Report No. 2009-22
February 2009
Complete Audit Report

The following findings were included in our audit report on the city of St. Joseph.

Due to sewer overflow problems, the city will have to spend an estimated $450 million over the next 120 years to be in compliance with federal and state standards, if the city's plan is approved by regulatory agencies. The cost of this project would mean at least a 200 percent increase in customer sewer bills. During measurable rainfall or significant snow melt, the city's sewer system cannot handle the additional flow and, as a result, runoff containing raw sewage flows into the Missouri River. According to the city’s long term control plan, in a typical year, there are 78 overflows and approximately 2.9 billion gallons of untreated water overflowing into the Missouri River, in violation of the federal Clean Water Act. Environmental Protection Agency standards require that the city limit the overflows to no more than 4 times per year.

Over $300,000 was transferred from the Sewer Fund to the Aviation Fund over the last 5 years as compensation for dumping sewer sludge on airport farmland. Justification for these transfers have not been maintained and whether this is the most cost efficient means of disposing of sludge is unclear.

The city of St. Joseph paid St. Joseph Museums, Inc. (SJMI) more than $2 million during the 5 years ended June 30, 2007, to manage the municipal museum under a contract that was declared unlawful and void by the courts in April 2007. Although the contract was deemed void, the city allowed SJMI to continue to operate a museum in the city-owned mansion and collect admission fees, without a valid contract. The Museum Oversight Board (MOB) has not complied with all of the requirements stated in the charter nor has the MOB ensured SJMI complied with the requirements. The SJMI Board did not provide invoices to the MOB to support payment of tax monies to SJMI, nor did it provide an annual report to the MOB as required.

Of approximately 650 city employees, more than 230 have city-issued procurement cards (35 percent). During the year ended June 30, 2007, procurement card purchases totaled approximately $2.4 million. The city has not adequately analyzed the need for the procurement cards based upon employee use, does not have adequate review procedures in place, and excessive spending limits have exposed the city to unnecessary liability. Procurement card and travel expenditures were not always necessary and prudent, some prohibited and unauthorized purchases were made, and adequate documentation was not always submitted.

Some disbursements or contributions of money and property to various entities do not appear to be prudent, reasonable, or necessary uses of city finds and may violate the Missouri Constitution. The city made contributions to various entities totaling at least $100,000 during the year ended June 30, 2007, that were not supported by contracts. In addition, the city made several donations of city-owned property that had an original cost of over $273,000.

At least $900,000 in interfund transfers and various landfill discounts were made during the year ended June 30, 2007, that appear to be for the purpose of subsidizing other funds. Of this amount, over $700,000 was from restricted funds. In addition, the indirect cost allocation plan (CAP) and the public works cost allocation plan (PWCP), which are used to determine administrative transfers, are largely based on estimates and no formal time studies have been performed to determine the amounts of some of these transfers. Many of the actual CAP and PWCP administrative transfers differed from the amounts calculated in those plans and some transfers were not approved by the City Council or were not supported by adequate documentation.

The City Council and the Museum Committee did not post agendas or maintain minutes of some meetings. In addition, various "confidential" memos that are not specifically closed according to the Sunshine Law have not been made available to the public.

The city has not sought legal opinions concerning longevity payments to employees. The city has a longevity program whereby any employee attaining 16 years of employment with the city is awarded a one-time net payment of $1,500. During the 2 years ended June 30, 2008, payments totaling approximately $54,000 were made to employees. It is unclear whether these payments violate the Missouri Constitution as they grant additional compensation for services already rendered. In addition, the city made vehicle allowance payments totaling $36,840 to the City Manager, Mayor, and City Council in 2007; however, the payments are not based on actual expenses and the city does not have any documentation to support how these amounts were determined or to show they were reasonable.

The city owns over 520 vehicles with a total acquisition cost to the city of approximately $14 million and spent over $1.2 million on fuel during the year ended June 30, 2007. Usage logs for city-owned vehicles are not always maintained. At least 25 city-owned vehicles were assigned as employee take-home vehicles, not including police vehicles, but justification for allowing employees to take vehicles home is not documented and commuting mileage was not always properly reported and taxed. In addition, comparisons of fuel used to the fuel purchases are not performed by the Landfill, Parks and Recreation, and Street Departments and access to fuel tanks is not adequately controlled and limited at the Parks and Recreation Department

The city provided cellular phones or PDAs to approximately 115 employees and did not adequately monitor personal use of cellular phones and PDAs or require employees to indicate personal use on the phone bills. The city exceeded plan minutes 6 out of 12 months during the year ended June 30, 2007, and no employees were required to reimburse the city for personal usage for the months in which plan minutes were exceeded. The city paid approximately $75,000 during the year ended June 30, 2007, for cellular phone and PDA services. In addition, the city has not evaluated the cost and distribution of cellular phones and other mobile technology to determine if all devices assigned are necessary.

The audit also includes recommendations related to sewer billing, contracts, budgetary practices, cash controls, and land and capital assets.

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