State audit of Puxico finds town in poor financial shape

~ The state office began the audit after receiving a citizens' petition.

PUXICO, Mo. -- Financially, the city is in trouble.

That was the message delivered by Debbie Lewis, manager for Missouri State Auditor Susan Montee, to about 20 concerned residents Thursday night at a town-hall meeting in Puxico.

Although the city budget shows a general operating fund of $38,950, because the fire and police departments and nutrition center are operating on negative balance the city actually has a deficit of $166,326.

"The city's general fund does not truly reflect the financial condition of the city," Lewis said. In fact, the city has been using money from restricted funds, such as the water and street funds, to cover general operations of the city.

"These restricted funds can only be used for such things as street, water or industrial development," Lewis explained. "Furthermore, no documentation could be provided indicating the city had any plans to bring [the deficit funds] into balance or had noted the poor financial condition of the city."

The city's main problems seem to be poor budgeting, receipt-keeping and a general lack of knowledge about certain policies and procedures to keep track of the city's money.

Accounting controls

"There are various problems with the city's accounting controls and procedures," Lewis said. One example found during the audit was the city collector withholding "various amounts of cash from deposits to use as a change fund" and substituting checks received the following day to replace cash that was withheld. The collector was also cashing personal checks from cash on hand.

According to the audit report, the board of aldermen responded that in the future, when the treasurer and collector make deposits, they will itemize checks and cash and ensure monies are deposited intact. Also, the city will not cash personal checks, and the collector will maintain a constant change fund.

Lewis said she found no missing money in the city's budget, and the problems being faced by the city are not unique.

Montee's office began the audit after receiving a citizens' petition. State law requires the state office to conduct an audit of any political subdivision if asked to do so by enough registered voters.

Residents were concerned by money that had been unaccounted for during the 2003-2004 fiscal year, when current board member Peter Coutavaz served as mayor.

Money unaccounted for

"Nobody is accusing anyone of stealing any money," said rural Puxico resident Jeff Holloway. "It is just unaccounted for and nobody has ever said where the money went."

However, the state office conducted an audit of the fiscal year ending June 30, 2006, disappointing many that it didn't audit earlier years as well.

"I believe that if they went back far enough they would find what we are talking about," said Donis Wheetley, a resident of Puxico and one of the people who helped circulate the petition around town.

"I don't feel that the issue that brought this about has been addressed," Wheetley said.

Both residents said a private audit of the year in question is currently being performed by Maloney, Wright and Robbins and that citizens will await findings from that audit.

While residents wait for the second audit, the city is stuck paying for the one requested by its residents.

"State law requires that the entity being audited pay for the audit and that is printed on the petition signature forms that the citizens signed," said Lewis. "The current total is $15,461."

But that won't be the final total. The price is expected to be near the $16,000 maximum printed on the petition signature forms.

Christmas hams

The audit also found that vehicle usage and maintenance logs for several city departments are not adequately detailed or reviewed by the board.

For example, a review by auditors found that fuel invoices for the city police department showed variances in the number of gallons purchased and miles driven between fill-ups.

The city also used approximately $1,400 of taxpayer money to purchase hams for Christmas presents for employees and for a Christmas party, as well as purchasing flowers, figurines and candy for city employees or other individuals for illness or death, and paid for an official's spouse to attend a conference.

"Our recommendation is that the city ensure the disbursements of city monies are a necessary and prudent use of public funds," said Lewis. "The city's residents have place a fiduciary trust in their public officials to expend tax revenues and fees in a necessary and prudent manner."

The city has also been violating Missouri state law by not adhering to the Sunshine Law and by operating deficit budgets.

"The city does not document when agendas for board meetings are posted," said Lewis. "There was no information available to determine when the agendas were posted.

"I would recommend that at the bottom of the agenda it be noted what day and time the agenda was posted in order to make sure that the city is not in violation of the Sunshine Law."

The city also did not document how some items discussed in closed session complied with state law. Some decisions made in closed session were also not disclosed in open session as required by law.

For the complete city audit, visit the state auditor's Web site at www.auditor.mo.gov.