A newly released state audit gives Jackson County a “poor” rating, pointing to questionable travel expenses funneled through a high-powered law firm, $2.7 million in no-bid contracts and inadequate oversight of tax dollars.
Many of the issues were previously reported in the news media prior to county officials requesting in 2018 that Missouri State Auditor Nicole Galloway conduct a thorough evaluation of how the county handles its finances. But in this second of an expected four audit reports, Galloway added new details and her sharp criticism,
Galloway calls out the past two county administrations, run by her fellow Democrats for loose rules on travel costs and a lack of transparency and oversight of legal services contracts.
The report describes how the two issues were disturbingly commingled during the county’s association with the Polsinelli law firm, which former County Executive Mike Sanders hired in 2011, with the approval of the county legislature, to handle federal issues related to development of the then-unused Rock Island rail corridor through Jackson County..
Polsinelli came aboard as Sanders was starting to arrange the $52 million purchase of 17.7 milesfrom the Union Pacific railroad, with the aim of building a multi-use trail and preserving the corridor for a potential commuter rail or other forms of mass transit.
Polsinelli’s job was to help the county navigate through the complicated regulatory process around the deal, which came together after Sanders resigned from office in 2016.
While the county initially solicited bids for the contract that Polsinelli won, it was only rebid one other time, in 2013, and renewed annually without the county reevaluating the services being provided, the audit said. There were no county rules addressing how often contracts should be rebid, but there should be, given the large amount of money involved, the audit said and offered examples where more scrutiny would have been warranted.
Between Sanders signing the contract in 2011 and 2017, when County Executive Frank White ended it in the second year of his administration, the county paid Polsinelli $1.3 million based on contracts that Galloway said “lacked detailed requirements,” were not monitored for compliance and had bills that lacked sufficient supporting documentation.
Out of 20 invoices Polsinelli submitted for payment during 2016 and 2017, only one was itemized, the report said.
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‘Questionable’ travel expenses
Of particular concern, the audit said, was $160,000 in travel expenses incurred by county employees that Polsinelli paid for while they were on trips associated with the Rock Island project. The law firm would then get reimbursed by submitting invoices that, with one exception, did not summarize, let alone itemize those expenditures. Rather the costs of hotel, meals and plane tickets were lumped in along with its monthly fee under the broad heading “current professional services.”
As a result, those travel costs were not reflected in the county’s travel budget, the audit said.
The arrangement was unusual and, according to the audit, it’s unclear why it was set up that way. Normally, the county pays travel expenses for its employees directly, and they are supposed to follow certain county rules on travel.
The roundabout way travel was paid for through the Polsinelli contract lacked transparency and was open for abuse, the audit shows.
More than a dozen current and former county employees, including White and Sanders, took trips that the audit called “questionable and were not transparent” to places like Washington, D.C., Denver, Los Angeles and nine other cities.
“The purpose or necessity of these travel expenses was also not always documented, and most of these travel costs for county management and officials were excessive and not obtained in compliance with county policy,” the audit said.
The report singles out several trips taken by Calvin Williford, a former chief of staff and economic development director for both Sanders and White, who was in charge of the Rock Island project. According to the audit, he spent lavishly on hotels: $565 a night for a hotel in Dallas in 2016, and $329 a night that same year while attending a conference in Portland, Oregon.
Like Sanders, Williford recently spent time in prison after both men pleaded guilty to a single count of conspiracy to commit wire fraud for misusing political campaign funds. The charges were unrelated to the Polsinelli contract and other issues brought up in the audit.
White’s current chief of staff, Caleb Clifford, told the auditors last month that “sometime in 2016,” White’s first year as county executive in office, the county “became aware” of the travel arrangement with Polsinelli and ended the practice.
In response to the audit, White said the county has addressed or is addressing Galloway’s concerns with policy changes that tighten financial oversight. Theresa Galvin, chairwoman of the legislature, thanked county staff for “fully cooperating with the process and score of work conducted” by Galloway’s staff.
However, the audit questioned why it took the county more than a year after they were requested to turn over the travel records for Williford and 18 months to get supporting documentation on the Polsinelli contract. The audit staff only got access to both last month, the report said.
The 36-page audit, which includes a 189-page appendix, also cites other instances where better financial controls are needed.
Galloway faulted former county counselor W. Stephen Nixon for not seeking bids or asking for approval from the county legislature while handing out nearly $1 million in legal services contracts. Among them, a previously reported $60,000 contract he arranged with Sanders after Sanders resigned as county executive, in exchange for possible assistance on the purchase of the Rock Island corridor and other county matters.
Sheriff’s office dinged
The report also criticized Sheriff Darryl Forté and his predecessor, Mike Sharp, for spending $9,000 in tax dollars on office Christmas parties for employees in 2017 and 2018. At the party Sharp hosted in 2017, his 125 guests were served meals of prime rib, lobster and shrimp that cost $32 a head.
Forté’s party was less lavish at $19 a meal. The report doesn’t specify what was on the menu for the 130 who attended, but concluded that the party expenditures were “not a prudent, reasonable, or necessary use of county funds.”
The report also faulted Sharp and others in the sheriff’s office for excessive or improper travel expenditures, such as charging the county for daily meal allowances while attending conferences where meal costs were included as part of the registration fee.
Once while attending a conference in Philadelphia in October 2017, Sharp booked a hotel room separate from the conference that cost $524 a night, more than twice the federal per diem rate.
The county is not under any obligation to follow the federal guideline, but the report suggests that would be good idea, noting that state agencies use it as a benchmark.
Galloway’s first audit focused on how the county spends the roughly $20 million collected each year through the quarter-cent community-based anti-drug sales tax, commonly known as COMBAT. Audits on budgeting and payroll are pending.