Echoing some issues raised by an outside audit last year of COMBAT, State Auditor Nicole Galloway’s office says Jackson County’s $24 million-a-year program to reduce drug abuse and violence needs updated revenue allocations and lacks sufficient monitoring for appropriate spending.
Galloway’s office started the COMBAT performance audit last year following requests from legislators and County Executive Frank White Jr. to audit the county. COMBAT, derived from Community-Based Anti-drug Tax, is a quarter-cent county sales tax first approved by voters in 1989 and renewed multiple times since. It supports a wide range of law-enforcement and substance abuse treatment activities.
"The COMBAT Fund was created to help protect the safety of the citizens of Jackson County, and it's vital that these resources be managed effectively and appropriately," Galloway said in a release this week. "My audit has found several areas for improvement, and I urge county officials to take action on the recommendations in this report."
Galloway’s office also plans to release a report several months from now on the county’s contracting and procurement practices.
County Prosecutor Jean Peters Baker had asked for a financial audit of COMBAT in 2018 after her office gained control of the program, and BKA LLP released its findings in September 2019.
That audit found COMBAT money going for salaries for people not clearly connected to the program, found that some spending wasn’t going through the COMBAT officials and found a pattern of the county executive projecting ultimately low COMBAT revenues – generating a windfall later that the executive would spend in a variety of areas.
Galloway’s audit mostly covered 2017 and 2018 and incorporated the BKA audit of COMBAT for those two years. In her response included in Galloway’s audit, Baker said several issues mentioned have been addressed since her office gained control.
After the report’s release, Baker and COMBAT Director Vince Ortega said they have established a whistleblower hotline for anyone wishing to report alleged mismanagement or improper use of COMBAT funds for further investigation, and they will continue to implement state audit recommendations.
The County Legislature voted in late 2017 to shift control of COMBAT from the county executive to the prosecutor. White vetoed that, the Legislature overrode the veto, White wouldn’t relinquish control of the program, and the Legislature took him to court, winning in August 2018. White appealed that as well, but the Western District Court of Appeals sided with the Legislature in November, and voters made it a charter change that same month.
Galloway said the allocation percentages of COMBAT estimated revenues had not been updated since 1995. With years of under-projecting revenues as previously noted, that meant less money for stated COMBAT purposes than what could have been used. The audit again noted questionable disbursements such as the $4,800 from COMBAT used toward a vehicle for White’s chief of staff in 2017.
Galloway took note of the County Legislature’s 2017 decision to essentially convey the MyArts building off the Independence Square to the Independence School District without independence appraisal. That building had received more than $1 million in renovations with COMBAT funds since the county purchased it in 2010 for drug prevention programming, but federal support for programming stopped in 2016.
The county's system for approval and allocations of payroll related to the COMBAT fund needs improvement, Galloway said. The audit highlighted the case of the former deputy finance director, who was directed to direct COMBAT funds for salaries in a way he believed went against the law. He later claimed in court papers that White’s staff "demanded that (he) violate the law with taxpayer money in December 2017 by seeking to illegally direct COMBAT funds without the approval of the Prosecuting Attorney and for purposes that were outside of COMBAT-approved purposes." That happened right after the Legislature first decided to transfer COMBAT control from White’s office to Baker’s.
That deputy director sued White and other officials in February 2019, and they settled in December for more than $700,000.
Responses from the County Legislature, White and Baker were included in the report released Wednesday.
In the Legislature’s response, Chairperson Theresa Galvin said legislators "support the report’s recommendations and will continue oversight efforts," which would include regular updates and hearings before the group.
White and Baker agreed that vehicle allowance practices, another area Galloway scrutinized, should be reviewed.
White said the Legislature is responsible for allocating the COMBAT fund "through the budget process" and pointed out that COMBAT funding percentages, while given in a non-binding resolution, "are not required to be followed." The MyArts building transaction is something he opposed, he said, and while his office has not had COMBAT oversight "for more than two years," White said he would help as needed to implement changes.
White said the finance and purchasing department was unable to find the paperwork that justified the transaction, but he recalled the county counselor’s office saying it was appropriate because of Clifford’s responsibilities. Regarding that payroll dispute that led to the county settling with the former deputy finance director, and led to Baker and Ortega establishing the hotline, White said he legally couldn’t comment on the matter.
Baker said that while her office now oversees COMBAT, it’s not involved in estimating revenues that go toward preparing COMBAT’s budget. That still falls with the finance department that reports to White. Baker said the current budget marked the first time her office could shape COMBAT allocations, and as a result funds to other county departments outside the allocation formula have been curtailed. Baker said she agrees COMBAT should fund an annual independent audit and evaluation of its programs.
Regarding the MyArts Building, Baker said her office’s budget could not support security and utility expenses, and then all programming costs after supporting federal grants were not renewed, and then her department was not part of the final decisions regarding the building.
With COMBAT now fully under her office, Baker said, she is able to provide sufficient staffing to monitor funded agencies, and the process with the Legislature for awarding funds to outside agencies has been altered.