FRANKFORT — After seven months of turbulence over internal spending problems, the board of directors of the Kentucky Association of Counties ignored its own search committee's recommendation and plucked a new leader from within the organization's ranks.
The board unanimously voted to promote longtime deputy director Denny Nunnelley after interviewing four finalists during the day. The 31 of the 34 board members who were present narrowed the field to two and ultimately selected Nunnelley over former state Auditor Ed Hatchett after about 45 minutes behind closed doors.
Last month, a KACo search committee had recommended Hatchett for the executive director job, but the full board opted to interview the finalists before making a decision.
"There is no perfect candidate out there no matter how long you conducted a search," said Christian County Attorney J. Michael Foster, a KACo board member and past president who had led the search committee. "I think there was a consensus that KACo has an excellent staff from top to bottom. And it would appear the board had no reason to disrupt that staffing pattern of people who were doing a good job."
Nunnelley, a former state senator from Woodford County who has worked at KACo since 1994, has served as interim executive director since his former boss, Bob Arnold, was forced to resign in September amid public criticism over KACo's spending.
The Herald-Leader first reported in June that the organization's top five executives, including Arnold and Nunnelley, spent $600,000 over two years in travel, entertainment and meals. Charges to a Lexington escort service were billed to the KACo credit cards of Arnold and Spencer County Judge-Executive David Jenkins, who was the group's president in 2008.
State Auditor Crit Luallen then investigated the organization, which receives public money through counties' dues and payments for insurance coverage and project financing. Her report in October found $3 million in undocumented, excessive or improper spending.
Nunnelley signed off on $70,486 of those expenses, according to the audit report.
Luallen declined to comment Friday on Nunnelley's hiring.
"The board recognizes the weaknesses after the report of Auditor Luallen, and we're making the adjustments so that I won't be able to do the things that have been done in the past," Nunnelley told the Herald-Leader on Friday. "And I'm committed to that."
Nunnelley's selection comes a day after lawmakers from both parties said they planned to push legislation that would mandate that KACo and the Kentucky League of Cities' boards bolster oversight of the respective organizations.
Republican Sen. Damon Thayer of Georgetown, the Senate State and Local Government Committee chairman, called Nunnelley's hire a "surprising move, considering his affiliation with the previous administration of KACo."
"I like Denny. He's a nice guy, and he has a lot of friends in the legislature," Thayer said. "But Denny has a lot to prove, as does the board at KACo, that they're committed to the reforms to regain the trust of the public — and the legislature."
Nunnelley was greeted with hugs and handshakes from many staff members after his hiring was announced Friday.
He said he relishes the chance to implement the board's new policies and repair any damage to KACo's reputation.
"Now I have the opportunity to be at the helm," he told the Herald-Leader.
As a result, the organization will be "efficient and proper," he said.
For example, KACo has spent just 8 percent of its promotions and marketing budget through the first half of its fiscal year and 15 percent of the money allotted for staff travel, Nunnelley said. Both were key spending areas targeted by auditors.
Under Foster's leadership, the board curtailed staff credit card use and approved tighter oversight policies and a code of ethics. New President Rick Smith, a Clark County magistrate, has pledged more reforms once a management review is completed this spring.
"Since we've adopted the policies and procedures, we haven't had any problems," said Smith, when explaining Nunnelley's hire.
The board's executive committee is scheduled to meet Thursday to ratify Nunnelley's one-year contract, which will call for him to earn $170,000 — slightly less than Arnold's $178,000 salary.
In addition to his service at KACo and one term in the state Senate, Nunnelley brings local government experience to the job after spending more than a decade as a local official in Woodford County, both as sheriff and judge-executive. A lack of local government experience was one of the knocks against Hatchett for some board members.
The other two finalists were Bill Patrick, executive director of the Kentucky County Attorney's Association, and Tony Wilder, the state department for local government commissioner.
LaRue County Judge-Executive Tommy Turner, KACo's vice president, said he told Nunnelley that even though he supported Hatchett for the job, he was committed to helping Nunnelley improve KACo.
Board member Carolyn Belcher, the Bath County judge-executive, said Hatchett gave "an awesome interview," but Nunnelley's long experience with KACo's programs and operations won the day.
"And for those of us who know Denny well and know his character, we know we will see many changes here at KACo and in the right direction," Belcher said.