Legislative Joint Auditing
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Thank you.
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Making your way to your seat, we will call this meeting to order.
All right, members. Here we go. So our first order of business today is the adoption of the
minutes of the October 11, 2019 meeting.
I'm sure everybody saw that in the email. Is there any question or comment about those minutes? If not, without objection, we're going to consider those minutes adopted. Thank you. Next item of business will be the adoption of reports of the executive and standing committees. Senator Cheatham, you're recognized to read the Executive Committee report.
Senator Eddie Cheatham
Unverified
5:27
Thank you, Mr. Chair. The Executive Committee met Thursday, November 7, 2019.
Staff reported to the committee to the audit special investigative and shortage reports scheduled to be presented to the standing committees and the full Legislative Joint Auditing Committee this month. In other business, the committee approved the 2020 Legislative Joint Auditing Committee calendar as amended. change meeting dates are january 23rd 24th 2020 and february 27th 28th 2020 with no additional business to discuss the meeting was adjourned the next meeting of the committee will be held thursday december 12th 2019 i'll move for adoption of this report thank you senator do i have a
second on that motion all right we have a second all those in favor of adopting this report as red and say aye all opposed no all right thank you members next will be the report on standing committee on counties and municipalities representative watson you're recognized
Representative Danny Watson
Unverified
6:34
thank you mr. chair on november 7th 2019 the standing committee on counties and municipalities
met. The committee adopted the minutes of the October 10, 2019 meeting. The committee reviewed five previously deferred reports. These were all filed. Officials from three of these entities were present to discuss the repeat findings. The committee reviewed 69 current reports. One of these was certified to the bond board. Twelve were referred to prosecuting attorneys. Officials from six entities were present to address the
repeat findings in their current reports. The committee filed all 69 current reports and deferred none. Mr. Chair I move for adoption of this report. Thank you
on that motion? Got a second. All those in favor of adopting it as read say aye all opposed no thank you that one will be adopted uh next is the report on standing committee on educational institutions senator pitch you're recognized
Senator Mathew Pitsch
Unverified
7:43
thank you mr chairman the committee reviewed one previously deferred audit report and nine current school district audit reports for the year ended june 30 2018 representatives from the little rock school district were present and answered questions from the committee relating to findings contained in the district's audit report the committee deferred acceptance of the district's audit report at its october 2019 meeting without review the audit report of the marmaduke school district was referred to the applicable prosecuting attorney the committee filed the one previously deferred audit report and nine of the current audit reports that were
brought before it mr chairman i move for adoption of
this report thank you senator may i say a second on that motion got a second here all those in favor of adopting that report as read say aye all opposed no all right that one will stand adopted thank you committee uh next will be the standing committee on state agencies report
Representative Nelda Speaks
Unverified
8:40
representative speaks you're recognized thank you mr chair ten reports were on the committee's agenda yesterday one deferred report and three
current reports with findings were presented. The Department of Education report was deferred from October the 10th, 2019, meeting so that the committee could get additional information on an issue related to an employee providing training to a school district. The State Board of Productry Medicine was not properly reconciling cash receipts to deposit and did not deposit
funds obtained from closing a bank account into the state treasury in a timely manner. The Office of the Prosecutor Coordinator did not properly record transactions totaling just over $10,000 to employee benefits. The Department of Veterans Affairs report contained findings from not complying with state procurement regulations, preceding disbursements before proper approval, not
making timely deposits, not submitting claims to the VA or Medicaid in a timely manner, and not collecting receivables in a timely and cost-effective manner. Various agency staff members were present to report on how the agencies intended to address the audit findings and to answer committee questions during the meeting. The committee adopted a motion to file the one deferred report and the nine current reports.
I move to adopt this report. Thank
you, Representative. May I have a second to that motion? We have a second. Senator Pitch. All those in favor, say aye. Aye. All opposed, no. Thank you. That will stand adopted. Members, our next item of business is a review of reports, audit report on the city of Helena and West Helena, year-ended December 31, 2018. Mr. Jones, you're recognized. Thank you, Mr. Chair.
Speaker 26
10:58
This presentation covers the audit report of the City of Helena, West Helena for the year ended December
Speaker 27
11:05
31st, 2018. The City of Helena, West Helena is located in southeast Arkansas and is the county seat of Phillips County. It operates under the Mayor Council form of government and has six aldermen. The 2010 population was approximately 12,300. The City has a history of extensive audit findings dating back to 2006.
These past findings consisted of the following. Disbursements for non-business purposes, material misstatements in financial records, significant non-compliance with the municipal accounting law, violation of the state ethics law, violations of Arkansas Constitution, Article 12, Section 5, which were payments to individuals and private organizations without contracts for services, payroll overpayments, and budget issues. In recent years, the city has made improvements in its financial record-keeping and had fewer audit findings.
Specifically, these improvements resulted in fewer misstatements in financial records and better compliance with the municipal accounting law. Arkansas Code requires the city council to approve an annual budget, which is an appropriation of funds for operations and city management to function within this appropriation. however the city failed to expend funds within appropriations due to a lack of management oversight resulting in general fund and street fund expenditures exceeding appropriations by seven hundred twelve thousand dollars and thirty six thousand dollars respectively before a 2018 budget amendment was adopted on
June 4th 2019 more than five months after a year in general street fund expenditures had exceeded appropriations by more than one million dollars and $92,000 respectively. The effect of this overspending constitutes a controlled deficiency in the process of maintaining city expenditures within appropriations and a threat to efficient stable operations of the city. As a result of overspending that included year-end bonuses of almost $105,000 the general fund had a deficit balance of $481,000 at the end of 2018. Another factor
contributing to this deficit was various accounts payable totaling over a million dollars, including the following. $276,000 to the Phillips County Port Authority, $210,000 for 2019 workers' compensation insurance premiums, the Arkansas Municipal League, $127,000 for payroll taxes and a tax lien, $125,000 for retirement contributions to lot fee and APERS, $86,000 for the Arkansas Municipal League defense program coverage and $271,000 to other vendors. In addition to the
general fund deficit fund balance, failure to pay premiums for workers' compensation insurance and cancellation of this insurance could result in the loss of the city's general revenue turnback received from the state for the period for which the coverage is not provided. Furthermore, the city's inability to pay its debts timely led to late payment fees, bank overdraft charges, utility shutoff notices, and some vendors requiring cash payments on delivery. The city also remains delinquent on its share of projects costs pursuant to a 1997
agreement with the Corps of Engineers. As of June 2019, the city's balance is $1.4 million. Due to these financial issues detected in the 2018 audit, we were required by auditing standards to question the city's ability to continue to exist and operate as a going concern. As previously noted, the city's regulatory basis general fund balance was a deficit of $481,000 at the end of 2018. The deficit in the general fund is primarily the result of the trend over
the last 12 years of expenditures exceeding revenues. The city has received contributions totaling $987,000 from the Water and Sewer Departments from 2006 through 2018. Contributions at this level may not be sustainable indefinitely. These factors create uncertainty about the city's ability to continue as a going concern. A five-year history of the city's financial condition is shown on this slide and is Schedule 4-1 on page 29 of the report.
the mayor and council have implemented the following corrective actions for 2019 total spending and overtime pay have been capped by executive order the 2019 budget was passed with cuts in administrative costs landfill tipping fees are increased by two dollars per ton as of january 1st cell phone and information technology contracts have been renegotiated The city combined the street and sanitation departments to save money by job attrition and elimination of one department head.
Sanitation rates were increased. The city will forego bonuses for employees this year. The 2018 bonus total was almost $105,000. The city is negotiating a payment plan with officials from the Port Authority and hope to have it finalized soon. the mayor is in discussion with officials from Washington DC regarding resolution of the agreement with the Corps of Engineers now present the remaining audit findings we know the following salary overpayments the city
paid the mayor $7,000 more than the amount approved by the City Council due to duplicate vehicle allowance payments the full amount of the overpayment was returned to the city in June of 2019. The city paid a fireman $3,000 more than the amount approved by the city council due to a bank error. The city treasurer knew the error and did not contact the bank for correction. The full amount of the overpayment was returned to the city in August of 2019. Employees in the administrative department and the district court clerk received full-time
salary and benefits, however timesheets did not reflect 80 hours worked each pay period in non-compliance with the city's employee handbook, which states that a standard workweek shall consist of 40 hours per week within a seven-day period. District employees earned overtime for working during lunch breaks. Although city policy indicates employees are not to work during meal breaks without proper approval of their immediate supervisor, documentation indicating prior approval was not provided. Similar findings
were issued in the prior report. Competitive bids were not solicited for three police cars costing $84,000 in non-compliance with Arkansas Code. The district court clerk was in non-compliance with Arkansas Code and other proper accounting procedures as follows. The balance remaining in the district court bank account was $79,543 less than the listing of receipts not yet adjudicated. A similar finding was issued for years 2013 through 2017.
We noted that the city was underpaid $8,715 during 2018 from the district court account. Bank reconciliations were not prepared in a timely manner in noncompliance with Arkansas Code. Financial statements were not presented monthly to the governing body, and the financial statements presented did not include all funds in noncompliance with Arkansas Code. This precludes management from making appropriate informed decisions on behalf of the city. Prenumbered receipts were not issued for all monies collected for the district court cost account after March 2, 2018, as required by Arkansas Code.
The condition of a defendant's release on a payment of bail or bond, if any at all, is an exclusively judicial function. However, this function was assigned to a court security officer in noncompliance with Arkansas Code as interpreted by two attorney general opinions. This concludes my presentation of the audit report for the City of Helena West Helena for 2018. City officials are present to answer committee questions. Thank you, Mr. Jones.
We do have a couple of guests here representing Helena and West Helena. Would you gentlemen mind standing, and as our custom here, we're going to put you under oath before you testify before this committee. We will start with the gentleman to my right. Would you please state your name, employer, and position? Thank you. Please raise your right hand. Do you solemnly swear to affirm that the testimony that you're about to give will be the truth, the whole truth, and nothing but the truth, so help you God?
Thank you, sir. next please uh state your name employer and position for the record thank you sir would you please raise your right hand do you solemnly swear or affirm that the testimony you're about to give will be the truth the whole truth and nothing but the truth so help you god thank
you sir nobody's in the queue right this second uh mr mayor would do you have statement that you'd like to
Representative Johnny Rye
Unverified
20:28
to begin with yes sir mr. chairman thank you again
Speaker 35
20:33
mr. chairman and staff members of the committee my name is Kevin Smith I'm mayor of Helena West Helena I used to serve on this Augusta body and for ten years and I take very seriously what you what
Representative Johnny Rye
Unverified
20:51
you do I wish I could say it's a pleasure to be back today under the circumstances but we have serious audit problems in Helena
Speaker 35
21:01
West Helena I was elected in January so I am a new mayor
but and these findings are mostly about 2018 but it also issues concerns going forward which i also would like to address if i could just try to summarize first of all let me say that i agree with your findings uh you won't you won't find any uh any any disagreement with them i also want to say that having been where you are and now where i am today i can tell you
that i've been able to watch your field staff closely and your district staff your auditors do an extremely good job out in the field and you should be proud of them when i came into office in january one of the first meetings i had was with our staff to say that we have a bad reputation in little rock when it comes to audits and that under my administration at least there would be zero tolerance of any kind of an attitude that this is not important or significant or any kind
of serious findings by the city and it would be my goal before hopefully not it won't take that long but before the end of my term to have no findings there was a time when i represented helena west Helena in the Senate when we didn't have findings from the cities so I think it can happen but over the years I think a culture of a lack of seriousness about what audits mean and physical responsibility taking place in our
government and that's what I think you see here today and you've seen it repeatedly I'm told by our auditors that things are getting better so So at least they've been headed in the right direction even before I became mayor. But as you can see, they're still very serious. When I was sat where you sat, the two things that bothered me the most were repeat findings and newly elected officials who acted like they weren't responsible for anything that happened before they were elected
and didn't have to answer to them. I don't feel like I should have to answer to something that happened before I was elected, but i do have to answer what we're doing now to correct them and so we had that first meeting we set up a number of policies which i won't go into but your auditors fleshed them out pretty well in their report and since january we've done a lot of things to address some of the matters that they've identified on your screens and in their report
And the second goal I had was transparency. There were a lot of things that, frankly, hadn't showed up in audit reports in the past. And I didn't want to gloss over. The first, when you have a problem, the first goal is to identify the problem, admit that you have a problem. And the second one is to define what the problem is, and only then can you start to solve it. So some issues like the Corps of Engineers debt that you saw at the end of that presentation has actually been there for about over 10 years, but I don't think it's appeared in the audits before because I don't think any mayor or anybody else has ever pointed that information to your auditors.
But I wanted us to be completely and totally transparent about everything that we face so that we could get about the business of doing something about it. and i'll i'll stop there just to let you know that that's uh we do take it very seriously we've done a lot since january i don't know if we've gotten i don't know that we've gotten there yet but we are on a path to get there and we've taken many steps on that path already that show that we're serious so with that i'll i'll stop and let you proceed okay thank you
mr. Smith uh senator Hammer you're up next for a question but uh first I'd like to apologize I didn't I think you had a question a while ago and I just didn't see you in time so I apologize for that but you recognize now for a question thank
Senator Kim Hammer
Unverified
25:24
you mr. chair either of you employed with the city uh I know mayor you're
Derrick Turner
Unverified
25:27
newly elected but either of you employed with the city throughout the time that these audit findings were occurring did you work for the city before you were elected oh no sir that's okay and i'm sorry the other gentleman i didn't i didn't hear your name or
Speaker 43
25:50
derrick turner i'm a city treasurer okay and how long have you worked
Speaker 42
25:55
for the city sir uh this is the beginning of my second
Derrick Turner
Unverified
25:59
term i came on in 2015 okay and so these findings that we have before us today their repeat findings did you um detect that they were going on and didn't have the cooperation of the previous mayor to address them or can you give me a little bit of back history with you being a city employee longer than the new mayor
Speaker 43
26:17
oh me yes sir um i wouldn't say that we didn't get cooperation from the previous mayor it's just that um Personally, I don't have a lot of control in purchasing and writing checks. You can tell, or they may understand what needs to be done, but you can't really control what they need, the things that are going on.
I think we kind of had a feeling that some of the issues that we were having had a lot to do with overtime. police department and the fire department were understaffed and so no matter how we budgeted no matter how we balanced the budget at the beginning of the year it was always hard to maintain that budget because of the significant overtime hours that our police officers and firemen were getting and and that led to paying the overtime kind of led to other bills not getting
paid um so i'm not going to say that the mayor didn't care it was just that i guess the payroll was one of the top priorities and these people worked these hours so we paid that when we paid the overtime that kind of just we just didn't have a lot of money left to pay other bills and things started to steamroll a little bit snowball a little bit okay all right well thank
Senator Kim Hammer
Unverified
27:47
you and And, Mayor, what's your projection as far as you said you hope it wouldn't be that long.
Derrick Turner
Unverified
27:53
What did you say as far as when you think that the ship will be righted as far as your deficit with
Representative Johnny Rye
Unverified
28:01
the adjustments that you all have made? Thank you, Senator. Yeah, that's a good
Speaker 35
28:05
question. I hope we passed a, for the first time in over 10 years and only the second time in 20 years, we passed a rate increase on our water, sewer, and sanitation bill in accordance with the recommendations of the Arkansas Rural Water Association, and we also indexed them to the CPI so that we wouldn't get in a deficit.
The sanitation portion of that bill goes to our general fund, and provided we utilize fiscal discipline and we don't spend it unwisely and spend it on our bills, My goal, anyway, is for us to be out of deficit situation by July the 1st, 2020. And that's an important date because that's when, as some of you may be familiar with some of our crime problems,
we haven't had a jail in seven years. Our jail is being built now and should be opened in January. But it's going to cost us about half a million dollars a year in revenue towards that jail. but that starts July the first the increase that we just experienced is going to give us a window from about September to June 30th where we are still getting that revenue before we have to pay for the jail that'll allow
us I hope to get caught up on the roughly three hundred thousand plus as long as we don't create new debt on top of that so it's it's a question of physical discipline as you all know and so that that's the plan that the other issues outside of that some of the some of the issues again they're kind of two issues one is that we had regular audit findings that would bring us here anyway
and the other one is the letter of concern or the concern of the overall financial status of the city when it comes to the second autumn I feel like we are very much in the process of riding this ship and the increase in water sewer and sanitation rates as you can imagine is politically difficult it was unanimously supported by the council I feel like we're now headed in the right direction but it's gone several years as your history of audits for us to testify with, I think, a lack of adequate central management.
It's been dispersed among too many people who don't communicate and don't work together or they don't bring it together to see where it all comes together. And then when you do an audit, which is what an audit is, you see all these things. The Corps of Engineers debt, which has been hanging over the city for a long time, I went up to Washington in March and met with the lawyers and the federal officials about that and finally had a breakthrough. Nobody had met with them before.
Nobody had taken that initiative, and we just kind of pretended it didn't exist. So for the first time in a long time, we didn't pretend it didn't exist. We took it seriously, and it was a good conversation, and those conversations continue. We're going to try to have one before the end of this year. and to make a long story short the officials in the city at the time did not sit I mean it's our position and we have the most of the evidence or a lot
of the evidence to back this up that was a program that allowed us to get in kind in our local match but we had to submit documentation to show that we did not submit it and so it converted to a cash match and now it's a debt that they're trying to collect at the federal level and they kept us from getting federal grants for the longest time they withheld they they let us go that March after that meeting so we have now been eligible for and we've applied for and
received significant some of federal grants and then secondly this next meeting will be about this in-kind issue and we hope that we'll have some resolution soon but at least we're like I said at the beginning we're addressing it not ignoring it some of the other items that on the physical concern part the workers comp the Municipal League insurance programs the retirement contribution the tax lien all of that that that basically inherited we have
paid since this end of the year since January 1st those have been paid we worked out agreements with Municipal League and others the Phillips County Port Authority which is an instrumentality of both the county and the city is is working with us but we're trying to see where we are in our budget but they're very lenient on their terms of payment so and then the other vendors we've worked down from that amount of 271 180 since january 1st we're not there yet that's where
i hope to be june 30th okay i
Senator Kim Hammer
Unverified
33:23
want to commend you all answer sorry well a good answer though and appreciate you and commend you for being here uh today and for the actions that you're taking but above all just being here for y'all to uh represent yourself mr chair i'd like to go on the bottom of the queue and i'd like to ask
Chair
Unverified
33:39
mr area question when everybody else is done if you don't mind, please. Will do. Thank
Senator Alan Clark
Unverified
33:45
you, Senator. Senator Clark, you're recognized for a question. Yes. I believe in your statement that you
said that there had been a climate or culture of not of being fiscally irresponsible, and correct me if I'm not exactly correct, and not paying attention to these audit findings? Yes, sir. And having been here, then you probably know that that is a headache and causes great chagrin here.
And I'm grateful that you've been elected and that you're choosing to take care of this, but you
got any ideas on what we can do to see that people do
Speaker 35
34:37
take it seriously? Well, yes, sir. I think you did some things recently, if I'm not mistaken, about giving the state the authority, I'm not the expert on this,
Representative Johnny Rye
Unverified
34:49
but to come in in situations where the city is just being,
just basically malfeasance type situations. And we haven't gotten, thank goodness, we haven't gotten to that point yet. My job is trying to keep us from getting to that point. I think that, I think the, I
Speaker 35
35:13
think it comes from the top in this case. and I've seen mayors in other situations in our own town
who treated this seriously and had no audit findings and kept the train on the track, so to speak. The challenge we have is 10 or more years of the opposite of that. And I think part of it is just taking responsibility for what we're doing. And I've tried to put it on myself and hold myself responsible. I feel like I am the one that should be accountable. Even though I'm a new mayor, I'm still accountable for what's going on since January 1st.
And we may not get there next time. I may be here next year, Teresa. I hope not when it comes to findings. But I don't think we'll be here. And I'm very confident we won't be here when it comes to the areas of matter of concern. I feel very confident that we will and are overcoming those issues. So I think we're changing that culture, to be short
Senator Alan Clark
Unverified
36:19
about it. I thank you for your diligence in dealing with it, Mr. Chair. Thank you. And I hope that this body will do something about putting teeth into some of this
where we have the people that are perennially here. Thank
Chair
Unverified
36:33
you. Thank you, Senator. Senator Pitts, you recognize for
Senator Mathew Pitsch
Unverified
36:40
a question? Thank you, Mr. Chairman. I was hoping that Senator Hammer and Senator Clark, they got real close to my question, so that didn't quite get there. You've taken over a city as, for lack of another term, CEO and CFO, and for all, if you were in a business world, you'd be, this would be very drastic in a business world.
But typically, you're going to have to deal with three things, the culture, the policy, and the people. And I've heard you talk about policies that you've implemented and the generic statement about the culture. You've got 10 years of culture to change. I would challenge you, though, to do a hard look into your personnel because that's the hardest thing to do as a CEO and a CFO. But you have situations that are screaming for changes to be made. And maybe you want to address that.
You've addressed the other two, one very well. the policy changes you've tried to implement and the culture that kind of generically but i don't need i don't need names on a list but i'm going to tell you the the abysmal report you inherited that we just read i watched you as you were looking at the screen as that was going on and i feel like you want to fix that but just policy changes and just culture changes as a ceo that's going to be very tough to change without getting the right people in the right
right chairs so i don't know if you want to address that in front of this body but you're going to be back if you
Speaker 66
38:13
don't deal with all three pillars of fixing an entity well i i also own a
Speaker 35
38:18
business and i agree with you completely it really i would say probably is the most important pillar so i agree with you more than you know probably um and i and i do think that's true um we've one of the first things I tried to do and our district court clerk just showed
up but was to make changes there where we had a lot of audit findings and the audit findings were the primary reason for that and it's something I'd like to address to the legislative body and this before me because you mentioned to follow up on Senator Clark's comments earlier actually as well the status of district court since I was here which is a long time ago now has been this sort of transition from local to state to control and it's created a lot of
confusion about who is whose boss and who's in charge what I dismissed district court staff in, I think it was January, with the goal of rebuilding it because the auditors held me accountable in the auditor of my office. The city council took it back away from me and gave it to the district court judge who they said was the correct person to be in charge of it.
He actually disagreed with that opinion. and the administrative boss of the courts who i consulted a lot on that disagreed with that opinion but nonetheless that's what happened and so they are not any longer under under my direct purview having said that and i think i'll say the municipal league i believe has a pretty strong recommendation to the legislature to complete that transition so that the lines
of authority of who is over who and who's responsible it's hard to have accountability which is what this body is all about is accountability if you're not sure who's in charge or who the boss is or who is responsible and and it really has been and I'll take my own share of responsibility I was here when we started this process it still hasn't been completed and and I would urge you I've got your attention I didn't understand it or appreciate it you know I'm not a lawyer, so we kind of let things up to the lawyers. No offense to the lawyers.
But we felt like they understood it better than we did. But now as mayor, I can tell you that it is still very much a problem out there in our communities and cities. So I hope that y'all will listen to the Municipal League when it comes to that issue. And that's just one thing. I have dismissed staff, not necessarily just for financial reasons, but I'm certainly not afraid to fire people. some of the people responsible are frankly they're not under me so I can't
I don't have that authority but having said that we do take advantage of your field auditors in the sense that we are listening to them and trying to use them as guidance we don't ask them for no we're not allowed to ask them for future guidance because y'all look at what happened not what's going to happen but it's very destructive to know what has happened in order to go forward and we're making use of all the tools we can. I asked the Municipal League, I know y'all
can't do that, but I've asked the Municipal League if they would come to our city to do a workshop on audit and accounting practices. They haven't been able to do that but I did attend their Little Rock workshop on that. So I agree with you senator and thank you for your comments and we're doing the best we can
Senator Mathew Pitsch
Unverified
42:11
just a quick follow-up i appreciate that just keep in mind that all three of those are equal
you you've done a lot and i've heard a lot on policies but the wrong people applying the right policies you're still going to have the bad culture they're all three equal and and i i look back over the history of what you've got and and you've mentioned a couple times that they had got it right that certain mayors got it right i'll bet the history of that as they put the level of importance that usually gets diminished which is the personnel pillar they've probably focused in that area and it's the toughest one to deal with yeah i mean it's lives are involved with
that so thank you for your efforts all
Representative Johnny Rye
Unverified
43:02
of you thank you representative rye you're recognized uh gentlemen a couple things i would like
to ask you about you know you said that there was new revenue that was coming in that actually was going to be used for new jail yes sir do you have that money in a kind of lockdown in a certain area that cannot be used for anything but that well
let me clarify that a little bit it's a county jail that the city
Speaker 35
43:27
will use with the county the County actually did it it was change in an existing sales tax for the Port Authority that the city got about half a million dollars a year was our portion that we use is basically our general revenue that the public voted because of the seriousness of not having a jail to redirect that existing revenue to the
jail and it's actually now being read or as of July 1st 2020 will be direct redirected to the county jail facility so we actually won't it's revenue we won't be getting we do hope though that that we're still sending our most serious offenders to jails and prisons around the state but that costs us a lot more than housing them locally and so we'll hopefully save money there but of
course it also means we'll probably have more people to lock up because we'll have a jail so we're looking at that the other thing we're looking at is combining our police department not not legally but just as a facility to have an efficiency of scale sort of with with facilities and radio systems and so forth in a common justice complex that's coming out of that that's also being built next to that jail so the sheriff and police department would be next to each other and we work together and have several efficiencies and staff and and
many other things and we think that's going to save us some money we're still in negotiations with the county on that but that's one of the things we're looking at i hope that answers your question as far as the now the the the new revenue i was referring to was the tax that we just passed the fees on sanitation water and sewer we also had serious problems with our water and sewer department which the staff the committee are familiar with as well unfortunately that water and sewer part will be segregated into the water
sewer per state law and should more than adequately take care of our problems of that department even though that's not what we're here the sanitation portion of that goes to our city general fund and that is about the same amount we're going to lose with that port tax about a half a million dollars in new revenue start and that started in September so we have from September to June 30th where we have that and we're continuing to get that half a million in port revenue that's the window where I hope we get caught up on the debt as long as we do
what basically what you're saying is is we sort of sequester it for that I don't know if sequester is the right word but just using physical discipline not to spend more just because we've got it but to spend it on that debt then I think by June July 1st I'm hoping we'll have that paid off thank
Representative Johnny Rye
Unverified
46:30
you follow up please well thank you sir uh you know you were mentioned mentioning the officers you know in the overtime within the
police department do you think that problem is because you're you know you don't
Speaker 35
46:43
have enough folks yes sir yes sir i absolutely do you don't have enough folks um we have fewer people working more hours at time and a half instead of regular salary so we're spending the money and just at our most recent council meeting this this week our chiefs resubmitted a plan to put more patrolmen back out on our streets and to hire more people and to use the we've also had a lot of savings in the police department in the salary field and other ways
redirect our budget it wouldn't spend more than what our budget is for the police department but reallocated in a way would get us more policemen and especially more policemen out in the field I got a motion died for lack of second
Chair
Unverified
47:36
thank you mr. chairman thank you sir but
Representative Nelda Speaks
Unverified
47:40
we'll keep trying representative speech you recognize for
a question thank you mr. chair mine is to the staff I did can you combined the sanitation and the street department? Can they be combined? Isn't that
Speaker 27
47:54
what they're trying to do? Yes, that's what they did. That's what we have seen in our work, that they did that and they saved, basically had one department head instead of two and saved some money. Oh, okay. So by law you can do
Representative Nelda Speaks
Unverified
48:07
that? Yes. Okay. We don't know any law against
Senator Mark Johnson
Unverified
48:19
that okay thank you senator Johnson you're recognized thank you mr. chair mayor I listen to this and I'm reminded of a mutual friend of ours that
said to me when I filed for the Senate that you know I needed to go out to state hospital and have my head exam and I'm sitting here thinking there's my friend who's done a similar thing but one I want to thank you for your service a A couple of questions that I had about just from a more or less administrative overview standpoint is a little bit of a follow-up on Senator Pitch's question. But I'm reminded that we're really two cities that combined that you have here.
And the culture you were speaking of, I don't want to ascribe to one of the other cities. I just know that, you know, anytime there's a blended family, so to speak, there's some problems and friction. Are any of these things, and again, as the new mayor, you might not have been there for a lot of this, but you've certainly been from that area forever and know it. Is there any lesson that we can learn in this that would help similar situations when two cities combine?
Were there problems that were related to that that perhaps created some of these audit findings? And having seen that from the perspective of a legislator, too, you might even have some recommendations to us of how we can put some things in place that could avoid this in the future. Do you have any suggestions or even some historical perspective on that?
Yes, sir. First of all, thank you, Senator Johnson, for your comments.
Speaker 35
49:58
yes i would say i would go back to mr pitch's comments uh it's it's very important to elect a team to to run that new merged city who is has a experience with management especially financial management it's uh one thing to do it politically it's a totally different thing to do it financially and that's that's where the rub is that's the difficult part so and yes the two cities were managed differently over the years and so when
they came together I would say it was a it was it was not a natural thing but I haven't said that that was that was well over 10 years now and I do think we're getting there. It's just been, it's just not as easy as it sounds. You don't save as much money as you think you will. You can, but you have to have the right people in those positions in order to do it.
I'm trying to think of a legislative answer to that. I can't honestly think of one other than a merger really isn't a merger, it's a takeover. And the existing state law says, now they tell me that y'all had the gall to keep passing laws after I left the legislature I can't believe that so it could change but I don't think it's changed the larger city takes over the smaller cities it's really a takeover and I wrote the law that said
because we didn't want you know a city to be called West Helena if it was Helena and West Helena that allows the city to change the name to the name it wants to be provided they vote for it so I have some experience of this from the legislative point of view I would say there ought to be a better way to do it than just the larger population takes over the smaller population because the truth of the matter is the government and the smaller population was a much better run at the time had no audit findings
and so forth and so the larger culture kind of took over the smaller culture but the smaller one was the one that was working so i don't know how you do that legislatively i really don't unless there's a way to slow it down to create a process that cities have to go through that gets reviewed by the legislature possibly before it can actually make the transition and i'm not sure what the constitutional ramifications of that are when you're talking about cities and elections but well i don't want to put
Senator Mark Johnson
Unverified
52:44
months into your term as mayor, but having had the legislative experiences, as these things come in front of you, if you scribble a note and maybe either on the record or off the record tell us that these things can be tweaked and we can help not just Helena West Helena, but other cities that might be facing the same thing just from having seen it from both sides, we would be grateful for having the advantage of your experience both in the General Assembly and in local government
to help us kind of smooth these things over because, as you know, it's a never-ending process. But thank you
for taking on this job, and again, thank you for many
Speaker 8
53:26
years of friendship. Thank you, Senator Johnson.
Chair
Unverified
53:31
I appreciate it. Representative Foster, recognized. Yes, Mayor. I know you inherited this, and you got to solve this, and I noticed one of the things you said, you're increasing the fees in sewer and water and landfill. Are you going to reduce these after the correction has been made financially?
Speaker 35
53:49
Well, no, sir, because really all that does is get us to what I hope will be a balanced budget or a real balanced budget. If we did that, we would probably be back to where we were. Also, the problem is we haven't been, you know, like everything in life, the costs seem to go up. And that's certainly true with cities. And so if we don't increase those fees, and in case for a water company, it's a business.
In my business, I wish nobody wants to raise prices, but if you can't raise prices, like a farmer, for example, can't raise prices on his own, you can see quickly what will happen if you don't do something financially, because costs continue to go up. so that's been happening and contributed to our deficit along with some very unsound management practices this kind of writes the ship if we had been doing this all along small bites at the
apples the one big one I think we would have been there but like everything it's like those potholes I'm trying to fill if you the longer it takes you to fill them the bigger they're going to be the more expensive it's going to take to fill them. It's kind of like that with the finances. So I'm just grateful that as long as... To me, the whole thing as the mayor, as CEO of the city, is to try and keep that new money restricted to paying off the debt so that when we take this loss in July from the loss of the other revenue,
we will be able to maintain a balanced budget
Chair
Unverified
55:42
that'll be a big success. Follow up, please. You're recognized. Okay. We see this over and over again in audit, and it seems like the citizens of the community end up paying for mismanagement, and that was the reason of my question on that. Yes, sir. Okay. Thank you,
Mr. Chair. Senator Clark, you're recognized. Yes.
Senator Alan Clark
Unverified
56:01
Mayor, did you just mention water? Yes, sir. And did you mention that as a financial problem? It has been in the past, yes, sir. Because you were selling water at too low a price? Yes, sir. Now you're into my wheelhouse and into a problem of the legislature being irresponsible. Would it not be helpful if a law was in place where there was an audit every five years
that said that a city could not sell water below cost and then there's
no pressure on the mayor and the city council to sell water
Speaker 35
56:52
below cost? Speaking as mayor and we have a water company that the city runs, it's not an independent commission or a regional, I think the answer to that is yes. and it's related to Mr. Fott's question
because if you don't do that, it gets us in trouble and makes the increase a lot larger later and you do end up paying for mismanagement. So in a way, it heads off a problem before it occurs. So, I
Representative Johnny Rye
Unverified
57:21
mean, just speaking for myself, I think that would be welcome. Well, that's what our water test
Senator Alan Clark
Unverified
57:28
force found. It's in our report. we failed to do that in the last session but we've got cities and towns all over this state that have
this exact problem and somebody can run against you and say we'll lower your water rates and put y'all right back into the place that you've been and it's irresponsible while we talk about your irresponsibility or the
people before you is irresponsibility it's irresponsible for us not to fix it thank
Speaker 93
57:55
you Mr. Chair Senator Hammer we're back to
Senator Kim Hammer
Unverified
57:59
you thank you I'd like to ask one question mayor then I'd like to ask mr. area question please what do you have budgeted to operate your jail at a daily
Representative Johnny Rye
Unverified
58:09
rate of per prisoner well again it's actually being operated by the county sixty dollars I believe is
Speaker 35
58:19
that is the daily right that will pay or that's the that's the right where we are in terms of negotiations anyway that's our right the right that the feds and state and others and other cities would probably be greater than that but I'm not sure what that is okay it's 100 beds I think about 25% are being retained for federal offenders okay 75 all right
Senator Kim Hammer
Unverified
58:47
thank you my question mr. areas I remember a bill I hate to attribute it to him if I'm not accurate but it seemed like Senator Hickey was one that ran that bill that dealt with cities and multiple findings coming back to us can you refresh my memory what that piece of legislation did and how does it apply to a scenario like what we're taking up this
Speaker 96
59:11
morning yes sir senator hickey's dissolution bill there are there are requirements in the
municipal accounting law if those requirements are not met there's an enforcement mechanism if you go all the way through that enforcement mechanism and this committee has a lot to do with that and the municipality still has not met those requirements and they lose their turn back then at the end of that process there is a clock that starts ticking you have three years within which if the municipality has to go through that enforcement mechanism again then they are in
position for this committee to ask the attorney general to start dissolution proceedings and that kicks off if if a court agrees that kicks off the governor appointing somebody to be basically the receiver for the city and to wind down the city affairs so that is the process that that legislation calls for can i ask the mayor question mr chair yes sir have y'all in in all of this have you lost
Derrick Turner
Unverified
1:00:16
your turn back money or was there a period where you've lost your turn back money that mr
Representative Johnny Rye
Unverified
1:00:21
airy just referred to no sir we haven't gotten to that point and i'm gonna do
Derrick Turner
Unverified
1:00:28
my level best to keep us from getting to that point maybe this piece of legislation would be good incentive for you to take back and address the three issues that senator pitch and some others have mentioned that if this doesn't get going in the right direction there is a pathway for
Speaker 35
1:00:45
us to you know intervene and I know again I might be dating myself a little bit but I know that when when I was here you know we had some tools available to the state when it
came to insolvency of cities and counties and I'm not exactly sure what the status of it is I kind of looked it up but the bottom line is if you're trying to convince my city council city employees the seriousness of audit findings and and just general generally accepted accounting principles and it's it's I find it is helpful to be the short answer to be able to say this is
what ultimately happens if you ignore this long enough if you don't face the music if you don't change things sometimes you do need the stick not just to carry it I mean I'll be the first one to agree with that I'm not gonna speak as to which legislation is better so I'm not here anymore I'll let y'all debate that but I definitely agree with your sentiment that there needs to be if I were back where you are today I'd have a lot of things that would do but but one of those would be to make sure you know that
Speaker 89
1:02:03
that was made clear to to all the
cities especially the cities that come before you here well and
Senator Kim Hammer
Unverified
1:02:10
again I want to commend you because you guys have come to the table and you got a plan in place and you know
Derrick Turner
Unverified
1:02:17
want to leave on a positive note in a difficult situation but at your expense perhaps this is an opportunity for you to take back and to let them know there is a new tool in the toolbox and for other cities that are out there listening or whatever the press chooses to write you know that this continuation of repeat audit findings is you know going to be in the past and we have that
opportunity to bring some leverage to get it correct so thank you thank you
Speaker 15
1:02:47
mr. chair thank you there's currently nobody else in the queue do any
members have any question or comment uh seeing none without objection we will consider this uh report adopted uh thank you for coming today we appreciate it and uh i appreciate you taking us head on you've undertaken quite a challenge, and I appreciate you being willing to do
Speaker 24
1:03:07
that. Thank you, Mr. Chairman, members of the committee. Appreciate your time.
Our next report will be on the Law Enforcement Agency's Compliance with Asset Seizure and Forfeiture Requirements Uniform Controlled Substances Act for the calendar year ended December 31st, 2018. Mr. Davis, you're recognized. thank you mr. chair this report
Speaker 102
1:03:40
reviews law enforcement agencies compliance with the asset seizure and forfeiture requirements of the Uniform Controlled Substance Act for the year ended December 31st 2018 asset forfeiture has
been used since 1971 to help prevent vehicles and other property of drug traffickers from being used in the Commission of Subsequent Offenses. During the late 90s legislators became concerned that the lack of uniformity and accountability in the forfeiture procedures across the state was undermining confidence in the process. During the 99 meeting of the Arkansas General Assembly Act, 1120 was enacted to address these concerns through the amendment of the Uniform Controlled Substances Act. The forfeiture process is shown on the slide in Exhibit 3 on page 3 of the report. Arkansas Code
provides that within 48 hours of an asset seizure the seizing officer shall file an original confiscation report with the seizing law enforcement agency for maintenance in a separate file within three days of the receive receiving the report the seizing agency shall forward a copy of that report to their prosecuting attorney for the district in which the property was seized and to the Arkansas drug director for entry into the asset seizure tracking system schedule one on page five of the report provides a summary of seized assets for calendar year 2018 for all judicial districts including the amount of cash
automobiles weapons and other items for example as shown on the slide in the second judicial district over 464 000 in cash 22 vehicles 65 weapons and three other assets were seized in 2018. for the entire state approximately 5.5 million dollars 431 vehicles 522 weapons and 82 other items are seized over the past 10-year period over 61 million dollars 5800 vehicles and 4300 weapons have been seized the map on the slide and exhibit
one on page two of the report show the seven judicial districts selected for testing to conduct the review two seizure incidents in each district were chosen from the asset seizure tracking system auditors trace the seized assets recorded in the system to the supporting confiscation report and verified required procedures had been followed in the disposition of the seized assets additionally one confiscation report was randomly selected from the agency and trace to the asset seizure tracking system to ensure all seized assets had been properly reported finally one seized asset was randomly selected from the
agency's evidence room and trace to the entities confiscated inventory records as a result of testing exceptions were noted in six of the 14 agencies reviewed the air showed on the slide are also listed on page 2 and 3 of the report along with the specific agencies where the deficiencies were noted these deficiencies included not maintaining adequate seized property inventory records not maintaining a separate file of original confiscation reports not
accounting for seized cash not obtaining and maintaining a proper transfer of property receipt omitting the odometer ratings from confiscation reports of seized vehicles none of these exceptions were considered significant each agency responded that it has taken action to correct these matters for each confiscation file selected for review that was still pending in court during fieldwork ALA staff continued to periodically follow up on the seized
asset until its court order disposition is finalized. Based on the calendar year 2018 follow-up process, ALA staff noted two exceptions. The first in the sixth Judicial District Prosecuting Attorney's Office was ordered by the Circuit Court on May 22nd 2018 to return to a defendant $963 that was seized on September the 19th 2016. As of October the 1st 2019 the cash had not been returned to the defendant subsequent to this report a check was issued by the
PA's office for nine hundred sixty three dollars and hand delivered to the defendant's attorney on August the 19th of 2019 the second in November the 2015 three thousand five hundred eighty four dollars was seized from a defendant by the Texarkana Police Department as of August 2019 the cash was still held by the 8th South Judicial District Prosecuting Attorney's Office discussion with the Prosecuting Attorney's Office revealed that the defendant had been incarcerated or has been incarcerated since the seizure in 2015 a civil complaint was filed in the case and answered by the defendant however the
case remains pending and subsequent to this report a new hearing had been rescheduled for December the 17th of 2019 to retry the forfeiture finally for a number of years ALA staff have been tracking several cases pending disposition a delay in the disposition is typically caused by the agency's inability to return seized property to a defendant because he or she is incarcerated or cannot be located to be notified about the release of the seized property. Other extenuating circumstances may also exist that are
beyond the control of the custodial agency. Though not considered an exception, ALA has determined that the amount of time that has passed warrants notification to this body. Additionally, due to the length of time that has passed, ALA staff will no longer continue to monitor this asset to its final disposition. In August of 2013, $419 was seized from a defendant by the Highland Police Department. As of August 2019, the cash was still in the possession of the department. Discussion with
the Highland Police Chief revealed that the defendant was in the Sharp County Jail for a period of time and multiple attempts were made to contact the defendant following their release regarding the cash. However, the defendant has yet to respond to the department's efforts to notify them to retrieve the property this concludes my presentation in consideration time the presence of agency officials was not requested today and I'll be happy to answer any questions thank mr. chair
thank you mr. Davis are there any questions from members all right seeing none we will
consider this report adopted thank you mr. Davis and you're recognized for our next report thank mr.
Speaker 102
1:10:09
chair this letter reports law enforcement agencies calendar year 2018 compliance with the asset seizure and forfeiture requirements of Arkansas code annotated 26 57 247 Arkansas code provides forfeiture procedures for tobacco products upon which the full amount of excise tax due was not paid or which were possessed or sold by an unlicensed wholesaler or retailer in addition to the property and money used to facilitate a criminal
violation of code for the manufacturer distribution of contraband tobacco products may be seized and forfeited to the state. According to the Arkansas Tobacco Control, no tobacco-related asset seizures occurred in county year 2018. And that concludes the presentation. Thank you, Mr. Chair. Thank
you, Mr. Davis. Are there any questions on this report? Alright, seeing none, we will consider that report adopted. The next item of business is The next meetings of the Legislative Joint Auditing Committee will be held on December 12th and 13th, 2019, or at the call of the chairs.
Do any committee members have any new business that needs to be brought before the committee? Senator Pitch asked about the new schedule. That was in the executive committee report. I guess everybody just take note of that, that a couple dates were changed yesterday. Yeah, they were changed, the dates that were changed. the january meeting will be held on the 23rd and 24th and the february meeting will be held on the 27th and 28th those are changes that the executive committee uh passed out yesterday and then we did
today in the full committee all right seeing no uh no new business will this will be adjourned Thank you.
Agenda
A. Call to Order by Chairman
B. Adoption of Minutes
C. Reports of Executive and Standing Committees:
D. Review of Reports:
E. Other Business: The next meetings of the Legislative Joint Auditing Committee will be held on December 12 and 13, 2019, or at the call of the Chairs.
F. New Business
G. Adjournment
Documents
| Title | Type | Pages | Source |
|---|---|---|---|
| Agenda — LEGISLATIVE JOINT AUDITING, Nov 8, 2019 | Agenda | 1 | Official source ↗ |
Speakers
Representative Richard Womack Chair
Unverified
Senator Eddie Cheatham
Unverified
Representative Danny Watson
Unverified
Speaker 18
Senator Mathew Pitsch
Unverified
Representative Nelda Speaks
Unverified
Speaker 26
Speaker 27
Representative Johnny Rye
Unverified
Speaker 35
Senator Kim Hammer
Unverified
Derrick Turner
Unverified
Speaker 42
Speaker 43
Chair
Unverified
Senator Alan Clark
Unverified
Speaker 66
Senator Mark Johnson
Unverified
Speaker 84
Speaker 8
Speaker 89
Speaker 93
Speaker 96
Speaker 15
Speaker 24
Speaker 102