month) is the same type of report we already get each month...a report that shows the amount budgeted, the amount spent at that point, and the amount remaining.
The raw data is helpful but could be misleading without additional financial information. As an example, the raw data that we get might show at the 6-month point that the county budgeted $100,000 for liability insurance, spent $70,000, and has $30,000 remaining in "avilable funds" for the last 6 months. If you just looked at those raw figures, you might think there is a serious problem with $70,000 spent in the first 6 months and only $30,000 left in the liability insurance budget for the last 6 months.
Only someone who has actually seen the invoices and has been paying the bills (County Mayor or Finance Director) could tell you if it's really a problem or if everything is actually O-K because that's just the way the insurance premium is scheduled to be paid--- 70% of the costs are billed and paid in the first 6 months of the policy term and 30% of the costs are billed and paid in the last half of the policy term.
Those who write the checks and see the invoices know and can report more than the simple fact that a check has been written. There's a lot more to being the county's chief financial officer (County Mayor) and being the Finance Director than just writing checks. These positions involve thoughtful analysis and review of the county's financial position throughout the year and checking with the trustee to see what the revenue picture is, too.
The above example should how you might think there was a problem when there actually was none. The opposite could occur as well. Let me put this on a family budget level. Let's say that you budgeted $1000 for car insurance for a year. After six months, you show your wife or husband that you have paid out $500 for car insurance so far. He or she thinks everything is fine. [What you don't tell your husband or wife is that you just got a renewal premium in the mail and that the cost for the last 6 months of your budget year is going to be $700.]
Going on the raw data that shows you spent $500 in 6 months and thinking that the next 6 months will be the same--another $500-- your wife or husband thinks that you are within your $1,000 insurance budget.
But you and only you (the one who receives the premium, talks to the agent, and writes the checks) know that there is a problem and that this budget item will be $200 overbudget at the end of the year.
That's all I would like the County Mayor and Finance Director to do. Give county commission and the taxpayers a "complete statement of the financial condition of the county" based on what the Mayor and Finance Director know about expenditures and invoices and based on what budget information they request from other department heads about the expenses remaining in various budgets.
The county was presented with and passed an initial budget for fiscal 05-06 in which the county expects to spend about $450,000 more than it takes in--we're starting with a deficit budget where the county makes up the $450,000 revenue shortfall/excess spending by pulling money out of its savings or fund balance.
Since we know we are starting out with a plan (budget) to spend more than we take in, all elected officials and department heads need to be watching revenue and expenditures closely. Halfway into the budget year, there should be a report from the county's chief financial officer that pulls all the financial information together and provides a "complete statement of the financial condition of the county."
Six months into the fiscal year, county commission should be asking those who are most closely involved in compiling and presenting the county budget, those who are directly involved in reviewing invoices and paying bills, and those who collect and deposit all county revenues whether their opinion and analysis is that we are still on target to collect the total amount of revenue originally projected (or whether more or less is likely to come in) and whether we are still on target to be within the total amount of expenditures originally projected (or whether more or less is likely to be spent).
REVENUE: The best scenario would be that we now expect to collect more revenue than was shown in the original budget projections.
EXPENDITURES: The best scenario would be that we now expect to spend less than was shown in the original budget projections.
But we won't know where we the county stands financially until there is a semi-annual report that provides new and updated revenue and expenditure information or projections.
And that's what I asked for at the end of the December meeting---an updated review of our remaining revenues and expenditures. In our current monthly expenditure reports, we are given information in several financial columns. One column is original budget amount, then comes a column for amount spent to date, and the last column is labeled "available funds" left in that spending line item.
Families review their budgets periodically to see if they are going to have enough money to meet all their remaining expenses. Halfway through the year, the County Mayor and his Finance Department should be checking the status of the county budget and letting commission know if the "available funds" that are shown in each line item of our financial reports are really expected to cover the remaining expenses that are projected for that line item--and if the total of all "available funds" will cover all remaining expenses.
You could have a line-item that shows "available funds" in the amount of $5,000. But what if you project that there is still $10,000 that is going to be billed in that line-item? You could find that the total of all "available funds" might be $4,000,000 at the 6-month point. But what if you are projecting that there is still $4,800,000 that is going to be spent to cover all remaining expenses?
If there is a problem area in the budget, you need a heads-up and early warning in order to take corrective action. That's why periodic financial reports are important, and that's why semi-annual report and periodic quarterly reports are important and should include a footnote to the column that says "available funds."
The column that shows "available funds" just provides raw financial data. The missing piece is an updated financial analysis and report from the County Mayor and his Finance Director that tells county commission that the "available funds" in the Mayor's report will likely cover the spending projected for the remainder of the budget period. There is a major difference, for example, in being told that you have $400,000 in "available funds" and that this amount will likely cover all remaining projected expenses for the year and being told that you have $400,000 in "available funds" but that this amount will likely not cover all remaining projected expenses for the year.
If there are complaints by our chief financial officer or others that reviewing our financial position periodically and including an updated financial analysis in quarterly or semi-annual financial reports is more work, then so be it.
Providing raw financial data and doing periodic financial reviews and updates are just part of being the county's chief financial officer and should include a statement about whether "available funds" are adequate to cover projected remaining expenses.
County Commission should request a more complete and updated financial review of county revenues and expenditures starting with the January 2005 semi-annual report (7/1/05-12/31/05). The current reports already provide the raw financial numbers on revenues and expenditures. The only extra bit of information that is needed at this time is a statement from the County Mayor, Finance Director, and Trustee that they have examined county revenue and expenditures, that they have examined the "available funds" as shown in these reports and that, in their opinion, the available funds likely are or are not sufficient to cover the projected remaining expenses.
Although that sounds rather simple, one has to realize that the County Mayor, Finance Director, and Trustee can continue to provide just raw data and numbers and they can refuse to provide any financial analysis. If they choose to do that and refuse to provide an opinion about the county's complete financial situation, then the responsibility for refusing to provide that information on a quarterly or semi-annual basis and to be accountable for their own data lies with them.
County Commission can do its part by asking for the information. County Commission and individual commissioners who are trying to be accountable to the taxpayers should not refuse to ask for this needed information and financial analysis simply because they are afraid that someone will be upset or doesn't want to provide it.
When you've already got a deficit budget, you have a heightened duty to insist on updated reports and financial analyses from the county's financial officers. We may need to put the brakes on non-vital spending right now to avoid a deeper deficit at the end of the year, or the reports may turn out to be reassuring. Perhaps our revenue projections will be greater than was originally budgeted and we won't even end up with a deficit at year end!
Only one thing is certain---we'll never know what to do and we'll never know where we really stand financially if we don't take the first step as a commission or as individual commissioners and ask for an updated financial analysis in January of the raw revenue and expenditure reports that we will be getting then.
The financial analysis should state (1) REVENUE: whether we are on target to likely meet, exceed, or fall short of the original budgeted revenue amounts, (2) EXPENDITURES: whether we are on target to likely meet, spend more, or spend less than originally budgeted, and (3) putting the new, updated revenue and expenditure information together, the report should be able to state whether the "available funds" in the county budget are likely to be sufficient to meet all county expenses for the rest of the year.
Merry Christmas!
I have not posted to my blog as regularly during December as I would have liked. After several family illnesses in November, everything is just now getting back to normal. I again thank all who have called with words of encouragement and all those who lifted our family in prayer.
This will be my last post until after Christmas, and it will touch on some of the highlights of the regular December meeting of the Hamblen County Commission.
If you received the local newspaper on Wednesday, December 21, you may have noticed something new. On Page A-3 of the paper, there was a list of Hamblen County Commission agenda items. At the December 12th committee meetings, I asked that we have the County Mayor request that the local newspaper publish the Commission agenda each month.
I received a telephone call the next day from Tribune reporter Stan Johnson to let me know that he thought it was a good suggestion and that the Mayor had discussed this with the paper soon after the committee meeting and that it was a "go."
I certainly want to thank the Tribune for agreeing to publish the agenda, and I also want to thank Stan Johnson, who was present at the committee meeting where I introduced the proposal, for his support as well.
Letting people know what is going to be considered at public meetings of the county commission is another indication of openness and a desire to encourage public participation. Openness and public participation are vital to the proper functioning of government at all levels in the United States.
At the beginning of our meeting, two groups of local athletes were honored. The Morristown West High girls cross-country team was recognized for its first place finish in the state. This team has consistently performed well through the years and finished 2005 with a 192-7 record and the AAA state championship. Raymond Farmer and Jan Haney are the girls cross-country coaches. Also honored were students who are members of the local trap shoot club. Several student members of this trap shooting team took individual and group honors at the state level.
In addition, Dr. Cleland Blake, who has served as the county's pathologist, was recognized at the beginning of the meeting for his many years of service to the county.
In the business portion of the meeting, the FINANCE COMMITTEE REPORT was first.
1. The report of checks paid by the Office of the Hamblen County Mayor were approved.
2. A meeting to consider a local Private Act to determine possible uses of the Hospital Debt Fund excess interest monies will be scheduled sometime prior to the regular January 9th committee meetings.
3. A bid was awarded for Entrance Signs to Hamblen County. A grant for these signs was secured about 6-7 years ago. It has apparently taken many years to work out right-of-way problems. No money was requested from commission during the 05-06 budget process for the county grant match of about $10,000, so the problem yesterday was where do you get the matching money now that you have a bid and are ready to get started.
Finance Director Nicole Epps said that the county's employee benefits (insurance) budget was probably going to be under budget and that the $10,000 match could come from a line item there. Sounds easy enough--until you realize that while that one line item may be under, several other line items in the county budget will be over (Finance Director Epps admitted that the medical line item in the jail budget is one item that will be overbudget.) Sounds easy enough until you realize that the county already has a deficit budget and plans to pay its bills by spending all of its current revenues plus taking money out of its fund balance (savings).
The proposed signs are very attractive. I support using the grant money and providing the local match for them, but I voted "no" on taking the matching money out of a line item in the general fund that is under budget when we know that other line items are over and when we know that the general government budget as a whole is in the red. There are other sources for this matching money--one of which is the Hospital Debt Fund which was used for matching grant money for Sheriff Otto Purkey earlier in 2005.
4. The request from M-H Library Board Chair Bill Brittain to provide extra money for the search for a new director failed for lack of a second. County Trustee Bill Brittain, as library board chairman, had asked for $2,500 from the county. The Finance Committee in a 5-3 vote on December 12th had recommended funding $1,000 if money was available in the county's advertising budget. Finance Director Epps reported on December 22nd that the county's advertising budget did not have any money to spare, so no action was taken on the request.
5. Commissioner Harville reported that the Finance Committee had taken no action on the proposal to open up the process in the way the county awards professional services contracts for architectural and engineering work. I mentioned that I would bring this item up again in January because allowing several firms to submit proposals and then choosing the best overall proposal will result in savings to the county and to county taxpayers. Although you can do what the county has been doing and just pick somebody without asking for other proposals and without considering other firms, it is hard to understand why the county doesn't open things up and consider proposals from several firms. There are many firms that can provide these services. The current process, however, is to pick someone and sign a contract with them without considering other firms.
6. A budget amendment to the Hamblen County Schools budget passed to provide for the spending of well over $1,000,000 more money on schools. About $600,000 of the new spending is money that is being pulled out of the school system's fund balance. That makes a total of about $1.4 million of its fund balance that the school system is using this year. Despite new local money and additional state money, the Hamblen County school system has a deficit spending plan for 05-06. Just as I am concerned about the county's 05-06 deficit budget, I am concerned about the school system's deficit budget. The saving grace in this is that most of the $1.4 million that the school system is pulling from its fund balance is geared to one-time expenditures that should not affect the next year's school operating budget. I voted in support of the amendment, but I expressed my concern on the record about pulling more and more from fund balance.
CONSTRUCTION OVERSIGHT COMMITTEE REPORT
1. The Construction Oversight Committee reviewed a written "Facility's Program" report provided by the architect for the 2nd floor jail renovation. The Committee recommended that the architect proceed as per the "Facility Program" outline. This involves the "build-out" of the 2nd floor shell in the previously completed (2004) Justice Center Addition. After Mayor Purkey and Commissioner Nancy Phillips discussed at length the issue of stairs and their location in the facility, I asked that the recommendation to proceed include a provision that the architect submit schematic drawings to the committee so the stairs issue can be discussed and resolved before the architect starts on his drawings. [Although there is an elevator in the plans, obviously a fire or power outage or other problem could render it useless in the event of an emergency. Commissioner Phillips has apparently had several jail employees express a concern about this. ] Fortunately, the commission agreed to include the provision that the architect provide schematics to the committee/commission and that we try and get this resolved before final plans are drawn and the project is put out to bid.
PUBLIC SERVICES COMMITTEE
1. Discussion of a downward revision of the fees charged by the Planning Commission for mobile home permits was put off until additional information can be obtained and further discussion can take place between the Planning Commission and the Hamblen County Commission. Under the old fee schedule, the cost of a single-wide mobile home permit averaged $72.00; a double-wide, $219.00. Under the new schedule which is based on square footage, a single-wide averages $199.00; a double-wide, $358.00.
2. The Commission approved the appointment of two judicial commissioners for General Sessions Court. Each judicial commissioner will be a current employee who will receive $300/month in additional pay out of the current budgets of General Sessions Court and Circuit Court for assuming additional duties.
3. The Commission voted unanimously to have County Mayor David Purkey send a letter to the City of Morristown with a copy to the EPA expressing concern about the sewer odor in Witt and Roe Junction communities and requesting a reply as to what action will be taken. [The committee recommended this on Dec. 12th. The City had an article about this in the paper shortly afterward.]
4. The county's seldom used chipper/shredder will be put out for sale. It doesn't work well with wet wood, and there apparently isn't enough manpower to operate it. I asked that it be put on several surplus property sites, being sure to put it on the state of Tennessee's huge surplus property listing to try and maximize the number of people who see and bid on this item.
5. The Commission approved the purchase of lifters for a garbage truck in order to add an additional truck to current garbage routes and speed up the pick-up process. Road Superintendent Barry Poole said that the money to purchase the lifters could be found in the current garbage budget.
6. The handling of visitor's comments at commission meetings is to be continued at the January meeting of the Public Services Committee. This is a very important issue.
7. Appointment of Jail Inspectors will be considered at the January meeting of the Public Services Committee. I introduced this item at the December committee meeting, so it can be reviewed and a full discussion can take place in January. With the many Jail problems we have had over the past several years, it seems wise to appoint three individuals to act as jail inspectors as allowed by state law.
These individuals could be appointed in January, and among their duties would be inspecting the jail monthly and providing a report to county commission monthly. It seems appropriate to try to handle our jail issues locally and to keep informed on a monthly basis instead of having state inspectors come in and tell us that our jail is de-certified. I hope that a reasoned discussion of this can take place in January although I expect opposition to this very modest proposal from some who will say that commission should just provide money and stay out of the way. I will discuss this more in future posts.
8. As I mentioned earlier, the Tribune was asked and has already agreed to publish commission agendas as a public service before each meeting. Even though it's already taken care of, we voted on this proposal that I brought up in Committee on Dec. 12th just to make it an official part of the minutes and to express our thanks to the Tribune for their co-operation in this.
SEMI-ANNUAL REPORT FORM THE COUNTY MAYOR
During open discussion at the end of the meeting, I asked that the County Mayor, who is required by state law to provide a semi-annual report to the commission, include in that report in January an updated statement and analysis of our revenue and expenditures for the current budget year. I would like to see updated revenue projections (that would indicate whether the county revenue is likely to be within, over, or under the originally budgeted amounts) and updated expenditure projections (that would indicate whether county expenditures are likely to be within, over, or under the originally budgeted amounts).
The purpose in requesting this is to get a picture of where we actually stand at the half-way point of the current fiscal year in connection with revenue and spending.
Surprisingly, or maybe not so surprisingly, the County Mayor did not like this request.
What the Mayor has provided in the past as his semi-annual report (6-month) is the same type of report we already get each month...a report that shows the amount budgeted, the amount spent at that point, and the amount remaining.
The raw data is helpful but could be misleading without additional financial information. As an example, the raw data that we get might show at the 6-month point that the county budgeted $100,000 for liability insurance, spent $70,000, and has $30,000 remaining in "avilable funds" for the last 6 months. If you just looked at those raw figures, you might think there is a serious problem with $70,000 spent in the first 6 months and only $30,000 left in the liability insurance budget for the last 6 months.
Only someone who has actually seen the invoices and has been paying the bills (County Mayor or Finance Director) could tell you if it's really a problem or if everything is actually O-K because that's just the way the insurance premium is scheduled to be paid--- 70% of the costs are billed and paid in the first 6 months of the policy term and 30% of the costs are billed and paid in the last half of the policy term.
Those who write the checks and see the invoices know and can report more than the simple fact that a check has been written. There's a lot more to being the county's chief financial officer (County Mayor) and being the Finance Director than just writing checks. These positions involve thoughtful analysis and review of the county's financial position throughout the year and checking with the trustee to see what the revenue picture is, too.
The above example should how you might think there was a problem when there actually was none. The opposite could occur as well. Let me put this on a family budget level. Let's say that you budgeted $1000 for car insurance for a year. After six months, you show your wife or husband that you have paid out $500 for car insurance so far. He or she thinks everything is fine. [What you don't tell your husband or wife is that you just got a renewal premium in the mail and that the cost for the last 6 months of your budget year is going to be $700.]
Going on the raw data that shows you spent $500 in 6 months and thinking that the next 6 months will be the same--another $500-- your wife or husband thinks that you are within your $1,000 insurance budget.
But you and only you (the one who receives the premium, talks to the agent, and writes the checks) know that there is a problem and that this budget item will be $200 overbudget at the end of the year.
That's all I would like the County Mayor and Finance Director to do. Give county commission and the taxpayers a "complete statement of the financial condition of the county" based on what the Mayor and Finance Director know about expenditures and invoices and based on what budget information they request from other department heads about the expenses remaining in various budgets.
The county was presented with and passed an initial budget for fiscal 05-06 in which the county expects to spend about $450,000 more than it takes in--we're starting with a deficit budget where the county makes up the $450,000 revenue shortfall/excess spending by pulling money out of its savings or fund balance.
Since we know we are starting out with a plan (budget) to spend more than we take in, all elected officials and department heads need to be watching revenue and expenditures closely. Halfway into the budget year, there should be a report from the county's chief financial officer that pulls all the financial information together and provides a "complete statement of the financial condition of the county."
Six months into the fiscal year, county commission should be asking those who are most closely involved in compiling and presenting the county budget, those who are directly involved in reviewing invoices and paying bills, and those who collect and deposit all county revenues whether their opinion and analysis is that we are still on target to collect the total amount of revenue originally projected (or whether more or less is likely to come in) and whether we are still on target to be within the total amount of expenditures originally projected (or whether more or less is likely to be spent).
REVENUE: The best scenario would be that we now expect to collect more revenue than was shown in the original budget projections.
EXPENDITURES: The best scenario would be that we now expect to spend less than was shown in the original budget projections.
But we won't know where we the county stands financially until there is a semi-annual report that provides new and updated revenue and expenditure information or projections.
And that's what I asked for at the end of the December meeting---an updated review of our remaining revenues and expenditures. In our current monthly expenditure reports, we are given information in several financial columns. One column is original budget amount, then comes a column for amount spent to date, and the last column is labeled "available funds" left in that spending line item.
Families review their budgets periodically to see if they are going to have enough money to meet all their remaining expenses. Halfway through the year, the County Mayor and his Finance Department should be checking the status of the county budget and letting commission know if the "available funds" that are shown in each line item of our financial reports are really expected to cover the remaining expenses that are projected for that line item--and if the total of all "available funds" will cover all remaining expenses.
You could have a line-item that shows "available funds" in the amount of $5,000. But what if you project that there is still $10,000 that is going to be billed in that line-item? You could find that the total of all "available funds" might be $4,000,000 at the 6-month point. But what if you are projecting that there is still $4,800,000 that is going to be spent to cover all remaining expenses?
If there is a problem area in the budget, you need a heads-up and early warning in order to take corrective action. That's why periodic financial reports are important, and that's why semi-annual report and periodic quarterly reports are important and should include a footnote to the column that says "available funds."
The column that shows "available funds" just provides raw financial data. The missing piece is an updated financial analysis and report from the County Mayor and his Finance Director that tells county commission that the "available funds" in the Mayor's report will likely cover the spending projected for the remainder of the budget period. There is a major difference, for example, in being told that you have $400,000 in "available funds" and that this amount will likely cover all remaining projected expenses for the year and being told that you have $400,000 in "available funds" but that this amount will likely not cover all remaining projected expenses for the year.
If there are complaints by our chief financial officer or others that reviewing our financial position periodically and including an updated financial analysis in quarterly or semi-annual financial reports is more work, then so be it.
Providing raw financial data and doing periodic financial reviews and updates are just part of being the county's chief financial officer and should include a statement about whether "available funds" are adequate to cover projected remaining expenses.
County Commission should request a more complete and updated financial review of county revenues and expenditures starting with the January 2005 semi-annual report (7/1/05-12/31/05). The current reports already provide the raw financial numbers on revenues and expenditures. The only extra bit of information that is needed at this time is a statement from the County Mayor, Finance Director, and Trustee that they have examined county revenue and expenditures, that they have examined the "available funds" as shown in these reports and that, in their opinion, the available funds likely are or are not sufficient to cover the projected remaining expenses.
Although that sounds rather simple, one has to realize that the County Mayor, Finance Director, and Trustee can continue to provide just raw data and numbers and they can refuse to provide any financial analysis. If they choose to do that and refuse to provide an opinion about the county's complete financial situation, then the responsibility for refusing to provide that information on a quarterly or semi-annual basis and to be accountable for their own data lies with them.
County Commission can do its part by asking for the information. County Commission and individual commissioners who are trying to be accountable to the taxpayers should not refuse to ask for this needed information and financial analysis simply because they are afraid that someone will be upset or doesn't want to provide it.
When you've already got a deficit budget, you have a heightened duty to insist on updated reports and financial analyses from the county's financial officers. We may need to put the brakes on non-vital spending right now to avoid a deeper deficit at the end of the year, or the reports may turn out to be reassuring. Perhaps our revenue projections will be greater than was originally budgeted and we won't even end up with a deficit at year end!
Only one thing is certain---we'll never know what to do and we'll never know where we really stand financially if we don't take the first step as a commission or as individual commissioners and ask for an updated financial analysis in January of the raw revenue and expenditure reports that we will be getting then.
The financial analysis should state (1) REVENUE: whether we are on target to likely meet, exceed, or fall short of the original budgeted revenue amounts, (2) EXPENDITURES: whether we are on target to likely meet, spend more, or spend less than originally budgeted, and (3) putting the new, updated revenue and expenditure information together, the report should be able to state whether the "available funds" in the county budget are likely to be sufficient to meet all county expenses for the rest of the year.
Merry Christmas!
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