Fayette County

Lexington to hire plant manager to oversee changes at beleaguered recycling center

Auditors discovered several safety violations at the city's recycling center and noted previous violations weren't corrected.
Auditors discovered several safety violations at the city's recycling center and noted previous violations weren't corrected. Herald-Leader

The city plans to hire a plant manager to make critical changes at its beleaguered recycling center in the wake of a scathing audit that found widespread problems with safety, accounting and overtime at the center.

Hiring a plant manager to oversee operations at the Thompson Road facility and fix some of the problems is his top priority, said Charlie Martin, acting commissioner of environmental quality and public works.

Martin told the Urban County Council's Environmental Quality Committee on Tuesday that he had already interviewed one candidate and would interview a second soon. Martin gave the committee an update on changes at the recycling center in light of the audit.

Martin, who was not acting commissioner during the time the audit covered, said he also was working on getting contracts between the city and surrounding governments. The lack of contracts was a key finding of the January audit.

The city has never had contracts with surrounding counties and cities to process other jurisdictions' recycled goods and does not have a contract with Bluegrass Regional Recycling Center, the broker that markets the recycled goods to sellers. That's been a problem for nearly a decade, according to the audit. In August 2004, internal auditors cited the city for failing to have contracts with other entities and Bluegrass, and it was never corrected.

Auditors had 12 different findings regarding management at the recycling center; many of those findings were centered on improving inventory and financial controls. Because of the lax controls, it was difficult for auditors to determine the accuracy of the amount of money Fayette County and surrounding counties received from the sale of recyclable goods.

Fayette County residents pay for the recycling service through their property taxes. The county charges those surrounding jurisdictions $35 a ton to recycle goods. Although the operation generates revenue, it is not self-supporting. For example, for the fiscal year that ended June 30, the facility generated $1.9 million in revenue but cost roughly $2.52 million to run. The recycling center has been on Thompson Road since 1992.

Councilman Ed Lane said that because the finances are so poor at the center, it's impossible for the city to know whether Fayette County is subsidizing the cost of recycling for surrounding counties.

"Do we know for sure if we are losing or making money?" Lane asked.

Martin told the committee that he hoped a new plant manager would be able to help the city determine how much it costs to process recycling versus how much it is charging other counties. Martin said he was told that the $35-a-ton price had not changed in several years.

Some of the problems found in the audit include issues with Bluegrass Regional Recycling Center, or BRRC, which received an overpayment of $9,341 in May and June. It repaid the city when notified of the overpayment, the audit said.

Auditors also found there was an excessive amount of overtime at the recycling center during the past three years. For example, overtime totaled $140,470 in 2012. But the overtime did not exceed the overall payroll for the department, the audit noted.

Additionally, auditors discovered there were several safety violations at the center. The report did not provide details. Moreover, the city's division of risk management had found several violations in 2012 that never were corrected, the audit said.

Martin said he was talking with BRRC, an arm of the Bluegrass Area Development District. The new plant manager will look at the contract with BRRC and determine whether the city could perform BRRC's role or should outsource the entire recycling operation.

"Everything is on the table," Martin said.

Council members stressed Tuesday that they wanted to see long-term changes at the recycling center. Moreover, they wanted to ensure that repeat problems found in this internal audit and others are addressed.

Bruce Sahli, director of the Office of Internal Audit, said his department was revisiting earlier audits to ensure that previous problems are addressed. They will be doing 17 follow-up reviews this year.

Chief administrative officer Sally Hamilton told the council Tuesday that she had told all commissioners to review any internal audits involving their departments during the past two years. The commissioners must return to her with answers on whether findings in the audits have been addressed, she said.

Councilman George Myers said he would ask the council to further study enforcement of audit findings. If issues aren't corrected, there should be consequences, he said.

Councilman Kevin Stinnett, chairman of the Environmental Quality Committee, said he wanted Martin to return with a detailed action plan to ensure that issues at the center were addressed.

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