Special Reports

KACo president to propose new expense policies

Kentucky Association of Counties President J. Michael Foster called a special board meeting for Thursday to pitch a new package of financial oversight reforms, including the formation of a regular auditing committee.

"I will be recommending a comprehensive set of guidelines to help us address our financial management issues," said Foster, the Christian County Attorney.

He declined to reveal those specific proposals. He said he wants to present them first to the 34-member board, made up of county officials.

He did, however, confirm that he will form an internal auditing committee to review the organization's spending.

This comes as some local officials have become increasingly critical of KACo's expenses after the Herald-Leader reported that the non-profit organization's top five leaders spent $600,000 on travel, meals, gifts and other items in 2007 and 2008.

KACo officials have conceded that financial oversight was weak.

Executive Director Bob Arnold, who was responsible for more than $350,000 of the expenses, approves staff spending. But no one reviewed Arnold's expenses.

And no one questioned charges to two Louisville strip clubs or a Lexington escort service made last year on the KACo-issued credit card provided to KACo's 2008 president, Spencer County Judge-Executive David Jenkins. Jenkins has denied making the charges.

Arnold has denied making a charge on his KACo card to the same Lexington escort service in 2007.

Foster has tapped Lexington lawyer Brent Caldwell, who has served as outside counsel for KACo for about a decade, to lead an investigation into who signed the receipts at the strip clubs and escort service.

Caldwell said only that he is "making progress."

KACo is funded by dues paid from county coffers and from income for insurance and financing services KACo sells to the counties.

In March, Foster implemented some expense policy changes, such as tapping KACo's general counsel, Tim Sturgill, as chief financial officer to review all employees' expenses and prepare monthly out-of-state travel reports for the KACo board to review.

State Auditor Crit Luallen just launched an investigation into KACo and will recommend other financial controls.

In the meantime, Foster will assemble officials with financial backgrounds to serve on KACo's internal auditing committee.

Bath County Judge-Executive Carolyn Belcher, an accountant whom Foster will nominate to that panel, said she thinks it's important to improve KACo because its services are crucial.

"Tighter controls and checks and balances are needed," she said.

In Boone County on Tuesday, County Commissioner Cathy Flaig issued a statement criticizing KACo's board for allowing "tax dollars to be so severely mismanaged" on expenses. She also criticized Judge-Executive Gary Moore for taking a KACo-funded trip to Hawaii for a national conference in 2005.

Flaig is challenging Moore in next year's election.

Moore said in a statement that he flew to Hawaii for that trip on his personal sky-miles and billed some meals to the county, while paying out of pocket for others.

But KACo paid for Moore, who is not a KACo board member, to go on two trips, including a $2,279 hotel stay for five nights at the Willard InterContinental hotel in Washington, D.C., in March 2007 and paid $720 for the flight and hotel for last summer's National Association of Counties trip to Kansas City, according to the Herald-Leader's review. That was the trip on which Arnold charged a $7,000 dinner for an unknown number of people.

Moore said KACo's offers to pay for some of those expenses saved Boone County tax dollars.

Last week, Pike County Judge-Executive Wayne T. Rutherford sent KACo board members a scathing letter saying they had allowed officials to spend "like drunken sailors." And Spencer County magistrates have asked for county documents to review spending by Jenkins, their judge-executive, in light of the reports about KACo.

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