The Bluegrass Area Development District has rehired as a consultant the man they forced out as executive director Monday, even as state Auditor Adam Edelen's office announced Wednesday that it would investigate the troubled agency.
Lenny Stoltz II will receive an $8,000 retainer for consulting services in addition to the $128,000 severance package the district's executive committee approved Monday night.
Stoltz will work as needed on the agency's accounting system, which he developed 25 years ago, acting executive director David Duttlinger said. Stoltz is the only person in the 101-person organization who understands the system, Duttlinger said.
"I need Lenny to be able to come in and reconfigure the system," Duttlinger said. "He's the only person who knows that code or that program."
Duttlinger acknowledged that a lack of shared knowledge about the accounting system was a "weak point" for the district, and "it's for us to fix it."
The Lexington-based district handles tens of millions of dollars, helping coordinate regional planning and federal spending among local governments in a 17-county area of Central Kentucky. Its board of directors is made up of mayors and judge-executives.
Stoltz's consulting job will last a year, but he will not be paid an hourly rate until his severance package has been paid out over 28 weeks, Dutt linger said.
Stoltz was not available for comment Wednesday.
Meanwhile, Edelen's office sent a letter to the district Wednesday announcing the intention to conduct a "special examination" of the agency, said Stephenie Steitzer, spokeswoman for the auditor.
Steitzer said an agency's having only one person who understands the accounting system "can raise questions about appropriate segregation of duties." Steitzer also said, however, that "they could have controls in place we don't know about."
Duttlinger said he was pleased by Edelen's decision to examine the district's spending.
"I believe that conducting an examination of financial policies, accounts, transactions and other activities will ensure that I have a clean slate to charter a future vision for the ADD and the region," he said.
Clark County Judge-Executive Henry Branham, an executive committee member, said Wednesday that it was "somewhat strange" that Stoltz was the only employee who understood the accounting system.
"In the world of business and finance, you always have a backup plan," he said. "It's very unfortunate we don't have that in place."
Lexington Mayor Jim Gray said he didn't object to the decision made by Duttlinger.
"We were told it was operationally essential," he said via email. "If it's not essential, or if there's an alternative, we would need to reconsider it."
On Monday night, the district's executive committee accepted Stoltz's resignation after giving him an ultimatum to leave or be fired. The $128,000 severance package is based on years of service, vacation pay and pension benefits. The board voted 11-2 to approve the package, with Gray and Branham voting against it.
Gray said the package was too generous. Branham said he was uncomfortable with the package and wanted to discuss it with the district's entire 75-member board of directors.
Duttlinger said committee members did not vote on the consulting job because they thought it was an operational decision that he could make himself.
On Monday, committee chairwoman Edwinna Baker, the mayor of Lawrenceburg, said the board decided it needed new leadership because of several problems. Chief among these was Stoltz's actions regarding a felony re-entry program operated by the district called Steppin' to a New Beat.
Stoltz led the district in January 2012 to buy a residential property on Trent Boulevard for $600,000 to house the program, and he later authorized $500,000 in renovations.
Some of the renovation money was spent on no-bid contracts.
When neighbors started complaining about a lack of transparency, Attorney General Jack Conway ruled that the district was not authorized to operate a felony re-entry program and that the district must open its spending records under the state Open Records Act. The Trent Boulevard property is now on the market for $995,000.
Stoltz was put on paid leave June 4. On June 26, the executive committee gave him the ultimatum to quit or be fired.
Steppin' to the Beat director Tayna Fogle also was put on leave over questions about the program, and she was dismissed June 21, Duttlinger said.
He said several files about participants in the Steppin' to the Beat program disappeared, and Fogle refused to respond to his questions about the problem.
Duttlinger filed a police report June 19 regarding the missing files, and Lexington police are investigating, police spokeswoman Sherelle Roberts said.
In an interview Wednesday, Fogle denied taking any files. She said she has hired an attorney and plans to sue the district for unlawful firing.
"As a former felon, I have been set up," she said. "Unlike my executive director, I was never given the opportunity to talk to the board to give them my side of the story."
Fogle's attorney, Ed Dove, did not return calls seeking comment.
Charles Payne of the River Park Neighborhood Association, which fought the district over its plans for the Trent Boulevard property last year, said he was puzzled by the agency's decision to rehire Stoltz as a consultant.
"I find it hard to imagine that their chief financial officer or their entire accounting staff does not know how their accounting system works," Payne said. "It sounds irregular to me and terribly inconvenient."
Linda Blackford: (859) 231-1359.Twitter: @lbblackford.