YELLOW SHEET Office of the State Auditor of Missouri Claire McCaskill

Report No. 2000-98
September 25, 2000

Some problems were discovered as a result of an audit conducted by our office in response to the request of petitioners from the City of Kahoka, Missouri.

As of February 29, 2000, the General Fund and the Park Fund had negative cash balances of $181,825 and $59,205, respectively.� To eliminate these deficit balances, the city transferred $171,528 and $58,870 from the Electric Fund to the General Fund and the Park Fund, respectively, during March 2000.� In addition, city officials indicated they do not intend to repay these monies to the Electric Fund and that additional subsidies may be necessary for fiscal year 2001. 

Revenues of the Electric Fund represent user charges which are intended to cover the cost of providing the related services.� It does not appear appropriate to subsidize other city operations from Electric Fund monies.� As a result of this situation, electric rates may be set higher than necessary to recover actual costs and city electric customers are being required to subsidize the cost of other city services through the payment of their electric bills.��  

The city provides water and sewer services to approximately 1125 customers.� The city has not performed periodic formal reviews of the water or sewer rates.� The current water and sewer rates were established by ordinance in 1991 and 1985, respectively. 

The city received approximately $134,289 from October 1996 to August 1997 from an estate.� The will required $76,737 to be used �for enlarging and improving the municipal airstrip and this share shall be utilized for no other purpose whatsoever�.� The city initially placed $76,737 in an airport money market account.� However, in December 1997 the city transferred $60,056 from the airport money market account to the Park Fund. 

The city made expenditures that do not appear to be a prudent use of public funds.� Current and ex-employees received free premium channels for cable.� City employees were eligible to receive a free family pool pass.� City employees and equipment were used on the prior mayor�s house for installation of lines.� The city�s sales tax exemption was used to make purchases by or on behalf of the prior mayor.� Supporting documentation was not maintained for some disbursements.� There is no documentation in the minutes to approve the three cellular phone contracts.� The city does not have a formal bidding policy and the old fire station was sold without soliciting bids.

The city did not prepare and adopt a budget for the year ended March 31, 1999 and the city did not adopt the budget prepared for the year ended March 31, 2000.� State law requires the preparation of an annual budget which shall present a complete financial plan for the ensuing year. 

A complete and well-planned budget, in addition to meeting statutory requirements, can serve as a useful management tool by establishing specific cost and revenue expectations for each area of city operations.� A budget can also provide a means to effectively monitor actual costs by periodically comparing� budgeted amounts to actual expenditures. 

An annual maintenance plan for city streets has not been approved by the Board.� A maintenance plan was prepared in 1999 and continues to be updated.� A formal maintenance plan should be approved in conjunction with the annual fiscal budget and include a description of the roads to be worked on, the type of work to be performed, an estimate of the quantity and cost of materials needed, the dates such work could begin, the amount of labor required to perform the work, and other relevant information. 

The city has not formally established a policy regarding access to city records.� To ensure compliance with state law, the city should adopt formal policies regarding the location of city records, the persons responsible for maintaining each record, and procedures for citizens to request access to public records and how the city will handle these requests. 

The city does not maintain adequate records to account for all traffic tickets issued by the police department and their ultimate disposition.

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