Bill would require more transparency for area development districts

Spending and programs at Kentucky’s 15 Area Development Districts would face more scrutiny and financial reporting under a bill filed Friday.

State Rep. Susan Westrom, D-Lexington, said she’s trying to bring more transparency to the quasi-governmental agencies in the wake of controversy in Central Kentucky’s Bluegrass Area Development District.

“If we feel any of these tax dollars are being misspent, we have to address transparency,” Westrom said Friday.

Development districts are regional groups that funnel state and federal money into aging and employment programs, among other things. They are run by the county judge executives of each represented county.

Two years ago, former State Auditor Adam Edelen found widespread conflicts of interest, questionable spending and a lack of accountability at Bluegrass ADD. This month, Education and Workforce Development Secretary Hal Heiner found problems with the bidding process for a contract to manage workforce development money in the region. The cabinet has also questioned about $2.8 million in spending.

Westrom’s bill would require the districts to officially post all employment positions and would ban any bonus payments to employees. The bill also would require the Education and Workforce Development Cabinet and the Cabinet for Health and Family Services to prepare yearly reports on how much money has flowed to the districts, how it was spent and how much is left over. Those reports would be given to the Legislative Research Commission and the numerous legislative committees that have some oversight over the districts.

The bill would require the state auditor to perform preliminary examinations of each district starting in July. The district boards would have 60 days to respond to any recommendations the auditor makes. The districts would pay for the audits. Each district would receive a new audit every four years.

Westrom attempted to push a similar bill last year but did not succeed. Continuing issues at the Bluegrass district may prompt her colleagues to pass the bill this year, she said.

“It’s important for the ADDs to understand that the cabinets can determine whether to send those funds to the districts,” she said. “We need to know how they are spending it, and that’s why we need to have these reports.”

Darrell Link, executive director of the Kentucky Council of Area Development Districts, said he appreciated Westrom’s hard work and willingness to work with him on the bill.

“Consequently, HB438 is a good transparency bill, in its current form, and will serve as a starting point for all of the General Assembly members to have a greater discussion as it moves through committees and both chambers,” Link said. “We have been saying for a long time that anyone is welcome to examine the ADDs processes and procedures, the ADDs finances, internal controls etc. So, it is important for the ADDs that we are recognized as a local government agency that is known as being above reproach, because the services that we provide to all Kentuckians are so important and vital to those we serve.”

This story was originally published February 19, 2016 at 12:07 PM with the headline "Bill would require more transparency for area development districts."