State auditor critical of Jackson County practices
A fourth and final state audit in recent months questions Jackson County practices in a wide range of areas and specifically urges county officials to revisit two long-festering issues in Independence – the Regional Animal Shelter and the decrepit office building at 200 S. Main just off the Square.
It also says the county needs to make sure it’s charging the legally set price when citizens request copies of public records. It says better record-keeping is needed in several areas.
“Improvements are needed in the handling of county property leases” writes State Auditor Nicole Galloway in an audit made public this week.
She also writes that “significant improvements are needed in the handling of receipts of the Collections department and the Parks and Recreation Department” and “Assessment department controls and procedures need improvement.”
Overall, she gave the county a rating of “fair,” next to the bottom on a four-step scale from the auditor’s office.
County legislators and County Executive Frank White Jr. asked Galloway for a performance audit nearly three years ago. The subsequent reports, covering 2017 through 2019, have been coming out since September. The first three dealt with the Combat anti-drug/anti-violence sales tax, the county’s no-bid contracts and other spending and budgeting, and payroll and personnel issues. Those audits carried grades of fair or poor.
The auditor found instances in which county contracts with outside consultants had expired but the consultant kept working and being paid by the county before a new contract was in place.
The audit also turned up instances of required work going undone – no report for 2018 on properties with significant increases in assessed valuation and late reports for 2019 and 2020, and then only at the behest of the County Legislature. The County Charter requires those reports. The 2019 report, the audit says, left out some of the properties that should have been listed.
The county’s overall assessment went up 19.75 percent in 2019, far more than anywhere else in the state, and that set off waves of appeals, litigation and protest. The county has brought in a new consultant to upgrade its computers and its processes.
“It is essential the county closely monitor the maintenance of assessment records and data, the implementation of the new computer-assisted appraisal system, the reassessment services for the biennial reassessments, and the training of staff to ensure effective and efficient future reassessments,” the audit says.
200 S. Main St.
The auditor says the county’s deal a decade ago with Independence attorney and developer Ken McClain hasn’t worked and should be reviewed.
The city of Independence put up the building at Main and Kansas in 1910, the first building it built specifically to serve as a city hall, and the city had it in use into the 1960s. In the 1990s, it came into the county’s hands and was used for offices for some time.
In 2011, the county entered into a deal with McClain to lease the building for $1 year for 50 years. At the time, county officials said, the county lacked the money to save the building and said McClain could both save it and put it back into use. The lease calls for McClain to “restore and maintain the Property in a clean, orderly, healthful condition” and to use it “for general office purposes,” the audit notes.
That has not happened. The auditor’s office visited the site in November and found it to be in poor shape inside and out. It is “currently vacant and will require significant work in order for it to be useful.”
“The county should reevaluate the lease agreement … because the property has not been repaired and redeveloped as intended,” the audit says, adding that in its current state “the property does not provide a benefit to county residents.”
The County Legislature issued a one-page blanket response to the auditor, saying it supports her findings. White’s office addressed the report point by point, saying it will work to make sure the leases 200 S. Main and with the Regional Animal Shelter “are in the best interest of the county” and pledging to review the auditor’s findings.
The animal shelter, opened in 2013, has had its struggles too. The city and county initially struck a deal: The county would build the shelter on city land, and the city could close its old shelter. Great Plains SPCA ran the new shelter for several years but backed out in mid-2019, and the city stepped in to run it for the county, with county financial support. That agreement runs to this coming July.
The county continues to pay off the bonds to build the shelter and pay the city $100,000 a year to support operations.
County Administrator Troy Schulte made it clear weeks ago during county budget discussions that the county still intends to sell the shelter to the city, but city officials have said no deal is certain or imminent.
The state auditor questions the current arrangement.
“The county was unable to provide any cost-benefit analysis documenting how continuing to own and fund shelter operations was determined reasonable and in the best interest of the county,” the report says. “Due to the lack of analysis, there is less assurance this agreement with the City of Independence is reasonable and fiscally responsible.”
During the three years the auditor looked at, five out of every six dogs and cats at the shelter came from Independence, and the per-animal cost for those taken in from unincorporated Jackson County ranged from $3,314 in 2018 to $7,286 in 2017.
The audit also says part of the 2019 deal for the city to step in remains unresolved. To ease the financial pressure on the shelter operation, the county was to pay the city $240,000 for the seven acres where the shelter sits – “however, this transaction has not been finalized,” the report says.
The auditor also found evidence that the county in some instances has not followed the state’s Sunshine Law, which sets the rules for citizen access to public documents.
“The county does not fully comply with the Sunshine Law or County Code provisions establishing procedures for Sunshine Law requests,” the audit says.
The county counselor doesn’t have procedures to ensure all Sunshine Law requests are submitted to his office “for review and assistance with compliance,” the audit says, though the counselor told state auditors that about 95 percent of all Sunshine Law requests to come to his office. All requests should go through that office, the audit says.
The audit included two Sunshine Law violations. The Sheriff’s Department charges $2 for photocopying the first page of a document and 25 cents a page after that, though state law sets that price at 10 cents a page. Also, the previous county counselor let attorneys in that office set fees on their own. At one point an attorney quoted a price of $33 an hour for research but without any written rationale for that price.
The auditor’s office found that the county had no procedure to track gate fees at Adair Park in Independence, which is mostly used for girls softball. The county contracts with two vendors at the park. The county gets 40 percent of the gate, after vendor expenses are deducted, and the vendors get the other 60 percent. But the auditor says there’s no way to tell if the Parks + Rec Department is getting its correct share.
“These contracts do not require reporting of gate fee collections. .... Vendors are also not required, at a minimum, to certify the accuracy of gate fee collections. Additionally, the county does not periodically perform a review of the vendors' gate fee procedures to ensure adequate controls are in place to prevent risk of loss, theft, or misuse of gate fees.”
White’s office says that concern was addressed with the vendors in 2020 and, in any event, no tournaments were held in 2020 because of the pandemic.
Procedures and controls
Galloway also pointed to other area she says need attention:
• “Collections department personnel at the Kansas City courthouse location do not manually receipt or record checks and money orders received in the mail on a mail log, record them in the electronic accounting system, or deposit them timely or intact because mail receipts are processed as time allows.”
A cash count by auditors on June 5, 2019 found 1,130 checks and money orders – approximately $687,000 – from March, April and May still unrecorded.
The auditor expressed the same overall concern about the Collections Department office in Independence, but the June 5, 2019 spot check turned up just two checks – $358 total – still needing to be processed.
• The county’s chief administrative officer “has not prepared monthly bank account balance reports or filed an annual report showing the most recent bank reconciliations as required by county code. Also, the CAO does not always perform timely bank reconciliations.” The lack of those timely reports, the audit says, “ increases the risk of misstatements of cash balances, including misstatements due to fraud, and possible misappropriation of assets.”
White’s office says it is working to assure that those reports are filed.
• The audit raises the possibility that Sheriff Mike Sharp didn’t turn in all of his gear when he resigned in 2018.
“The Sheriff's office does not have documentation indicating the former Sheriff returned all county issued equipment including a handgun, handheld radio, ballistic vest, and voice recorder, following his resignation,” the audit says. “An equipment return sheet is typically filled out by all employees upon resignation; however, no return sheet was found for the former Sheriff.”
• “The Information Technology department did not maintain or monitor network access logs and did not timely revoke network access of terminated employees,” which can mean “an increased risk that unauthorized or inappropriate system activity may not be detected,” the audit says.
White’s office says the IT Department “has made the changes necessary to ensure the network access logs are property maintained and monitored, as well as terminating the network access for former county associates.”
• The county has no overall map of the many tax-increment financing districts across the county. Cities use that as a means of lowering a developer’s tax bill to spur investment. Being in a TIF district significantly affects the taxes due on a property.
• “The county has not developed records management and retention policies in compliance with the Missouri Secretary of State Records Services Division guidance. ... This guidance recommends government entities have a policy on electronic messaging, including text messages, email, and other third party platforms. According to the Director of Information Technology, development of an email retention policy has previously been proposed and such a policy drafted, but a formal policy has never been approved.”