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Office of the State Auditor of Missouri
Claire McCaskill

 

Report No. 2004-46

June 10, 2004

The following problems were discovered as a result of an audit conducted by our office of the City of Mexico, Missouri.


The employment contract between the city and the former city manager was prepared and signed in 1988 when the former city manager began employment and was not periodically updated.  Changes in benefits provided to the former city manager were not always recorded in the council minutes or otherwise documented as approved by the council; including increasing the former city manager's annual administration leave, making city contributions to his deferred compensation account, and changing the hourly rate for vacation and sick leave payouts.

The city council provided vacation and sick leave buyback benefits to the former city manager; however, these benefits are not normally provided to other city employees.  Leave buyback is payment for accumulated leave time which has not been used by the employee.  While the city council adopted specific policies for leave buybacks for the former city manager, some buybacks were made for more than the amount approved by policy without documented council approval.  The city council should review the practice of providing leave buyback benefits to ensure it is a reasonable and prudent use of city funds.  In addition, council approval should be clearly documented for the payment of such benefits.

The city did not report the taxable benefits associated with the city vehicle provided to the former city manager.  From 1995 to 2002, the city provided a vehicle which was used for business and personal use.  No mileage logs were maintained of the actual usage during this time period.

Both the current and former city managers authorized the reclassification of an employee into a new pay group without approval of the city council.  Because the city council approved the pay scales and pay group classifications for city employees, it appears questionable for the former and current city manager to approve changes in individual employees' pay group classifications without council approval.

The city council did not adequately document the reasons for hiring the current city manager nor how his salary was determined.  The city council indicated several resumes were reviewed and the council unanimously voted to hire the current city manager.  In addition, while the council had some discussions on setting the salary, no documentation was provided on how the council determined the approved salary amount.

The city did not document how some items discussed in closed session complied with state law.  The results of votes taken in closed session are not always made public in a timely manner as required by state law.  In addition, votes were not documented for some decisions made in closed session.

The city paid approximately $3,300 during the year ended September 30, 2003, for a membership at a local country club for the economic development director to meet with businesses that are considering locating in the city.  While the city normally listed the names of individuals who received meals at the country club, no documentation was prepared to indicate which businesses these individuals represented or to otherwise indicate how these expenditures could enhance economic development for the city.

The city does not have a policy requiring city council approval for travel expenses incurred by the city manager.  The former city manager apparently approved travel authorization forms for trips he made.  In addition, the former city manager was reimbursed $1,057 for expenditures charged to his personal credit card for which the purpose was not documented.  Additionally, this payment was made directly to the credit card company rather than the former city manager.

The city council voted to purchase and finish construction on an industrial building without adequately documenting the estimated economic benefit to the city.  During 2002, the city paid approximately $400,000 to acquire and $625,000 to complete this building.  Additionally, the city council voted to enter into an agreement to complete construction on the building prior to acquiring ownership of the property.  Although, the council had the intent to purchase the building at the time the construction contract was approved, the purchase should have been concluded first to avoid potential problems.

A member of the city council voted to purchase the industrial building with apparent knowledge that his employer intended to lease the facility.  When the vote was made to acquire the building, the councilman employed by the potential lessor of the building did not abstain from the vote.  Personal interests in business matters of the city create the appearance of conflicts of interest, and to avoid the appearance of conflicts of interest, council members should not participate in decisions that may effect related parties.

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Missouri State Auditor's Office
moaudit@auditor.mo.gov