The City of Springfield has invested in several capital improvement projects and made decisions regarding employee benefits that have required a significant amount of city resources and accumulated a significant future liability for the city. Additionally, a considerable amount of city funds have been spent as a result of poor planning and poor oversight. The city does not have an internal auditor as allowed by city charter, which could have helped in discovering and resolving several areas commented on in this report.
After more than three years and contracting with two developers, the Heer's Tower project is still in the initial phases. During this time the city pledged public funds to secure private financing for a developer to purchase the Heer's Tower, paid $693,000 to the developer for demolition and design services without soliciting bids, subsequently paid $3.3 million to foreclose on the property, and then sold the Heer's Tower for $3 million to a second developer. Additionally, the city's agreement with the second developer contains unclear terms regarding the city's hotel/motel room tax revenue.
The city is also constructing two parking garages in the downtown area near the Heer's Tower and College Station developments costing $17 million and anticipates funding the debt service payments through increased sales tax revenue generated by new downtown commercial developments. However, the terms in the city's agreement for the College Station development do not appear to adequately protect the city's financial investment in the project.
The city has spent over $3 million to purchase a building, furniture, and equipment for a police and fire training facility, but after more than three years the building sits vacant without renovations and approximately $300,000 in furniture and equipment is still stored in the original packaging. Additionally, warranties on some of the unused equipment have expired. Acquiring equipment when it is not immediately needed is a waste of public funds.
Over $8 million in city funds have been used to subsidize the Jordan Valley Ice Park and Car Park since these two facilities opened. The city's feasibility study for the Ice Park indicated the park should have been self supporting in the first year of operation; however, income from hockey activities have not developed as projected.
The city has not determined a revenue source to repay approximately $2.7 million in bonded indebtedness associated with the construction of the state crime lab, which is estimated to cost approximately $6.8 million.
The unfunded liability of the Police Officers and Firemen's Retirement System (Plan) has increased by approximately $100 million since 2000, and the city has not met the funding obligation for employer contributions as determined by actuarial calculations. Although the city has contributed $37.7 million to the Plan since 2000, the required funding continues to rise and the city's contribution has not increased at the same rate. In an effort to control the increasing liability, the City Council approved an ordinance making several changes to the Plan for employees hired on or after June 1, 2006, including changing the method by which retirement benefits are calculated, increasing the retirement age, and eliminating automatic annual cost of living increases. Since these changes only apply to recently hired employees, it will take a number of years before an appreciable impact is noted.
City policy allows some employees to accrue unlimited amounts of leave time, and receive compensation for the unused leave upon termination, resulting in a significant future liability for the city. Some city employees have received payments totaling over $100,000 for unused leave time upon retirement. These large payments constitute a significant future liability for the city and have increased the calculation of monthly retirement benefits for Police Officers and Firemen contributing to the under funding of the retirement plan.
The city has also not met the funding obligation for the city's self-insured workers' compensation fund, resulting in approximately $6.7 million in unfunded liabilities at June 30, 2006.
The ballot language used to extend the city's general revenue property tax levy does not provide voters with a clear sunset date. The levy will generate approximately $6.4 million in 2007.
The city contracted with the former City Manager and former City Attorney to provide consulting services, however, contracts were not always followed, documentation of work performed was not always adequate, and contracts were amended numerous times to extend the contract period without adequate documentation to explain the extensions.
Controls and procedures over the city's $31.5 million loan program (operated by the Department of Planning and Development) need significant improvement. Loan balance totals varied by as much as $1 million between the different loan accounting records. Additionally, loan defaults have not been resolved consistently and in accordance with city policy, deferred loan balances are not adequately monitored, and security measures in the city's loan software system are inadequate. The city needs to evaluate its policy to allow loan payments to be deferred for 20 years, and does not have a policy limiting the number of loans or amount of loans awarded to individuals or companies. Further, the city issued $3 million in bonds to fund additional low interest loans because adequate monies were not available in the city's loan fund, and the bond interest rate is more than the interest rate charged on the loans.
Improvements are needed at the numerous cash collection points throughout the various city departments that collect over $48 million annually in city receipts. Weaknesses were identified in the areas of recording and accounting for receipts, accounting for the numerical sequence of receipts, depositing/transmitting receipts timely, reconciling receipts to deposits, and restricting employee access to computerized accounting records.
The city has not performed a cost benefit analysis since 1999 to determine the most cost effective method of repairing and maintaining city owned vehicles. The city's service center (operated by the Public Works Department) bills the various city departments significantly more for an oil change than the Parks Department reports as the cost of an oil change in their maintenance facility. Additionally, the city's service center bills city departments an additional mark up price for work contracted to outside vendors, replacement parts, and fuel. Further, employees of the service center receive incentive payments based on job performance and operating cash flow, which may be in violation of the Missouri Constitution. Approximately $3.1 million was billed by the service center to the various city departments during the year ended June 30, 2006.
The city collects over $3.2 million annually in hotel/motel room taxes, but does not examine or inspect the books and records of the hotels and motels to ensure the amounts paid are accurate. Additionally, the city does not properly monitor the hotel/motel tax funds passed through to the Springfield Convention and Visitors Bureau (CVB). Adequate supporting documentation is not maintained for some CVB expenses, the CVB's payroll bank account was not used in compliance with city contract, and the vehicle provided to the CVB Director is mainly used for personal purposes.
Approximately $1.2 million in revenue was not collected by the Springfield-Branson National Airport because authorization to collect a Passenger Facility Charge expired in March 2006 and application to the Federal Aviation Association to continue to impose the fee was not submitted timely. Additionally, improvement is needed in managing and soliciting proposals for various contracts.
Better controls need to be implemented over the $6.6 million charged on the city's 450 purchasing cards (VISA credit cards) issued to various city employees. We identified excessive spending limits, unnecessary purchases, split purchases to circumvent transaction limits, and inadequate supporting documentation.
Compliance with contract terms and adequate supporting documentation was not required for $464,417 paid to the city's lobbyist during the two years ending June 30, 2007.
The Parks Department has assigned fuel credit cards to employees who do not use and may not need to use the credit cards. Additionally, increased controls are needed over the Parks Department's bulk fuel purchases, and bids have not been solicited for concession products.
Also included in the report are recommendations related to vehicle usage, city expenditures, bonus and incentive payments, controls over seized property, city policies and procedures, finance department procedures, and council and board meeting minutes.
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