Audit: Irregularities found in Jackson County budgeting

By Mike Genet
mike.genet@examiner.net

Similar to September’s audit report about the county’s contracting and procurement practices, Missouri’s state auditor issued Jackson County a “poor” rating – the lowest of four possible grades – for the way it handles its taxpayer money in budgeting and transfer procedures.

The county was criticized specifically for a pattern of underestimating fund balances and revenues while overestimating spending.

Both the County Legislature and County Executive Frank White, Jr., responded in the report that they were committed to the necessary changes, best practices and oversight.

The report released Monday is one of several anticipated in State Auditor Nicole Galloway’s ongoing review of county operations, generally covering 2016, 2017 and 2018. In April, Galloway issued a report calling for better spending controls in the COMBAT anti-drug, anti-violence program. September’s report criticized the county for no-bid contracts, travel expenses and even Sheriff’s Office Christmas parties paid with road-and-bridge funds. Galloway’s office said a future report will focus on payroll.

The Legislature asked for the audit in February 2018, a move supported by White. By the end of that year, the COMBAT fund had been shifted from control by White’s office to County Prosecutor Jean Peters Baker.

"Jackson County taxpayers deserve to see exactly where every one of their dollars are going, but budgeting practices and the way money was transferred between funds made that difficult," Galloway said in a release. "The county needs better processes so that citizens can be confident all spending is appropriate and transparent."

The audit found that by frequently underestimating fund balances, underestimated revenues and overestimated spending, county funds had a higher-than-expected balance. In 2018, for example, the general fund was budgeted to end with a zero-dollar balance. Instead, the fund totaled more than $50 million at the end of the fiscal year.

The poor estimates led to undesignated fund balances. Instead of amending the budget as established by state law, including public hearings, the Legislature transferred these undesignated fund balances – more than $3 million worth of transfers in 2017-18.

The audit also noted how the county executive office’s used administrative transfers, which are permitted and don’t need legislative approval as long as they’re below the $10,000 threshold. A portion of the transfers from 2016-18 appeared to lack proper approval or sufficient explanation, and sometimes went toward a single purchase that easily exceeded $10,000. Such cumulative transfers appeared to be designed to skirt legislative approval, the audit reads.

The audit recommends the Legislature and county executive work to “ensure budgets provide reasonable estimates”; stop authorizing transfers from undesignated fund balances that are not appropriated through the budget process; and make budget amendments only when new revenues come in and public hearings have been conducted.

“I am pleased to know that most of the recommendations made involve issues that have already been addressed by the county,” White’s office said in a release Monday. “While we may disagree with some of the statements or findings, we will continue to work with elected leaders as we review the report to determine if additional changes are necessary.”