Politics & Government

University City Petition Audit Reveals Financial Mismanagement

Findings of U City petition audit were detailed at a public meeting Thursday night at City Hall.

The petition audit of University City reveals significant financial missteps by the City.

State Auditor Tom Schweich released the findings of the audit at a public hearing on Thursday night. 

The audit found that U City has more than a million dollars in uncollected trash service fees. As of June 2010, the audit found that the City failed to collect fees from 3,373 citizen accounts, totaling $1.6 million. "We expect U City to be more vigilant in collecting that money," Schweich said. He noted that the City has taken action to correct the problem by putting some residents on payment plans, but he said "we still think it's going too slowly."

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The audit also looked at employment contracts, and found that the City paid former City Manager Julie Feier $97,400 in severance pay and that current City Manager Lehman Walker has the same clause in his severance package. The audit also revealed that if Feier's termination date had been just 8 days later, the City would have saved $28,600.

Schweich recommended that in the future, severance contracts be made, "not quite as favorable to the employee." 

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The audit also found "$900,000 in unsupported allocations." However, Schweich stressed that it doesn't mean that people were cheating or that massive mis-allocations occurred, it just means that there wasn't adequate documentation. He said the City has vowed to improve the way time sheets are filled out.

When asked if the audit found anything illegal, Schweich said there were a couple of minor incidents. He said the audit actually highlighted the fact that the City's financial controls are such, that there could be opportunities for much greater mischief. "The first thing that has to be fixed are the financial controls. Once they are fixed, then we can tell if there is serious fraud going on."

According to the audit, U City paid outside law firms over $230,000 in fiscal year 2010, including $43,000 for City Attorney services, but never conducted an analysis to determine whether outsourcing legal services made financial sense.

Schweich said the most serious problem the audit uncovered related to the settlement of a discrimination lawsuit case. The City paid $146,000, including legal fees, to settle the case instead of only paying the $15,000 deductible, because it failed to notify its insurance company promptly. The mistake cost the City $131,000. "That's money, pretty much just thrown down the drain," Schweich  said. "In the private sector something like that would be legal malpractice." He said it was a clear error that didn't require any work to avoid. 

Former University City Mayor Joe Adams, who attended the public hearing, told University City Patch that when he inquired about the discrimination lawsuit, he was told it had been taken care of.  "I'm not a lawyer, I have to take the other peoples word that they were handling it."

Schweich said the audit found "a pretty serious issue" with meeting minutes and public records. "Missouri Sunshine Law is something that the auditor's office takes very, very seriously." He said the audit found six instances where the closed meeting rules and open meeting rules and Sunshine rules were not properly followed. "That needs to be corrected immediately," said Schweich.

In a tense exchange, councilmember Lynn Ricci told Schweich  she was "fully dissatisfied" with the audit. "I would rate the auditor's office with a 'C'" she said, referring to the grade Schweich gave U City.  She said the audit missed some very important matters. Ricci also voiced her displeasure at receiving the audit report an hour before the public meeting.

Ricci also lashed out at the state auditor concerning the delinquent trash service balance. "That $2 million grew for years before it was identified by this council. So, it's not on this council." 

Ricci went on to say, "The big crux for this audit was the transferring of budget funds without authority and you did not address that at all." At that point, Schweich interrupted her and said "this sort of attack mode is very common I understand at City Council meetings."

Schweich defended the audit findings. "Just because you don't like the results of the audit does not mean it was not a thorough audit."  He told Ricci to stop creating trouble and start fixing the problems. "What I'm asking you to do and other councilmembers to do, is sit down and fix these problems. Next question. Next question," he said.

In his closing remarks, Schweich said "the nice thing about this audit is that we didn't find anything that would be that difficult to fix."

After the public meeting, councilmember Ricci told University City Patch that she was very upset about the audit. She said she didn't feel it was thorough and worth the hefty price tag. "We spent $80,000 for them to do their job and in my opinion their job wasn't done."

Ricci felt the audit overlooked many important issues. "They didn't touch on meat. They touched on surface issues and I want meat to improve my city," Ricci said.

City Manager Lehman Walker said the City agreed with the various recommendations of the State Auditor. However, he noted that "these findings are based upon events which occurred under the previous Administration and previous City Council."

Former Mayor Joe Adams said he felt the audit report "was fair." When asked if the audit findings reflected negatively on his administration, Adams said "I don't really think so." He added "It wasn't as explosive as people thought." Adams said he knew about the trash rates and the fees and his administration was working to change that. 

Current U City Mayor Shelley Welsch said she thought the audit report was "a very good road map for what we need to do." She said it highlighted some very serious problems in the way the City has been run. She said this city council and city manager are committed to implementing all of the State Auditor's recommendations.  

Welsch said the audit did hold one big surprise for her. "I was unaware of how much money was coming into City Hall and  not being properly documented." She said that was "the biggest thing in this audit." She added "I was unaware as a member of council that our controls were so poor."

Paulette Carr, the chief petitioner for the audit, told University City Patch that was she was very happy with the auditor's report. She said "while it didn't touch on every single thing out there, it touched on the major issues."

She said she was pleased the audit report addressed the Sunshine Law discrepancies. "For me, the Sunshine Law is that interface between the citizen and the government and I want to make sure that we do have open meetings and open records."

An audit follow-up team will be back in a few months.


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