Audit finds mismanagement at Kentucky Horse Park
The Kentucky Horse Park has suffered from poor management, questionable practices and potential conflicts of interest, according to an examination by State Auditor Mike Harmon’s office.
That lack of good management has blocked the Horse Park from becoming financially self-sufficient, requiring $24.8 million in state subsidies in the past decade, Harmon said.
He is referring findings from the report to the Executive Branch Ethics Commission to determine if further investigation is needed.
“Our eight-month examination found the Horse Park was poorly run with little or no oversight, questionable management practices, and potential conflicts of interest on operations and sponsorships at the park,” Harmon said Wednesday. “Not all state agencies are capable of being run like a business and being profitable. However, all state agencies are capable of being ethical and well managed.”
The examination was requested by members of Gov. Matt Bevin’s administration after a series of political scuffles, including Bevin’s dissolution of the Horse Park Commission. One of its members was former Gov. Steve Beshear’s wife, Jane Beshear, who has been involved at the Horse Park for decades. Bevin’s newly appointed commission hired a new executive director, Laura Prewitt, last year.
Sen. Damon Thayer, R-Georgetown, also requested the audit after tangling with Horse Park Foundation members, who alleged that Thayer targeted the park after being turned down for a job.
“I’m pleased that the work of the auditor has uncovered many of the allegations I had been hearing for years about the park,” Thayer said Wednesday after the audit was announced.
In the examination, auditors found some of the following problems:
▪ Eighty percent of food service contracts were not billed in accordance with contract agreements, with some billed lower or higher. Documents supporting price modifications were shredded by staff following the events, the audit found. Contracts included perks to the Kentucky Horse Park Foundation and to one of the park’s major corporate sponsors. For example, contracts with outside entities might include free event tickets for Horse Park Foundation members.
▪ Contracts for services with several vendors were not properly bid, including the company that provides fuel to the Horse Park. That company was paid more than $473,000 over the last three fiscal years with no contract in place. The company, Bulk Plant Incorporated, is owned by John Clark Oil of Ashland. Owner Brent Clark confirmed there had never been a contract.
“We just had a long-term relationship for a long, long time,” Clark said. “We never had a written contract, just services we provided when they need it.”
Clark said his company is no longer providing fuel to the park.
The company’s local agent is Ralph Coldiron, who also serves on the board of Equestrian Events Inc., which manages one of the Horse Park’s biggest events, the Rolex Kentucky Three-Day Event.
“All I did was deliver the fuel,” Coldiron said, for which he received payment.
▪ A contractor hired to consult with the park’s gift shop also supplied merchandise for sale in the shop. The merchandise contract violated competitive procurement rules. Park employees were aware of the potential conflict because merchandise was initially sold under the same business name as the contractor.
▪ Flat rates were given to one horse show production company going back to 2006, with the discount in 2016 alone totaling more than $766,000. That company was identified as Kentucky Horse Shows LLC, which operates most of the hunter-jumper shows that take place spring, summer and fall at the Horse Park.
The Kentucky Secretary of State’s business listing identifies officers of the company as Hugh Kincannon, Renie Murphy and Robert Murphy. Kincannon was not immediately available for comment. Renie Murphy is married to Danny McCray, the Horse Park’s food services director, audit officials said. The company also stored equipment and trailers rent-free at the park.
▪ The park’s former deputy executive director, Darren Ripley, was allowed in 2016 to live in a home on the park grounds and pay only $250 per month in rent.
▪ Some of the park’s sponsorships conflict with state regulations. Documentation at the Horse Park was so poor, employees could not provide a complete list of sponsor agreements between 2013 and 2016.
▪ The Horse Park’s staff was paid by the state to do work for the Southern Lights event sponsored by the Kentucky Horse Park Foundation, which is a private non-profit entity. Auditors said this forced the park to surrender a “significant” revenue stream to the foundation.
▪ The Kentucky Horse Park and the Kentucky Horse Park Foundation failed to properly separate their finances. For example, the two entities agreed to finance new barns in circumvention of state procedures for incurring debt. This arrangement potentially avoided compliance with state procurement and construction laws.
Cabby Boone, chairwoman of the foundation board, issued a statement Wednesday afternoon saying the foundation’s only purpose is to support the Horse Park.
“The State Auditor’s office has failed to note that since 2009, the foundation has continued to donate a significant portion of the annual Southern Lights revenue directly to the park every year,” the statement said. “In fact, the foundation provides well over $100,000 in direct support annually to pay for the Kentucky Horse Park’s volunteer program, underwrite all costs related to the hosting, maintenance and content management of KHP and International Museum of the Horse websites, and provides a park support line item in the foundation’s operating budget which can be spent at the discretion of the executive director of the park.”
▪ The amount of money spent to hire employees through temporary employment agencies increased 300 percent, from $544,000 in 2014 to $2.17 million in 2016.
Tourism Secretary Don Parkinson called the audit “an important step forward.” Parkinson said the Bevin administration was not looking to privatize the park, but would be interested in public-private partnerships to make it more profitable, such as a long-discussed hotel on the grounds.
In an official response to the examination, park director Laura Prewitt said she and her staff had found many of the same problems.
“This report reinforces the decisions we have made since then to ensure ethical practices at the park,” Prewitt said.
Now that the park can properly assess the true costs of services, it can become financially self-sufficient, she said.
“We’re making great steps toward making it profitable,” Prewitt said.
The Kentucky Horse Park is a 1,200-acre park and equestrian venue that features an indoor arena, a museum and exhibition space. It features equine events 12 months a year.