Special Reports

Lawmakers to propose more oversight of KLC, KACo

Lawmakers from both parties will push legislation requiring the Kentucky League of Cities and Kentucky Association of Counties to boost oversight and open their meetings and books to the public following high-profile spending problems.

State Auditor Crit Luallen, whose office investigated KLC and KACo last year, suggested language for the bill to key House and Senate members. On Thursday, several House Democratic leaders agreed to sponsor it, and the Senate's state government committee chairman said he expects a companion bill to be filed in that chamber.

The legislation would write into law the obligations of the KLC and KACo boards, which are made up of city and county officials, to provide stricter oversight of the organizations. For example, the groups would have to follow state procurement and competitive bidding procedures and make the confidential notes of annual audits available to the state auditor. In addition, their boards would have to sign off on compensation policies for their staffs.

"The key here is to remember that these are organizations that are funded with public dollars and are led by officials who are elected leaders," Luallen told the Herald-Leader in an interview. "The majority of their boards are elected leaders representing the public. As such, they are subject to public scrutiny."

KLC and KACo provide services, such as lobbying and legal help, to local governments. They also sell insurance to the counties and cities, which generates millions of dollars in revenue for the two organizations.

Reports by the Herald-Leader last summer showed that the two groups' executives spent nearly $1 million on travel and entertainment in recent years and that their top officials were highly compensated in salaries and benefits. Audits by Luallen's office confirmed and expanded on those findings.

"I think the revelations of the last year have proven that both the League and KACo need more legislatively mandated accountability and reporting requirements," said Sen. Damon Thayer, R-Georgetown, chairman of the State Senate's state and local government committee.

Since their problems became public, the KLC and KACo boards have cut up many staff credit cards and approved policies to increase the board's oversight of operations and expenses.

KACo President Rick Smith, a Clark County magistrate, said he plans to distribute copies of the new policies and some draft procedures the group has in the works.

"I wish they would read what we've done first and take that into consideration," Smith said. "I don't think we need legislation to do that."

But lawmakers said legislation is necessary so the problems won't recur if newly strengthened policies are eroded or ignored when embarrassment fades over last year's scathing audit reports and media coverage.

"It's not punitive. It's intended to ensure their organizations function as I think everyone wants them to — with active boards and good business practices," said Rep. Arnold Simpson, D-Covington, who will be one of the co-sponsors of the House bill.

Rep. Bob Damron, the House Democratic caucus chairman from Nicholasville, said his party's leadership is backing the bill, which he said probably will be filed early next week.

"Hopefully, this legislation will set the parameters for them to change the cultures," said Damron, who added that he and other lawmakers have received e-mails from constituents upset about government spending who have used KLC and KACo as examples.

The two groups are considered non-profit organizations. But most of their funding comes from tax dollars in the form of dues or insurance payments. Luallen said such quasi-governmental organizations should be held accountable for their use of money.

The proposed legislation would make KLC and KACo subject to the Kentucky open records and open meetings laws. KLC, at one point, denied the Herald-Leader access to records, then reversed that decision. The group voted just last week to continue holding closed meetings.

The bill would allow the organizations to protect records and board discussions of proprietary insurance information, such as rates.

KLC executive board chairman Mike Miller, the mayor of Jackson, said many board members have been concerned about keeping proprietary information from leaking.

"If we can protect the stuff we need to protect, I don't think there's a member on our board who would object to open meetings," he said.

The draft legislation also would require League and KACo spending and budget information to be more transparent. That dovetails with a separate bill filed by Thayer that calls for government expenses to be outlined online.

Miller said KLC staff is already looking at software to allow the League to post expenses online.

"The public has a right to know exactly how this money is being spent and what kind of controls are in place to ensure that we don't have problems again," Luallen said.

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