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December 18, 2009

Asleep at wheel — 19/20/09

Board did nothing to curtail wasteful spending of the KLC

Anonymous The Daily Independent Fri Dec 18, 2009, 02:41 PM EST

Those reading the audit of the Kentucky League of Cities released Thursday by the office of Auditor Crit Luallen could be excused for asking, “Haven’t we read this before?”

The answer is not quite, but almost. Many of the shortcomings Luallen’s office found in the League of Cities audit — “excessive spending,” “unprecedented salaries” and a board of directors composed and city leaders who were asleep at the wheel while the League’s staff spent lavishly — closely parallel the findings in an audit of the Kentucky Association of Counties (KACO) that Luallen’s office completed earlier this year.

The conclusion: The two statewide organizations that serve as the primary lobbyists for cities and counties in the Kentucky General Assembly and that provide low-cost insurance for cities and counties both wasted hundreds of thousands of dollars in questionable expenses, money that could have been used to lower the insurance costs for cities and counties.

The similarities between the audits of KACO and the League of Cities are stunning. While the KLC audit did not find any credit card expenditures of escort services and for a strip club like the KACO audit found, other abuses revealed in both audits were remarkably similar.

The KLC audit found the executive staff of the League engaged in “numerous conflicts of interest.” What kind of conflicts? Well, the KLC staff rang up $28,000 in expenses at a restaurant owned by the husband of Executive Director Sylvia Lovely, who is stepping down at the end of the year. In addition, the audit found the KLC spent more than $1 million with a legal firm in which Lovely’s husband is a partner. We know Lovely and she’s no fool. She had to know that using her position with the League to line her husband’s pockets was a clear conflict of interest.

However, much of the blame for the wasteful spending in both the League of Cities and KACO lies squarely on the shoulders of the boards of the two agencies. They simply failed to do their jobs.

Luallen said the KLC staff often kept the board in the dark about some of its activities. But who is to blame for that? If the members of the KLC and KACO boards had done their jobs and served as watchdogs over the agencies, much of the wasteful spending could have been prevented. Instead, members of the two boards took the easy way out by lazily accepting the reports of their executive staff without question and rubber-stamping their costly actions.

So have the leaders of the cities and counties learned their lesson? One would hope so, but some of their comments raise concerns.

For example, Corbin City Manager Bill Ed Cannon, a member of the KLC Executive Board, admitted that the board was not aware “of some of the stupid stuff that occurred; I was completely unaware of that until I read it in the newspaper.” And Cannon adds that the board may have been complacent and not asked enough questions, but he said that’s changed since the allegations came to light and board members will continue to ask hard questions about the management of KLC.

However, Cannon also said of the KLC audit: “A lot of this stuff is politically motivated, just the political aspirations of people dealing with this.”

Well, from out vantage point, what Cannon calls “politically motivated” actions are a rare example of an public official aggressively doing the job she was elected to do. The elected auditor is given the task of watching over the expenditure of public money in Kentucky. Using tax dollars for such things as “escort services” and costly meals at your husband’s restaurant is just the type of waste the auditor should be exposing.

Members of the revamped board of both the KLC and KACO insist that they have learned their lessons and have corrected their mistakes and slothfulness that allowed wasteful spending to never be questioned.

We would be more hopeful that the changes would work if the concerns about the operation of KLC and KACO had been raised by dedicated board members. Instead, the two audits were launched in response to a series of stories in the Lexington Herald-Leader. If not for that series, we suspect both KACO and KLC would still be wasting the taxpayer’s money while their board members slept.

Both KACO and the League of Cities provide valuable services to counties and cities. Both groups are effective advocates for city and county issues in the General Assembly, and both supply local governments with affordable insurance. However, the good things KACO and the League of Cities do are no excuse for their wasteful spending habits. Indeed, if the KACO and KLC boards did a better job of watching over expenditures, we suspect the service they provide to cities and counties would be both more effective and less costly.

Much good can come from the audits of the KLC and KACO, but it won’t happen if local leaders simply dismiss their findings as being political motivated by an ambitious auditor.

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Board did nothing to curtail wasteful spending of the KLC

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