The state auditor said she was "alarmed" by expenses at the Kentucky Association of Counties, and several elected officials who serve on the group's board expect to eliminate "wasteful" spending with tighter oversight.
Meanwhile, one key legislator who tracks local government issues said Monday that he wants officials from KACo and the Kentucky League of Cities to explain their spending practices at a committee meeting later this year.
That reaction came after the Herald-Leader reported Sunday that five executives at KACo — which provides lobbying, insurance and financing services for counties — spent nearly $600,000 over the last two years on travel, meals and other expenses.
Earlier this month, the newspaper reported that Kentucky League of Cities executive director Sylvia Lovely's 2008 compensation package was $317,000 and that the top three officials of the League spent more than $300,000 on travel, meals and other expenses in the past three years.
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"We are alarmed by the excessive spending at the Kentucky Association of Counties and the apparent lack of oversight by its board," state Auditor Crit Luallen said Monday in a statement. "We'll have further comments soon after we evaluate what role our office will play going forward."
The state auditor performed a management review of KACo in 1993 at the request of leaders of the association, which is set up as a non-profit organization but receives money from counties in the form of dues and payments for insurance and financing services.
Bob Arnold, KACo's executive director, said he hasn't heard from Luallen and doesn't plan to request an audit. He said KACo officials would cooperate with the state auditor "if it is found that it's in their purview and she has the statutory authority to audit us."
Even though KACo and the League operate mostly with public funds, a key lawmaker acknowledged that the General Assembly probably has little authority over such non-profit groups.
Still, Sen. Damon Thayer, R-Georgetown and chairman of the Senate State and Local Government Committee, said he'd like officials from both groups to answer lawmakers' questions during a committee hearing. Thayer said he already has alerted leaders of the League.
"We certainly have an interest on behalf of the taxpayers in hearing from them about the use of taxpayers dollars," Thayer said. "It's too soon to talk about any legislative oversight, but that's certainly something that can be discussed if momentum builds."
In general, the boards of directors of such entities should be "taking a stronger fiduciary role," Thayer said.
Gov. Steve Beshear's spokesman echoed that sentiment, saying KACo and the League should follow, "where possible," recommendations that Luallen made in May for proper oversight of spending in quasi-governmental agencies.
"The governor believes organizations that are supported — directly or indirectly — by taxpayer dollars need to be extremely sensitive and prudent about how they utilize the resources entrusted to them," said Jay Blanton, Beshear's spokesman, in a statement.
Several KACo board members said discussions about stronger leadership have already begun.
"There should be more oversight and new policies," said Edmonson County Judge-Executive N.E. Reed, a Republican who has served on KACo's board for about two years.
Reed said he and other board members haven't been privy to details of KACo leaders' expenses, which included covering the cost of certain high-ranking board members and top KACo staff to travel out of state.
Those expenses included hotel stays of more than $450 a night, 50 meals that cost $1,000 or more and thousands of dollars for gifts and sports tickets for KACo staff and board members.
"I'm sure this will raise a lot of concerns and issues, as it should, when we see some of those amounts," Reed said. "We're talking about quite a lot of money."
Larue County Judge-Executive Tommy Turner, a Democrat and longtime KACo board member, said he expects several of his fellow county officials who serve on the board to make suggestions at the next board meeting in September.
Among possible recommendations would be to no longer provide the group's president — an elected official who serves a one-year-term — with a credit card and putting a cap on all expenses, perhaps by providing a per diem.
"Just having an open checkbook, that's not the way business is done in the counties," Turner said.
Another KACo board member, Pendleton County Judge-Executive Henry Bertram, said he wants current KACo president J. Michael Foster to take the lead in any further policy changes.
Foster, the county attorney for Christian County, pushed through new travel expense procedures in March that call for the board's executive committee to review monthly out-of-state travel reports and for KACo's general counsel to monitor all staff expenses, including those of his boss, the executive director.
"Have we spent money in a wasteful manner? We probably have," said Bertram, a Democrat. "I trust Mike Foster. And if there's things that need to be scrutinized more ... he'll do it."
Although KACo officials haven't closely monitored past spending, Bertram said that Arnold has "done a tremendous job" on the big picture of improving KACo's services to the counties.
KACo has dropped many of its insurance rates and lowered interest rates on leases in recent years, Bertram said.
Still, administration fees on KACo's services increased 25 percent between 2006 and 2008.
Turner said a fellow county official pointed out to him Monday that KACo's services could be cheaper if it tightened expenses.
"Their comment was that the dollars that could have been saved in KACo's programs are dollars that could be returned to counties or dollars that could be saved in even lower insurance premiums or financing costs," Turner said.