Forensic Audit Suggested For City Of Shawnee Finances

 

February 7, 2019

Continuing his questions about city finances, former city commissioner Tom Claybrook suggested a forensic audit be performed for the City of Shawnee during the Shawnee Board of City Commissioners meeting Monday, Feb. 4.

During public comments Claybrook revisited questions he had concerning finance numbers for the city. "I came before you three months ago and asked a simple question about the city's finances," said Claybrook. "Why did the budget say there was $4.3 million in the general fund and the books said $600,000? The mayor said we deserved an answer to that question and we would get it in the near future.

"Three months is long enough for your constituents to wait," said Claybrook "so I will tell them how their treasury was depleted."

Claybrook stated he pulled all of his numbers from the city budgets and audits which are available online and from the finance department. He then gave the following financial information:

"The 2015 audit showed an unassigned general fund balance of $5.7 million. The 2016 audit showed $4.7 million and the 2017 audit showed $2.3 million." Claybrook did not have figures from the 2018 audit, noting it is "one month overdue. However the finance department provided me with an Oct. 29, 2018 balance of $611,000. So over a three-year period the general fund balance was virtually depleted, going from $5.7 million to $611,000. The budgets during this time showed that the balance stayed above $4 million."


Claybrook stated that $7 million was "illegally taken from the street fund and used to shore up several other funds. $3.7 was given to the capital fund. $1.4 to the SMA, $1.1 to the general fund, $510,000 to the airport and $178,000 to the street and alley fund.

"All of these numbers come from the 2017 audit, page 51," said Claybrook.

"I say illegally diverted because when the third cent sales tax was approved by voters it was legally restricted with 43.75 percent dedicated to street improvements.

"As of Dec. 31, 2018 the street fund had $382,000," said Claybrook. "The budget that went into effect July 1, 2018 stated they had a $6.3 million balance with a plan to spend $8.8 million in major improvements this year.

"These budgets are full of fictitious numbers designed to hide improper spending," continued Claybrook. "In essence, what happened was most of the major funds were overspent and the street fund was used as a slush fund to keep them from going insolvent. Then most of that money was spent. With all these irregularities and obvious misappropriations, I respectfully suggest that in order for you to fulfill your fiduciary responsibilities to the citizens of Shawnee you have a forensic audit performed to find out exactly where all this money went and to insure that none went out the back door."


"Mr. Claybrook, I'd appreciate if you mentioned that I and the city treasurer spent an hour and a -half with you," said Interim City Manager Eric Benson. Before Benson finished his statement Claybrook began responding. The next full statement came from Benson, who said "You're playing loose with the numbers there and I take exception with your accusations."

"You weren't here at the time," said Claybrook. "You don't know what happened." Mayor Richard Finley stated time was up and asked if Finance Director and City Treasurer Chanse Allison would like to respond. Allison declined.

In commissioners comments at the end of the meeting Finley said "I take strong exception to Tom Claybrooks' comments and his demeanor and his tone. He did ask a simple question but as any of you who are in business know simple questions don't yield simple answers."

"I went to Chanse with Tom's questions," said Finley. "It was dig to the bottom of it and see what's there systemic, why we don't know on a more current basis where we are. Chanse has taken steps to remedy those things. The information we are now getting is better than we have got in the past."


"I'm not saying we didn't stub our toe and we should have known," continued Finley. "Some of us were asking questions and we weren't getting good answers."

"As for Tom's comments about what is legal and not legal, it is my understanding these bond issues, these sales tax issues balance over time," said Finley. "You don't look at any point in time and say where are we. You measure these things so it is common to use funds from another fund. I resent very much the fact that Tom implies that we're misappropriating or stealing because that is simply the case."

Later in the meeting Allison presented a mid-year budget update. "One of the things I want to point out is from July through December we have a positive net revenue," said Allison. "This is city wide so this includes government activities, our general fund, all the supporting funds and also includes business activities at the airport and the municipal authority."

Allison pointed out that last year at this time there was a negative net revenue of approximately $2.8 million. Allison states the biggest swing is due to increased sales taxes this year as well as increases in utility revenue and a decrease in capital spending.

Allison said, "Some of the big decisions we've made as far as increasing utility revenues and some of the new funding features we've added this month and last month, this doesn't capture that." He also stated the figures would not reflect the recent retirements.

With a 6-1 vote, the board approved an amendment to the employee retirement system, defined contribution plan for the City of Shawnee. Commissioner James Harrod was the only no vote. The amendment changes the time in employment to become fully vested in the retirement plan from seven years to five years.

The other amendment adds a variable funding mechanism. "Where the budget allowed we could offer incentives or reward our employees by the city giving an additional percentage as an employer contribution on their behalf on their account," said Allison. "What makes it attractive is we don't have to pay FICA or Medicare taxes and things like that. It's not a permanent increase to the city's budget as far as new salaries. This would be a one time benefit in the event you wanted to do that."

Barbara Loudermilk, Executive Director of Central Oklahoma Community Works, informed the board the 2019 PIT (Point In Time) count was performed on Jan. 24 in Shawnee. The PIT count is done to estimate the number of homeless people throughout the United States, in each county and city. "We counted in the city of Shawnee on Jan. 24, 94 homeless," said Loudermilk.

Loudermilk said on televised reports she saw the following day it was stated that the count in Oklahoma City was 1,200 but they calculated that to be only 20% of the actual number of homeless people. "Take that number (94) and multiply that by five and you're going to get about 470 homeless people in the city of Shawnee and Pottawatomie County.

"I would like to commend Commissioner Ed Bolt," said Loudermilk. "Since he's been elected he has made a commitment to work with all the non-profit and community agencies in this city to start doing town meetings and to find the needs and ways we can address this homeless (situation).

In other business the board:

• Approved the rezoning of three properties

•Approved an ordinance creating a Parks and Recreation Committee. Mayor Finley appointed Commissioner Ed Bolt to the committee.

• Approved the lease of the city of Shawnee property located at the northeast corner of Leo Street and Westech Road.

• Approved the hiring of Rebecca Blaine as Planning Director.

 

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