KLC votes to welcome audit

lblackford@herald-leader.comJuly 3, 2009 

The Kentucky League of Cities has changed course and will again voluntarily release documents to the Lexington Herald-Leader, the group announced in a news release Thursday.

The nonprofit's board of directors also voted to welcome state Auditor Crit Luallen, who said Wednesday that her office would audit the League and the Kentucky Association of Counties because of what she called "serious concerns over spending" at both groups.

Luallen said her decision to audit the League was partly based on the League's decision to stop releasing documents to the newspaper, but Thursday's announcement won't stop her work.

"We are proceeding with our plans to conduct the audit and will contact the League on Monday to set up the first meeting," Luallen said late Thursday.

The League's executive board, along with the board that governs its insurance arm, voted in a conference call Thursday to reverse a June 25 letter denying any further requests for documents under the state's Open Records Act.

"Our intent to protect our insurance service programs has been greatly misunderstood to the detriment of the reputation of our organization," said Temple Juett, the League's general counsel.

Records given to the Herald-Leader earlier this year resulted in a series of stories on the League's salaries and expenses, including the $317,000 compensation package of Executive Director Sylvia Lovely and $300,000 spent by three executives over three years on travel, meals and other expenses.

Board members said the League denied a June 11 request by the Herald-Leader for the amount of money paid to various law firms over the past 10 years because it related to proprietary information regarding their insurance operation.

"While we are withdrawing our opposition to certain requests, we will continue to protect our proprietary interests as we compete in the marketplace every day," said Mayfield Mayor Arthur Byrn, chair of the League's insurance services board.

Lexington Mayor Jim Newberry embraced the League's reversal. "Just as I thought it made sense to open the League's meetings to the media, I think it's also important for the League to follow the Open Records Law," Newberry said. "Public accountability comes with public dollars, and the League relies upon the public dollars it receives when cities pay their dues or pay fees for services."

Lovely, the League's executive director, said she looks forward "to the opportunity to bolster confidence in KLC."

The League's executive board met on June 19 and formed a committee to review policies and rules. In addition, Lovely stopped several executive perks, including League-paid staff travel and League functions at a restaurant owned by her husband.

"We are a great organization which we know provides the best services to Kentucky cities," Lovely said Thursday in a statement. "This process will make us even greater."

The League and the Kentucky Association of Counties lobby on behalf of their member cities and counties and provide insurance and financing services. Their boards of directors are made up of mayors and county judge-executives from across the state.

The Herald-Leader reported this week that KACo's five top officials spent nearly $600,000 in two years on travel, meals and other expenses. More than half of those expenses were charged by Bob Arnold, KACo's executive director.

In addition, charges to two strip clubs and a Lexington escort service appeared on the KACo-issued credit-card statements of Spencer County Judge-Executive David Jenkins, the group's 2008 president. He and KACo are disputing those charges.

J. Michael Foster, KACo's president and the Christian County Attorney, said the executive officers on the association's board will discuss KACo's response to Luallen next week, likely via conference call.

On Thursday, Foster said he forwarded the board a letter Luallen sent him announcing her plans for the audit.

Foster has said he wants KACo to cooperate with and learn from Luallen's audit.

"My thought is that we need to express our commitment to address these issues in a responsible way, and we hope that her financial review will be a good resource for us," Foster said.

Foster, in March, pushed for new expense policies that require KACo staff to present the board with monthly reports of out-of-state travel costs. And KACo's general counsel now serves as a chief financial officer who reviews all employee spending.

"We need to create a greater level of transparency on travel expenses," Foster said. "I think that's a good step forward, but the journey's not over."

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