In November, as state auditors wrapped up their report on the Kentucky League of Cities, board members argued over promoting the organization's longtime deputy, Neil Hackworth, to executive director — the first sign of a deep split among its leaders.
The divide appeared to deepen Thursday when board members responded to the release of state Auditor Crit Luallen's report on the League.
On one side is the coalition of mayors supporting Hackworth for executive director. They remain skeptical of Luallen's findings. On the other side are local officials on the board calling for more wholesale changes to policies and a national search for an executive director.
"It's time to change the culture," said Louisville Mayor Jerry Abramson. "It's time to change the atmosphere to try to get new leadership."
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Hackworth has been No. 2 to executive director Sylvia Lovely for 14 years and has been running the League's day-to-day operations since Lovely announced in August that she would step down at the end of the year.
The audit, released Thursday, noted numerous instances of Hackworth, Lovely and insurance chief William Hamilton profiting from their jobs.
None of the three returned phone calls requesting comment.
Lovely resigned in August following Herald-Leader stories about expenses and perks at the League. It remains to be seen whether Hackworth and Hamilton can hold on to their jobs.
"I doubt it," said Lexington Mayor Jim Newberry, who opposes Hackworth's potential hiring as executive director and has been on the executive board for three years. "I'm very glad that no permanent personnel decisions have been made. ... It will enable the board to move forward with much better information than we had before."
Anthony Massey, the Frankfort city manager, said there is "a black cloud" over Hamilton and Hackworth, but he stopped short of saying whether they should be dismissed.
Board members, including Massey, said they were surprised at the November board meeting when Mayfield Mayor Arthur Byrn made the motion to name Hackworth as executive director. After debate in executive session, the motion was defeated 8-6, board members confirmed.
"I just couldn't believe that" the motion came before the audit was released, said Richmond Mayor Connie Lawson, the past KLC president. "And secondly, I wasn't in any mood to not at least seek out the absolute best (applicants) for the future of the organization."
Lawson said Hackworth shouldn't be precluded from applying but should be considered like any other applicant.
Byrn said Thursday he still supports Hackworth as a candidate for executive director.
"If someone has done something criminal, then that's something else. But to my knowledge, there has been no criminal activity," Byrn said.
Jackson Mayor Mike Miller, the current KLC president, responded in a letter to Luallen's audit, saying "some issues in the report are necessary business actions in the competitive insurance marketplace."
"I think there are some very helpful things in the audit, but I don't necessarily agree with all of the assumptions and the opinions expressed" in the audit, he said.
Newberry and Massey wrote a letter to Luallen disagreeing with the tone of the board's official response.
Other board members, such as Florence Mayor Diane Whalen and Winchester Mayor Ed Burtner, said the KLC board must move swiftly to follow the course Luallen outlined in her report's 140 recommendations, which advocate tighter fiscal controls and stronger conflict-of-interest policies.
"The report does a great job of outlining specific steps the board needs to take to get back on track," said Newberry, who has withheld Lexington's dues to KLC since August. Miller, meanwhile, is planning an executive-board retreat for January to discuss the next moves for the board, including how to hire a new director.
Paducah Mayor William Paxton said he called Luallen on Wednesday after reading the audit to tell her: "Look, there are two camps right now, but I'm for working within the system" to make all the necessary reforms.
"We've got to put the League first and put personalities second. We've got to trust one another that we're going to make decisions that are best for the League."