SOMERSET — City officials in Somerset made spending and management decisions without proper accountability and ignored various policies and ordinances, state Auditor Adam Edelen's office said in a report released Wednesday.
The 29 findings of the special examination included that the city didn't seek bids as required on $280,000 worth of work; did not follow policy on some payments to vendors; and made $2.7 million in adjustments to utility bills in less than three years without a formal policy governing such changes.
The report also said Somerset Mayor Eddie Girdler at times did not follow the employee pay and classification plan approved by the city council.
In one case, a female employee was paid $10,000 a year less than the minimum salary in the plan — and less than two male employees in the same job, the report said.
"This exam paints a picture of a city management that ignores ordinances and policies, skirts oversight and accountability and conducts the business of taxpayers as a few people at the top see fit," Edelen said in a news release. "What's worse, we heard over and over again from city employees that they were afraid to share information with us because they feared being retaliated against. This is not how a city ought to be run."
An angry Girdler issued a news release that accused Edelen of pursuing the examination for political gain, calling him a "self-serving, dishonest politician." Girdler said he plans to file an ethics complaint.
Edelen said Girdler was trying to distract taxpayers from city management problems.
"It appears that Mayor Girdler is upset that I publicly called a spade a spade," Edelen said.
Edelen's office said findings from the review would be referred for possible action to Attorney General Jack Conway's office, the state Departments of Revenue, Labor and Agriculture, and the city ethics board.
One finding that will be turned over to Conway's office is that Girdler has negotiated special rates for the city to supply natural gas to large industrial users without formal written contracts, said Stephenie Hoelscher, spokeswoman for Edelen.
Edelen said not having contracts raises questions about terms and fairness of deals.
Another finding that will be referred to Conway's office deals with a former city budget director, Hoelscher said.
The report said the former employee apparently used more than $2,900 for personal purposes in 2009, mostly by cashing cold checks from the city till and buying football tickets with a city credit card.
Edelen's report did not name the employee. Other published reports say he's Jimmy Hogg, who no longer works for the city.
Girdler ordered the employee to repay the money, but he repaid only $500 and was not disciplined, the examination found.
Officials in other cities have been watching the special exam in Somerset in part because of controversy over a lawsuit Girdler signed on behalf of the city. The lawsuit challenged the authority of the state auditor to do examinations of cities.
State law requires the auditor to do annual reviews of a number of county offices. The law does not direct the office to audit cities, which hire certified public accountants for their audits.
However, the auditor's office has long claimed the power to do municipal exams, and the Kentucky League of Cities had accepted that the office does have the authority.
Several city council members pushed back against the suit and planned to try to force a vote on dropping it, but Girdler said the city would drop the complaint voluntarily.
The report said Somerset had a number of shortcomings in personnel and accounting practices, such as not consistently posting job vacancies, having a formal employee evaluation process or consistently applying procedures on access to its accounting system.
The city said in a response that while officials disputed information in many of the findings, the city could do a better job in some areas and would work to improve.
The response said Somerset officials have followed the law and that the city has proper procurement and other policies in place.
Any suggestion that Girdler hired unqualified people or that employees were paid different amounts based on "non-objective" factors was unwarranted, the city said.
On the lack of bidding, some spending was covered under a prior bid the city extended, and some was for work on a project where excavation costs turned out to be more than expected, according to the city's response.
"We will continue to operate with transparency, and according to the law," the city said in its response, prepared by city attorney Carrie Wiese.
The response also said some findings in the report were inaccurate.
The city's response said it was not proper for Edelen's office to use the exam as a platform to recommend changes in state law.
The report said state lawmakers should consider covering city employees under the state's law that protects whistleblowers, and requiring more oversight of city natural-gas systems.
In response, Edelen's office said the city's reply misrepresented facts and the actions of field examiners, and that the findings in the exam were correct.
Somerset "has not provided any documentation to demonstrate the information in the report is anything other than fair and accurate," Edelen's office said.