City audit finds recycled problems

Councilwoman Peggy Henson zeroed in with the key question Wednesday, after hearing that issues raised in previous audits of the city's recycling center had gone unaddressed:

"How can we be assured going forward ... that things are going to get better?"

While the focus this week is on the recycling center (known in government speak as the Material Recovery Facility or MRF) the question applies universally.

At least one answer to Henson's question arose Wednesday as a committee of the council heard about the MRF's issues from Bruce Sahli, the head of the city's internal auditing office.

It's Sahli's office that regularly reviews the performance of city divisions and investigates those where issues have arisen and which prepared the report on MRF.

The agency has changed its work plans to include more follow-up audits to check on the progress of recommended improvements.

Sally Hamilton, Mayor Jim Gray's chief administrative officer, acknowledged that the administration needs to develop its own system for following up rather than relying exclusively on reviews by internal audit.

This should be a priority. Such oversight by management will assure issues are addressed more quickly and more thoroughly which, in the end, is the whole point.

As for the issues at MRF, set out in the audit and described in a story by Beth Musgrave, there is plenty of work to do.

The most basic issue discussed in the report is that the accounting system in place doesn't really give a complete picture of the economics of Lexington's recycling program.

This is problematic not only because there's no way to measure efficiency when you can't track costs but also because cities and countines surrounding Lexington-Fayette County pay fees to have their material recycled here.

In the words of the audit report, "accurate accounting (revenues and expenses) is essential to assure that the fee structure is equitable."

This means, essentially, that we don't know if Fayette County taxpayers are subsidizing recycling for surrounding areas.

A related issue is the city's lack of contracts with the neighboring communities or with Bluegrass Regional Recycling Corporation (BRRC), the agency under the umbrella of the Bluegrass Area Development District that brokers the commodities produced through recycling, except aluminum, which MRF sells itself.

While the audit report notes that the city is considering ending its relationship with BRRC and doing that work in-house, the issue still remains that clear contracts setting out the rights, responsibilities and liabilities of the parties are essential to running this, or any, business.