Important Findings from the Annual Audit Report

On Tuesday, June 11th, the city’s independent auditing firm Brazeale, Saunders, & O’Neil presented the annual audit for fiscal year 2018. At 199 pages in length, the audit report highlighted ongoing issues and problems that have been raised at council meetings over the past year.

Some of the major takeaways from this report include:

1. The city has a “Significant Deficiency” as it relates to payroll. On page 195, the report states “During the audit, we noted that there were instances in which employees submitted erroneous, misstated, or fraudulent time worked.” Page 196 goes further, making recommendations to institute internal controls that will “aid in detecting the existence of fictitious employees” and ensure that department heads and supervisors who are knowledgeable about the hours and attendance of their employees be responsible for signing off on a statement affirming that they have properly reviewed each time card for accuracy.

• These issues carry serious weight in an annual audit report, but let’s not forget that these same issues have been mentioned at various council meetings and work sessions over the past year. Without any exceptions, the city’s administration has denied the repeated allegations that certain employees have been abusing the current payroll system. Of course, in the time that’s followed since those repeated denials, the State Auditor’s office has begun conducting various investigations.
• Understanding that the council shouldn’t expect these problems to be fixed independently, Councilman Johnson has taken the lead in inviting a technology company to institute a new system that creates accountability and a series of internal controls to prevent instances of fraud from occuring in the future.
• In the next 90 days I’ll be proposing a series of changes to the city’s handbook, civil service rules, and ordinances that will further correct some of the issues we are experiencing related to employee pay, management, and closing unnecessary loopholes that have led to large increases in our payroll costs.

2. Concessions Operating Income (Page 135)

• This was a problem that I first became aware of with last year’s audit report, which revealed that concessions had been operating at nearly a $15,000 loss. While this year’s audit report shows that loss has been reduced, we are still losing a little more than $3,000 on concessions.
• Compare these number to 2009–2013, during which time the city would consistently profit between $14,000–$17,000 annually from concessions.
• We know from 2 whistleblowers, a former Parks and Rec. employee and the former director of Parks and Rec., that there have been significant issues with the way our concessions and rental facilities operate. One employee has recounted witnessing money from concessions exchanging hands (a video about this can be found on my Facebook page.)
• These issues have been reported to the office of the State Auditor, and we are awaiting the results of that investigation.

3. Grants Processed and Grant Money Recieved

• Detailed on pages 186 and 187, the city processed only 24 grants for FY 2018. Compare this to 2011 where 54 grants were processed. In fact, about twice as many grants is what the city used to process each year, until the city’s administration gutted the planning division in Community Development. The former employees in that division were all skilled in writing grants, and that had become an important part of their job duties prior to the Planning Division being decimated by bad management decisions.
• To put the number of grants processed in perspective, the city is losing approximately $2,000,000 a year by not processing as many grants as we once were.
• In an attempt to remedy this situation, the council has heard a proposal from a local professional who could help the city get back on track with grant writing. I hope to have this in place no later than the start of Fiscal Year 2020.

4. Property Taxes

• The city of Meridian currently has the third highest property tax rate in the state, trailing only Hattiesburg and Jackson.
• While the administration is renewing old talking point about raising property taxes, the facts as outlined in pages 168–172 reveal that the city is actually receiving about 6 million dollars more in tax revenue that we were in 2009. About half of those gains have come from property taxes, with the other half coming from sales tax.
• When it comes to property taxes, I’m currently of the mindset that we should strive to be more like growing cities such as Tupelo and Ridgeland — where the tax rate is significantly lower.
• The notion that we would see a decline in services as a result of no tax increase or a tax cut simply isn’t true. Our decline in services is entirely linked to management issues that have yet to be properly addressed. While the city council can’t step in and make all the necessary changes ourselves, we can institute certain policies that can at least create more accountability and demand more of city management.

Conclusion:

• The City Council is very aware of the problems we face and we are becoming more and more prepared to deal with these issues. We begin our annual budget process in July, where we will have no shortage of tough decisions to make in an effort to move our city forward.
• Community engagement is crucial to making government more effective. Stay tuned for the full audit report to be uploaded to the city’s website, as well as the State Auditor’s website.
• City Council meetings are held the first Tuesday of each month at 9:00am and the third Tuesday at 5:00pm. If you can’t make it in person, check out the livestream on the city of Meridian Facebook page or check back a day or two later for a better quality video of the council meeting posted to my “Councilman Weston Lindemann” Facebook Page.