Alva Review-Courier -

Citizen petition audit finds no fraud, no official action required

 

February 5, 2023



Late Thursday, the Oklahoma State Auditor and Inspector published the findings of a citizens’ petition audit of the City of Alva. Since no fraud was found, no further action will be taken.

Mayor’s Statement

Alva Mayor Kelly Parker issued the following statement on Facebook:

“After nearly 4 years, the State Auditor and Inspector Office has completed the citizen requested petition audit of the City of Alva.

“I’ll start by sharing that I 100% support the citizens’ right to audit the authority exercised by their elected and appointed officials.

“In her email notification to Council Members, Brenda Holt, CPA – Director, Forensic Audit Division, wrote, ‘Because there are no findings of fraud, no official action is required by the council, and we believe any further presentation is not necessary.’

“Now, as anticipated, while there were some findings, there is no evidence of fraud or corruption. The vast majority of these findings were already identified by our routine annual audit process. The others represent simple fixes, most of which occurred months, if not years, prior to this report.

“What I will add is that this process has cost the City tens of thousands of dollars (we’re awaiting the final bill).

“This audit has been a dark cloud hanging over many of our past and current leaders. I hope this report will lay to rest all of the chatter and innuendo that City Hall is corrupt.

“At the end of the day, we have some fine leaders and you know what? We don’t always agree with each other or our citizens. There is a big difference, however, between not agreeing with what is done and corruption.

“Elections are held every two years. Make your voices heard with your votes.

“Candidate filing is next week. I hope this report gives some assurances that any incumbents who may be running are fit for service.

“Thank you to all who have supported our City over the years and for all who will continue to do so.

“God bless you all.”

The filing period for municipal elections Parker refers to begins on Monday. The filing period is Feb. 6-8 from 8 a.m. to 5 p.m.

Period Covered

Petitioners requested a review of select concerns occurring between June 2013 and June 2019.

Alva operates under a statutory aldermanic form of government consisting of a mayor and eight council members who also serve as trustees for the Alva Utility Authority (AUA) and the Alva Economic Development Authority (AEDA).

The Alva Hospital Authority (AHA) serves the citizens of Alva by supporting the operation of medical facilities within the city. It is governed by seven trustees including a member of the city council, a member of the Share Medical Center staff and five people who reside within the city limits of Alva.

Following are the findings for each of the five concerns or audit objectives as listed on the citizen petition.

Alva Recreation Complex Fund

Objective: Review selected financial transactions of the Alva Recreational Complex (ARC) Fund, specifically alleged missing or improperly transferred funds during 2015 and 2017.

On May 11, 1999, a one-percent sales tax was approved by voters implementing Ordinance No. 99-827. The ordinance stated the sales tax would be used for “namely economic development and for support of general governmental operations of the City of Alva, and areas immediately adjacent thereto.”

The ordinance allowed for development of projects by the AEDA to be approved by the city. These projects were defined:

• Funding of scholarships to Northwestern Oklahoma State University (NWOSU) students in Alva.

• Development, operation and maintenance of parks and recreational facilities within the city.

• Recruitment of new industries to, or the retention of existing industries within or near the city.

• Projects that would promote the overall economic health and well-being of the city and its residents.

The ordinance also authorized any sales tax proceeds not needed for economic development to be transferred to the general fund upon council approval.

On Sept. 20, 1999, the AEDA board approved the funding of scholarships by authorizing one half of the one-percent sales tax to be allocated to the NWOSU Scholarship Fund. The remaining tax revenue was allocated in 2006 to the Alva Recreational Complex Fund.

No Finding: A recalculation of the sales tax distribution was performed, and it was determined the sales tax revenue was appropriately allocated to the designated funds as required by the proposition and defined by ordinance.

Concerns surfaced after the city’s independent auditor reported the city was performing interfund transfers and borrowing cash from restricted revenues. While the auditor explained interfund transfers are common in municipal governments, the city had an approximate 50 percent increase in interfund borrowing in FY 2019.

No Finding: Transfers from the Recreational Complex Fund for general government use are allowable per the sales tax ballot proposition, as long as they are council approved.

Finding: City administration did not obtain council approval to use restricted sales tax revenues for general government purposes.

The Pooled Cash Fund’s beginning balance as of July 31, 2016, was $2,159,819. By December 30, 2019, the Fund had a balance of $40,703.

Finding: The city did not properly account for restricted revenue within the Pooled Cash accounting system. Restricted revenues were expended for general government purposes without the ability to repay the restricted revenue funds in a timely manner.

The petition audit details further information about transfers within the Pooled Cash Fund causing shortfalls in the scholarship fund which were covered by cashing certificates of deposit. “Funds were not improperly transferred, and no indication was noted of missing funds,” the report states.

Paying Non-City Employees: The recreation complex hires part-time employees such as referees and umpires as contract labor. Purchase orders are being created after an ARC invoice has been completed for the worker. Under state law, purchase orders must be completed prior to services being rendered to ensure funds are available.

Emergency Clause

Objective: Review the City of Alva’s use of the Emergency Clause to implement city ordinances from 2016-2018.

The emergency clause is voted on separately from the vote on the ordinance. Passing an emergency clause puts the ordinance into immediate effect. If there is no emergency clause, the ordinance takes effect 30 days after the final passage unless a later date is specified.

Finding: Although the council is separately declaring and voting on an emergency clause for each city ordinance, as required by statute, the reason the ordinance is an emergency is not being declared, which is also required by statute.

The audit found the city enacted 11 city ordinances from July 2016 to June 2018. Nine of the 11 passed with the approval of emergency clauses. None of the nine included a reason for the emergency enactment.

Conflict of Interest

Objective: Review the relationship between the executive director of the Share Medical Center Foundation, the Alva Hospital Authority, and the City of Alva.

The petitioners questioned whether Mayor Kelly Parker, who is employed as the executive director of the Share Medical Center Foundation and with the Share Convalescent Home, has influenced the city’s oversight of the medical center in his position as mayor. The petitioners alleged Parker’s employment took precedence over his role as mayor and created a conflict with city business. The petitioners specifically objected to the city’s action to deny Integris Healthcare a facility permit to expand services in Alva.

On Sept. 8, 2016, the City of Alva Planning Commission voted 6-0 to recommend denial of the Integris Healthcare application. On Sept. 19, 2016, the city council voted 6-2 to accept the Planning Commission’s recommendation and deny the Integris Healthcare application for permit.

Planning Commission minutes indicate Parker contributed significantly to the discussion of the Integris permit; however, he did not have any authority to vote. He also could not vote on the city council on Sept. 19 to deny the permit.

Under an aldermanic form of government, the mayor does have the authority to vote on questions under consideration by the council when the council is equally divided. The mayor may also veto any city ordinance or resolution passed by the city council. Any ordinance or resolution vetoed by the mayor may be passed over by a vote of two-thirds of all the members of the council.

“There appears to be no legal conflict of interest between Mayor Parker’s position and his employment. Per our review, a deciding vote has not been required by Mayor Parker and a veto has never been utilized. However, the AHA, the city council, and Mayor Parker should each evaluate the relationship involved and seek further legal counsel as to potential conflicts that could emerge,” states the audit report.

Open Meeting Act

Objective: Review the City of Alva’s adherence to the Oklahoma Open Meeting Act between January 2017 and June 2019.

City council agendas and minutes between January 2017 and June 2019 were reviewed.

Finding: Of 30 meeting agendas and minutes reviewed, one instance was identified in which the meeting agenda did not include matters that the council subsequently took action.

On Aug. 20, 2018, the council voted to appoint new members to the Alva Library Board and Planning Commission without listing the discussion or actions on the agenda.

Two other petitioner concerns are addressed under this topic. Concern was expressed that council members were directed to approve minutes of prior meetings when the member was not present at the meeting. “The Open Meeting Act does not require a public body to approve the minutes of its meetings and we are not aware of any other statute or rule that requires such approval,” states the audit report. One way a member may become familiar with the events at the meeting is to review records of the proceedings such as audio recordings, transcripts and documents considered at the meeting.

Another concern was whether citizens are permitted to attend committee meetings that had been publicly posted (i.e., meetings of less than a quorum of the city council). There are nine advisory committees established to act as advisors to the city council that do not have decision-making authority. The meeting dates and times are posted online but not posted at City Hall.

“The state Supreme Court has held that committees are not subject to the Open Meeting Act if they were not established by statute and have no meaningful decision-making authority. Less than a majority of members of a public body may meet without having to comply with the Act,” according to the audit report.

Street Maintenance Fee

Objective: Review the appropriateness of the Street Maintenance Fee implementation vote occurring in June 2013.

The petitioners questioned the appropriateness of the Street Maintenance Fee proposition passed by voters in June 2013, which added five dollars per month to utility customers’ water bills. They questioned whether or not utility customers living outside the city limits should have been permitted to vote on the Street Maintenance Free proposition.

The proposition passed by six votes (304 yes, 298 no) in the municipal election held June 11, 2013, as certified by the Woods County Election Board. According to state statute, only registered voters who reside within the municipal limits of any municipality shall be permitted to vote in any election held for said municipality.

“Per this statue, citizens living outside of the city limits are not allowed to vote in municipal elections,” states the audit report.

The 20-page audit report may be viewed at ww.sai.ok.gov under Publications or go to:

https://www.sai.ok.gov/Search%20Reports/database/Alva%20City%20of%20Web%20Final.pdf

 

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