Airport board makes expense and ethics changes

jhewlett@herald-leader.comFebruary 26, 2009 

In an effort to respond swiftly to a scathing audit of the spending practices of Blue Grass Airport's former managers, the airport board approved key changes Wednesday to policies on employee expenses and ethics and passed a whistle-blower policy.

Many of the policy changes were based on recommendations by a consulting firm that the airport hired in January in the wake of questions about the expenses and travel of former executive director Michael A. Gobb and three of his top lieutenants. Those recommendations were echoed Wednesday morning in State Auditor Crit Luallen's 256-page report, which called the board's previous level of oversight "inadequate."

"We've implemented a lot of things," said J. Robert Owens, who became the board's chairman last month. "I think everything's going in the right direction now."

Luallen presented her findings to the board, which had voted unanimously before she arrived to adopt policies to clamp down on expenses and prevent excessive spending on travel and food.

The new board policies included guidelines for meal expenses for employees and clients — that breakfasts should not exceed $20 to $25 per person; lunches $30 per person; and dinner $50 per person. That would prevent future purchases such as the two $700 bottles of champagne that former directors bought on the airport's dime, according to Luallen's audit.

In addition, all travel by the airport's executive director would need to be approved first by the chairman of the board. Other employees would need their supervisor's written authorization for expenses other than normal business-related travel.

The new policies that the board adopted are aimed at improving employee ethics and integrity, preventing unchecked travel expenses, and adding protections for airport workers and vendors who blow the whistle on wrongdoing.

Board member Nancy Wiser said she liked the whistle-blower provision.

"We want to create an environment in which people can come forward," she said.

The board approved a plan to hire a new external auditing firm. Luallen, the mayor and the outside consulting firm had urged the airport to rotate auditors every five years just as federal legislation, known as the Sarbanes-Oxley Act, requires publicly traded companies to do.

The airport had used Lexington-based Potter and Co. for 20 years.

"Clearly some of these red flags should have been raised in the auditing process," Luallen said of the airport's current auditing firm.

Owens said the airport paid $327,621 over the past three years for Potter's services.

Luallen recommended that the airport hire an internal auditor to oversee airport finances. She said her staff would be available to help the airport. "We want to make our team available to you as a resource," she said.

She asked the airport for a progress report in 60 days and said she wants to share insights about the internal workings of the airport with a new auditing firm.

Board members also discussed but didn't take action on a recommendation from Jacobs Consultancy to set a salary range of $135,000 to $165,000 annually for the executive director, and a range of $90,000 to $120,000 for directors.

The four directors, three of whom have resigned in light of questioned spending, enjoyed pay increases from 42 percent to 92 percent between 2000 and 2008. All of them made well over $120,000. The salary for Gobb, the former executive director, more than doubled in that time to $219,460. That was more than the pay for directors at similar-size airports and even Louisville International Airport, which handles nearly four times as many flights.

Jacobs recommended that those in the second tier of management have their titles changed from directors to deputy directors. Under the consultant's proposals, there would be deputy directors of finance and administration, operations and maintenance, planning and engineering, and marketing and public relations. Jacobs also recommended that the position of manager of administration be "recast" as the position of executive assistant, and that the pay range for the new position be from $50,000 to $60,000.

Debbie Kelly, who is now the airport's manager of administration, makes more than $79,000 a year.

Jacobs also suggested that the airport add an environmental officer.

Board member Richard Hopgood said diversity needed to be taken seriously as new managers are hired at the airport. Board secretary P.G. Peeples said he was relieved that he and board member Roszalyn Akins, the two African-Americans on the board, didn't have to bring up that issue.

Acting director Fred Testa said that although some of the former managers cast the airport in a bad light, the rank-and-file employees should be commended.

"It's one of the best staffs I've ever worked with," he said. "This broad brush that's being painted should not taint them whatsoever."

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