Mayors, legislators question whether KLC is changing enough

lblackford@herald-leader.comJanuary 21, 2010 

Last week, the Kentucky League of Cities' executive board members voted to continue closing their meetings to the public. Thursday, several powerful lawmakers have proposed a bill requiring that they be open to public scrutiny.

It's that kind of disconnect between the League and public opinion that is upsetting some League members in the wake of a scathing audit from State Auditor Crit Luallen last month.

"I have read nothing to indicate why these people (executive staff members) should still have their jobs," said Alan Baldwin, a Morehead city council member who has proposed dropping the city's membership in the League if he doesn't get some answers.

"There is certainly very clear evidence in the auditor's report that they violated public trust, demonstrated they had no regard as shepherds of public funds, and, even after the disclosures started, things continued on as though all this will blow over."

After a two-day retreat of KLC's executive board at Barren River State Park last week, some of the attendees are also wondering whether the League has changed enough.

Florence Mayor Diane Whalen said that while she was hopeful for change, she was "hard-pressed to to say I was pleased with the entire weekend."

Whalen has been hearing from numerous city officials in Northern Kentucky who were "shocked" by the detail and information in Luallen's report, which found excessive salaries, perks and spending along with a host of conflicts of interest.

"There is consensus among city officials that we need to start from scratch," she said.

That was not, however, the consensus of a majority of the 17 executive board members of the League, who discussed some personnel issues in executive session, but took no action.

That vote was spurred by board members who were opposed to an attempt by fellow member to move Deputy Director Neil Hackworth into the top job before the audit was released. (Former executive director Sylvia Lovely's resignation was effective Jan. 1. A search firm will be hired to replace her.)

The audit severely criticized both Hackworth and William Hamilton, who heads the League's insurance services. In particular, the audit said that several of Hamilton's family members had worked for the League, he had received numerous gifts from League insurance vendors, and had almost $70,000 in expenses on his League credit card in three years that had "an unclear business purpose," "inadequate documentation" or were "excessive."

The board has agreed to address all 30 findings in Luallen's audit.

Mayor Jim Newberry, an executive board member who has criticized the League in the past, said the board is making some progress, and some members want real change.

"However that group is in the minority," he said. "There are some key issues that need to be addressed and only time will tell whether the minority gets some added support and becomes a majority.

"It's very difficult to make the kind of change this organization needs to make when you have the same leadership team in place."

There may be more support for change outside of the board. The Northern Kentucky City and County Management Association recently sent a letter to board chairman Mike Miller suggesting detailed changes, including hiring a new executive director and insurance director from outside.

"The quality of governance of the KLC organization has been deficient for some time," the letter says. "The 221-page audit conducted by Kentucky State Auditor Crit Luallen attests to that fact on page after page."

At least two bills will require more transparency from the League, including one that forces them to put all expenditures on a public Web site. Another will force the League to hold open meetings. The group already is required to provide documents under the state's open records law.

Last year, KLC made substantial changes to its spending policies, including ending the use of League credit cards for most employees and requiring more substantial documentation for expenses.

Princeton Mayor Gale Cherry, who joined the board two months ago, said she thinks the board is moving in the right direction at the right speed.

"You don't want to throw the baby out with the bath water," she said. "These are the people who have proven most capable in every other way of handling these issues."

But observers wonder if the same leadership that got the League into this mess can extricate it.

"I don't like to get involved in personnel matters of agencies, but I think there is still a question surrounding the League and whether or not taxpayers have confidence in its management team," said Sen. Damon Thayer, R-Georgetown. "Perhaps they're waiting to make those decisions after a new executive director is hired. Hopefully, they'll conduct a good search and come up with a reform-minded leader who's not tied to the past administration."

Baldwin, of Morehead, says he and other city officials will wait for better explanations.

"When people demonstrate their willingness to compromise themselves and their organization, there's only one choice — they have to be removed," he said. "If the board is unwilling to act, the only recourse the cities have is to drop their membership."

Ryan Alessi contributed to this story. Reach Linda Blackford at (859) 231-1359 or lblackford@herald-leader.com.

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