Representative Johnny Rye Our first order-- Okay. Has everyone looked over the minutes for last meeting? If we have, will someone make a motion to accept the minutes? Representative Carol Dalby makes a motion that we accept. I need a second. Okay, Senator Hammer, second. All those in favor, say aye. Aye. Those opposed, say no. Okay. Senator Wallace.
Senator David Wallace Right here, Mr. Chair.
Representative Johnny Rye It would be good if we could. Senator Wallace, we've got something really important. He needs to go before us because he's got to leave.
Senator David Wallace Well, thank you, Mr. Chair. I appreciate it. Mr. Chair, this concerns the city of Zinc. I've talked with the Municipal League. The city of Zinc has hired-- can you hear me?
Representative Johnny Rye Yes, sir. Okay.
Senator David Wallace Has hired a CPA, which is one of the requirements. I've talked with the audit team today and I'm going to recommend that we approve their report. And the reason I'm doing this is a city of Zinc was a town of about 90 people. The mayor has a serious heart condition. And we probably don't need to have him come down here. And I've been assured by Municipal League that they're on top of it. And I think that our audit people agree with me. So I am making a motion that we approve the report on the City of Zinc.
Audit Staff Page 2044. If it pleases the committee, I'll go ahead and just present that.
Representative Johnny Rye Please.
Audit Staff On page 20 under reports referred to the prosecuting attorney and Attorney General's office, we've got the town of Zinc 2023 under the mayor. The town paid over $1,000 to officials and council members for mowing, repairs and miscellaneous labor without authorizing ordinances in noncompliance with code. This is a repeat finding of the previous year. In addition, three checks were written to the mayor were recorded in the disbursement journal as being paid to different payees. The budget was not adopted by ordinance. A resolution is required by code. This was a repeat finding from 2017. As Senator Wallace stated, they have hired a CPA firm to take over the books since the recorder-treasurer has resigned right after exit conference. And the PA will act on the first finding with the ordinance. So that's the findings in question.
Representative Johnny Rye Senator Wallace, do you need to go in and explain that a little bit better for us there?
Senator David Wallace Mr. Chair, I think I did.
Representative Johnny Rye Yeah. Okay.
Senator Steve Crowell Yeah, we have a motion file. We have a second. And so moved without objection.
Representative Johnny Rye Okay. All those in favor say aye. Okay. Thank you, Senator Wallace.
Senator David Wallace Thank you, sir.
Representative Johnny Rye Okay. It's an update on delinquent private reports.
Senator Steve Crowell We're going to do one thing first. We want to take a moment and recognize two people that have given great service to the state of Arkansas, and this will be their last meeting. So we just wanted to take a moment and recognize Miss Hodges and Mr. Fite. Appreciate everything for all you all done.
Representative Johnny Rye Yes, we do. Thank you so much, Senator Crowell. Well, Carol, we're gonna miss you. I promise you that. And Lannie, you too, sir. Boy, we've been around the block a long time, haven't we, Lannie? yYes, sir. Adoption of the minutes. We got that. Update on delinquent private reports.
Audit Staff Thank you, Mr. Chair. We started out with about 150 water and sewer departments that needed to submit us a report at the end of June of 2024. The list that was in your package, we're down to 63. 47 of those, we have engagement letters on. Another 13, we have written responses and they have a plan.
And we're down to three, which is on the second page, which are Black Rock, Dermott and Russell that have not responded to two letters that were sent to the mayor and recorder treasurer, and then a round of certified letters that were mailed to all the city council members, mayor and recorder-treasurer and clerks on November 5th. Act 453, which amended Code Annotated 10-4-412, allows for the Committee to withhold both general and street fund turnback until they become current. So that's the question before us now. What is the next step with these three entities?
Senator Steve Crowell So it's my understanding that they've had about two, two plus years to make this right.
Audit Staff These are reports that were due at the end of December 31st of 2022. So the law says 18 months when they become delinquent, which would have been June of 2024. And now they've had additional five months of trying to remind them.
Senator Steve Crowell Representative Jean.
Representative Lane Jean Yean, Mr. Chairman, on my report has Black Rock, Dermott, Russell and Thornton not responding.
Audit Staff Thank you sir. Thornton and Cotton Plant, all their certified letters, we were notified this week they were returned. So we reached out to them individually. Cotton Plant, their issue, if you'll notice on there, they had some financial issues with their CPA. They resolved that this week. So they're in process of getting their audits done. Thornton, we reached out to them and they got together earlier this week and they've reached out to a CPA as well. So they're now on a written plan list. Thank you, sir, for reminding me.
Senator Steve Crowell Senator Hammer.
Senator Kim Hammer Thank you, Mr. Chair. Would staff, the sent engagement letter, exactly what is an engagement letter?
Audit Staff It's a contract with the CPA to actually do a signed contract with the CPA firm, with the city, to do the report.
Senator Kim Hammer Okay. So let me ask you a question about Rockport, then. It says apparently they still owe the CPA for 2019 reports, so they will not start any more years. What's their status?
Audit Staff The CPA actually called me on Rockport and said he would work with them to get it done. Now, that's their version of a written plan. When we get back there, we will update each of these each time we go back. So every year we will revisit this to see if they have it. And if we get to-- of course, the clock and the calendar turns over at the end of June-- we have the same issue for the 2023 reports and then they'll be right back on the list again if they haven't corrected it by then.
Senator Kim Hammer Okay. And then my question would be, is anybody in the room from the three in question, Black Rock, Dermott or Russell? Are there representatives in the room today?
Audit Staff Not that I'm aware of. They weren't invited. We were instructed in the last meeting just to send certified letters. Now, that was the precedent that was done for the cities. If you remember, Bauxite and Augusta when they didn't have their audit, so we invited the whole council member down before the committee went to that. But that's the only other example of how we've approached this.
Senator Kim Hammer All right. So these three cities knew that this was coming up for discussion today?
Audit Staff They were all sent certified letters, and the vast majority of them were not returned. So we're under the impression that they got them.
Senator Kim Hammer Okay. And those letters stated that this would be a subject of discussion in this meeting.
Audit Staff Yes, sir.
Senator Kim Hammer Okay. Thank you. Motion at the proper time.
Representative Johnny Rye Okay. Motion made by Senator Hammer--
Senator Steve Crowell Just hold on. More discussion. So my understanding is our next meeting is May 8th.
Audit Staff That is correct.
Senator Steve Crowell So if we kick this can down the road, they're looking at--
Representative Johnny Rye Six more months.
Senator Steve Crowell Six more months. So, Senator Hammer, you have a motion? Any other discussion?
Speaker 5 If I remember what we are, I think I almost could use the word, required to do, and given the fact that everybody on this list has complied, the appropriate action to take would be a motion to withhold their turnback money until they submit a report. And I guess my question in that motion is, if we do that and then they get those reports in, would that automatically relieve or stop the action of their turnback money?
Audit Staff I'm not an attorney, but we could check with Ms. White. But I do believe that's how it is written. It says until the reports are current is how the law reads.
Senator Kim Hammer If I make a motion to withhold their turnback money and then all of a sudden they get on the stick and get it done and two months from now they send that in, would that automatically trigger them being able to get their turnback money at that point?
Audit Staff That is my understanding. But staff is going to run check with Michelle. The way that this law is written, it reads, unlike the other turnback laws we're going to get to, this is the first 12 months is actually escrowed. So they would actually get-- if they get it done within the first 12 months, they'd get all their back turnback, sent to them. Now, the water repayment doesn't read like that. It reads that every month they're not paid in full, that money's gone and there's no way to get it back.
Senator Kim Hammer Right. So if we pass a motion that says we're going to withhold the turnback money and it takes them 60 days to get an engagement letter to you-- and an engagement letter constitutes meeting the requirement?
Audit Staff In this case, it says current report. So again, Miss White would have to or somebody would have to opine on that as far as what constitutes-- I mean, we've kind of given these others that same credit, so we're interpreting it that way. So I would assume.
Senator Kim Hammer Mr. Chairman or chairmans, are they going to get. Ms. White?
Audit Staff They're going to check with her. Yes, sir.
Senator Kim Hammer Could we wait? I'll hold my motion till she gets here, because I think I'd like to get those questions answered. Might have some bearing as to--
Senator Steve Crowell Yes, I think move on to the next subject and we'll come back to this.
Representative Johnny Rye Yeah, that'd be fine. Senator Kim, once she comes back, we'll get that report. Thank you, sir. Okay. Discussion of Act 709 of 2021, Repayment of turnback funds for the town of Gilmore.
Audit Staff If it pleases the chairs, I'd like to go ahead and present the City of Gilmore Report. It's also here on page nine. And we'll do this all at one time. Under a previously deferred report, on page nine, we have the town of Gilmore 2023 under the mayor and recorder treasurer. Schedule one of this report shows general fund balance a little over $5,500. In addition, it was brought to our attention that as of December 31st of 23, the General fund owed a significant amount to the IRS for taxes owed, as well as a balance due to the street fund and the fire fund.
As shown on Schedule three, when these outstanding amounts are considered, the general fund has a deficit fund balance of over $28,000. This is a repeat finding back to 2019. Additionally, under the recorder treasurer, restricted street fund monies of $2,100 was expended for unallowable purposes. Property taxes of almost $800 and State aid of over $6,500 for highway funds in previous years owed to the street fund were not transferred during the engagement period as required by code. The total amount due to the street fund at 12/31/23 was a little over $9,500.
City Council passed ordinance 22-9- 13 to repay 10% of general fund revenues to the street fund each year until the balance was paid in full. However, only 1.6% of revenue was paid to the Stree Fund during 2023. This is a repeat finding back to 2006. I believe the mayor, Bruce Delaney, is here today to answer questions.
Representative Johnny Rye Mayor, could you-- and I guess this is our secretary. Could you identify yourself, sir?
Mayor Bruce Delaney Yes, sir. I'm Mayor Bruce Delaney from the city Gilmore. I have my assistant with me today. On the turnback money to pay the street back, when we first started out, I didn't quite understand how that 10% was supposed to be going. But the audit lady, she came in, she explained to me. I understand everything now. You know, I have been doing a whole lot to get this straightened out. But if you don't mind, I'm going to let my assistant talk. She can tell you all I have did to try to get this stuff did better.
Representative Johnny Rye Mayor, could I ask you a question, please, sir?
Mayor Bruce Delaney Yes, sir.
Representative Johnny Rye With your situation, sir, you were supposed to transfer money from the general fund to the road fund, but that has not been occurring. Isn't that right, sir?
Mayor Bruce Delaney Well, we had been transferring, but we weren't doing enough because I didn't understand the 10%. But, you know, like I was saying, now I understand it because the auditor lady she sat me down and she spoke with me. She talked to me and told me exactly what I need to do and I do want to get in compliance. We are doing exactly that 10%. That's why I was asking could my assistant speak so she can tell you what all I did to try to make this right.
Representative Johnny Rye Yes, sir. Well, I'm sure there's some questions, sir, today because what I heard is that we actually weren't repaying the street fund back, sir, which is a pretty serious thing considering that it's supposed to be an automatic situation. And we gave 10% each year that was supposed to be paid back to the road fund from the general fund. And I'd heard and maybe I'm wrong, Mr. Archer, but the money has not been repaid.
Trevena Jefferson Excuse me, sir, could I speak? What he did was the auditor came in and spoke with them in September. And I was sitting there with them and they weren't knowledgeable that 10%-- it was 10% of the total revenues that was deposited into that account. Total credits. So the deposit that they had been putting over were very small. So starting in September, that $9,500 that they owe as of today, they owe $6,700 some dollars. He's been doing that 10% after the auditor left.
In September, he did 10%, which was like $1,100. In October, he did his 10%, which was $800. In November, he did $1,500, which was over the 10%. So now that he has an understanding of what he is supposed to do, he's doing that. But at first they did not have that understanding that it was the total revenues of general. And the auditor that came in, she sat down and she explained that and I turned around, was like, you want the total? She said the total revenues that hit general fund. It doesn't matter where it comes from. It's not just the funds that's coming from Crittenden County for Street. It's the total amount.
Representative Johnny Rye Yes, ma'am, it's 10% of the amount of money that was actually spent that was supposed to be spent on the street money that came off of the half-cent sales tax to all cities statewide. And that's quite a bit of money. How much would that be, Joe?
Audit Staff Their total street fund turnback was almost $15,000. $14,810 for 2023.
Trevena Jefferson Yes. So they were $9,500 delinquent. And as of today, like I said, in those three months, now they're at $6,700 in delinquency. So he's paying that back.
Audit Staff Well, we haven't looked at 23 yet, so I can't speak on that. I know that we stopped by this week. I believe Ms. Tiffany stopped by this week and talked to y'all, called you anyway. And she did verify that y'all were paying some back. But we haven't audited those figures. For 22, after the ordinance was paid, the amount due actually increased by that $2,178 because they misspent some additional money during 22 when the ordinance was passed to repay the 10%.
Representative Johnny Rye Senator Hammer, do you have something you need to add to this, sir?
Senator Kim Hammer Yes, sir. It's actually on a different finding within the report. So can I go ahead and do that or do you have somebody else that wants to ask questions on the subject you're talking about? All right. And ma'am, I'm sorry. I did not get your name. I'm sorry.
Trevena Jefferson My name is Trevena Jefferson.
Senator Kim Hammer All right. Thank you, Ms. Jefferson. I notice in the report that we have in front of us, it says that there was $4,056 paid from the fire equipment training funds that were not repaid. And as of December 31, 2023, was paid. So has that been cleared up or is that still outstanding?
Trevena Jefferson That is still outstanding.
Senator Kim Hammer Okay. And the unallowable expenses, what were those expenses? Do you know right off? Because I don't see in my report where it says what they were, just that they were unallowable.
Trevena Jefferson Unfortunately, I don't know what those unallowable expenses were that the city did at that time.
Senator Kim Hammer Okay. All right. Do you know what the plan is as far as paying those back or have you all addressed that yet?
Trevena Jefferson Yes, sir. The plan is that once they get the delinquency cleared up, which should be cleared up by April, then they start paying back fire. And fire should be cleared up, probably, I say roughly about three months after that.
Senator Kim Hammer Okay. All right. Did the staff identify any of those unallowable expenses were?
Audit Staff Ms. Candace is looking.
Senator Kim Hammer Okay. And I'll just go on hold till she can find it. Thank you.
Senator Steve Crowell Representative Fite.
Representative Lanny Fite I just have a motion at the proper time.
Representative Johnny Rye Okay, sir.
Senator Steve Crowell Are there any other questions? Senator Stubblefield.
Senator Gary Stubblefield Thank you. Thank you, Mr. Chairman. Ms. Jefferson, can you tell me what the balance is as of today in the general fund?
Trevena Jefferson I don't know what his balance is as of today, what's in his general fund. But I can tell you the balance that's delinquent, for the delinquency of the $9,502. So I couldn't tell you what his bank account balance is, but I can tell you what the delinquency balance is.
Senator Gary Stubblefield What is the delinquency balance?
Trevena Jefferson The delinquency balance off of the $9,502 that they was written up on last year is now at $6,991.03 to Street that's owed.
Senator Gary Stubblefield Okay. All right. Thank you, Mr. Chairman.
Senator Steve Crowell Okay. Representative Dalby.
Representative Carol Dalby Thank you, Mr. Chair. Mr. Mayor, I'm curious, on this very first paragraph, it says the general fund had a negative balance of $28,254. Are you now back in the positive? This says that you're in the negative by nearly $30,000. Can you explain that?
Mayor Bruce Delaney No ma'am, we shouldn't be in the negative.
Representative Carol Dalby Then Mr. Archer, can you explain? Mr. Archer, can you--
Audit Staff I'm sorry. I was--
Representative Carol Dalby Explain it. It says, I guess, they're in the negative. It says the general fund had a negative balance of $28,254. Do they not have any money in the bank?
Audit Staff They have $5,500 in the bank. But if you calculate the $9,500 they owe to the street fund, the $4,000 they owe to the fire fund, and the money they owe to the IRS, then it becomes negative. But these financial statements are on a cash basis. It's not full accrual. So that's if they paid off all their debt, they would have a -28. But the actual bank balance-- and that's as of the end of 23.
Representative Carol Dalby Okay. Thank you very much.
Representative Johnny Rye Joe, was there something else? Are we just waiting on the answer?
Audit Staff Ms. Gazaway is looking to see what that money was spent on in 2013.
Ms. Gazaway For the fire department. Or fire training? So they have a prior balance of $4,000. They transferred in current year 23 $950 for water sewer to offset expenditures. But then they paid some fire expenditures, so we offset that. So it went up $210 from the prior year. I don't know what the previous $4,000 were, but I can dig and find that out. But this year it was just a transfer to water.
Senator Kim Hammer I don't need to-- I think there's a motion pending out there. I think we'll address that later and not take up the committee's time now. Thank you.
Representative Johnny Rye Okay. Well, the motion. Representative Lanny, you had a motion.
Representative Lanny Fite Thank you, Mr. Chair. May I make a statement first? This problem with Gilmore goes back to 2006, and we hear it over and over again. I've been here ten years, and it's, yeah, we're going to fix it, we're going to do something. Well, we passed some legislation that gives them an opportunity and a framework in which to pay it back in. But also in that framework it says if you don't pay it back, then the full amount's due. And if you're not able to pay it, then you lose these turnback funds and street department. And I would like to make a motion that we enforce that at this point right now.
Representative Johnny Rye Yes, sir. And what we're doing, Representative Lanny, so that everyone will know, we're talking about street money turnback.
Representative Lanny Fite Street money turnback.
Representative Johnny Rye And that's all.
Representative Lanny Fite That's all.
Senator Steve Crowell Is there a second? Second.
Representative Johnny Rye All those in favor say aye. All those opposed. Okay.
Audit Staff So staff will notify the Treasurer. And the way the law reads, within 30 days they will verify with us that the findings haven't been corrected. And then letters will be sent out that all highway revenue coming from the state-- that will be all three phases, the four lane, the fuel tax and the turnback-- will be withheld until the city notifies us that that had been paid in full. And we'll go verify that and get it reinstated.
Representative Johnny Rye Okay. Okay. Representative Karilyn.
Representative Karilyn Brown Thank you, Mr. Chair. Reinstated, but you won't pay the back pay?
Audit Staff No, ma'am. The law does not allow for escrow of these funds under these conditions. It will just start at that point forward.
Representative Karilyn Brown Well, that's what I thought you said earlier, but I wanted to make sure I was understanding. Thank you.
Audit Staff One more point of clarification. Can we decide whether we're going to file this report or defer it? Staff recommends we file it because we will follow up on this every time we go there.
Senator Steve Crowell Got a motion for file and a second already. All in favor?
Audit Staff Thank you.
Senator Steve Crowell Thank you. Thank you for coming down. Appreciate you.
Representative Johnny Rye Okay. Senator Crowell, would you come back with us on Section B?
Senator Steve Crowell C.
Representative Johnny Rye Section C?
Senator Steve Crowell Okay. Senator Hammer, they have to get to a letter and get a plan and then they would get it turned back on. So it is only until they start the action of the plan and then it gets turned back on.
Audit Staff So that would be an engagement letter.
Senator Steve Crowell Correct.
Audit Staff Right. So if they get an engagement letter.
Senator Kim Hammer Question if you don't mind. Then in the meantime-- and this is money that they would not be able to recoup during that time. It doesn't retroactive back.
Audit Staff No, this is escrow. I mean, the water audits, that money will go into escrow for up to 12 months. And then if they get that letter, then they'll get their money back and continue to get their additional future money. But after additional 12 months, then it's redistributed to other cities.
Senator Kim Hammer So bottom line is we make a motion or I make a motion to withhold their turnback money, that would be in effect until they get an engagement letter to you and then that would trigger turning it back on?
Audit Staff That is correct, yes.
Representative Johnny Rye And Senator Hammer, can I ask you, would that be the turnback money concerning the road portion?
Audit Staff No, sir. That's General and Street.
Representative Johnny Rye Okay.
Senator Kim Hammer So, Mr. Chairman, at the proper time, I've got a motion on doing all three, I guess. I don't know there would be any reason to split them out. We could do all three.
Senator Steve Crowell Yeah, that sounds good. Any discussion on this? I have a second on this motion? Got a second. All in favor? Motion passes. Do we have to file that?
Audit Staff No, those aren't reports.
Senator Kim Hammer Is staff going to notify them of our action today? I mean, how do they get notified so they can?
Audit Staff The law requires us to send a letter to the Treasurer and then we will send a letter to all the council members, mayor and recorder-treasurer, all officials, certified letters to them. Probably Monday or tomorrow. We'll get them started tomorrow, get them in the mail Monday.
Senator Kim Hammer Unless someone is watching the live stream. That's the way they're going to find out then. Okay. Thank you.
Representative Johnny Rye Yes, sir. Thank you, Senator Hammer. Okay. We're now at E, discussion of noncompliance with municipal accounting law. Oil Trough.
Audit Staff If it pleases the chair, I'd like to make the same request I did on Gilmore and go ahead and turn to page 24, and we'll present their report as well. Under reports with repeat findings on page 24, we have the town of Oil Trough for 23, 22 and 21 under Mayor and Recorder-Treasurer. The county procedures for municipalities as set forth in Arkansas Code annotated 14-59-101 through 119, the town with noncompliance with these codes and other accounting procedures as follows. Invoices and supporting documentation were not provided for disbursements. Payroll records were not provided. A detailed fixed asset listing was not provided. Bank accounts were not reconciled. Pre-numbered receipts were not issued. Cash receipts and disbursement journals were not established. The recorder Treasurer did not submit monthly financial reports to the council. And annual financial statements were not posted. These findings range from being repeated from 2011 to 2019. We have Mayor Bobby Carroll and Recorder Treasurer Judy Smotherman here today to answer questions.
Representative Johnny Rye Thank you all for being here. Just go ahead and have a seat. And maybe this-- do you see there's one, two, three, four, five, six, seven, eight different areas that look like a problem? Maybe you could tell us where we're at at this point as far as making corrections on what has happened so far.
Senator Steve Crowell Please identify yourself for the record.
Representative Johnny Rye Yes, go ahead. He mentioned your name but go ahead and identify yourself again.
Judy Smotherman Judy Smotherman, Treasurer recorder. The invoices and supporting documentation, we have. The payroll records that were not provided are now being properly provided. And that action is corrected or correcting at this point. A detailed fix asset listing was not provided. I have that on my desk. It is available. Bank accounts were not reconciled. No, sir, I did not. I do now as soon as I get the bank statement. Pre numbered receipts were not issued. Yes, sirs, they are. I have 12 accounts. All of them have a separate receipt book and they're used according to the account it's for.
Cash receipts and disbursement journals were not established. They're established. They were not up to date at that time. That is being corrected. The recorder Treasurer did not submit monthly financial reports to the council. No, I did not. I simply gave them the most current bank statements as I was trained to do when I came on board. Now I will do financial statements to them for each account. Annual financial statements were not posted. No, sir. They will be. The first one is due in March and it will be posted in five places or if necessary in the newspaper.
Minutes were not provided. Yes, they were available, but I did not give her the binders. They are kept. They're kept by the month and they're in binders and they're available for anyone to see. Budgets were not provided. They are kept after approval. They're kept in the binder with the minutes. So we do have those. I'm working on the budget for next year at this time. So if you have any questions then.
Representative Johnny Rye Yes, ma'am. We do have questions, ma'am. Thank you. Senator Hammer, go right ahead, sir.
Senator Kim Hammer Thank you, Mr. Chair. And thank you all for being here today. We appreciate your showing up and answering questions. Ma'am, how long have you been in your duties or in your position, please?
Judy Smotherman Five years.
Senator Kim Hammer Five years. Okay. And I guess what I need a little help understanding is, did you know that these things were supposed to be being done and they just didn't get done? Or how is it that such a long list of findings occurred? Or is there any background or back information you'd like to give us to help us understand?
Judy Smotherman I tended to do as I was trained to do, and therefore the way it was done does not work. I have to establish a new way and do it properly.
Senator Kim Hammer And who was it that trained you?
Judy Smotherman Amy Goin.
Senator Kim Hammer Okay. So have you had any direct communications with the Municipal League as far as getting training from them? Or how is it that you've got your new training?
Judy Smotherman Not until today. And I spoke with Mr. Critcher and he told me there is help available.
Representative Johnny Rye Ma'am, could you please speak into the speaker please?
Judy Smotherman I spoke with Mr. Critcher today and became aware there is help available. And we will request it.
Senator Kim Hammer Okay. All right. Thank you.
Representative Johnny Rye Joe, let me ask you a question. Upon what you guys have looked at, what do you see that's changed that would clear this up?
Audit Staff Well, the law allows for a 60 day, I guess, grace period. So, you know, if at the will of the committee, they go on the clock for 60 days and we would go back out-- as soon as the recorder-treasurer called us and said she was ready, we'd go out and verify this. And if it is as she says, then we'd report back in May and the report would be filed and we'd be looking forward to the next engagement. But not disputing anything Ms. Smotherman said, but we haven't been there to verify it yet.
Representative Johnny Rye Okay. Well, I'm sure there's a possibility that something could have happened where we dropped the ball. But at the same time, they're going to come by and they're going to check, ma'am, to make sure everything is right. And they will report back to us-- if we got a motion in a second and all that. Once we do that, then I'm guessing, Joe, when will you start this process?
Audit Staff That's up to the committee. If you start it today, 60 days from now would be February 5th. But we don't meet again until May. So technically, they have until the May meeting before we can report back to the committee whether or not they're in compliance or not. And then an additional 60 days would be given. At that point in May, 50% of turnback would be escrowed. And then an additional 60 days, and then 100% would be redistributed at that point if they're still not in compliance. If they're in compliance in May, we just file the report and things return to normal.
Representative Johnny Rye Senator Hammer.
Senator Kim Hammer A question for staff. If we wanted to hold this report over, then it could be held over till our next meeting, which would be May. I mean, it could be held over that long.
Audit Staff If we defer it, that's whe--n all of the deferrals today will be held over to May. That's the next meeting. That 60 day, even though the law allows for 60 days, under these circumstances, it's actually going to be six months.
Representative Johnny Rye So are we comfortable with that overall?
Senator Kim Hammer Can I ask her a question, please?
Representative Johnny Rye Yes, sir. Go ahead, Senator Hammer.
Senator Kim Hammer Ma'am, During the five years that you've been in office, did the auditors ever come and visit with you?
Judy Smotherman Yes, sir.
Senator Kim Hammer And whenever they visited with you, were you ever made aware during those visits of these things that needed to be corrected?
Judy Smotherman Yes. And we worked on them.
Senator Kim Hammer Okay. When did that happen? Or how long ago did that happen?
Judy Smotherman The first one was three years ago. And then this past fall, Miss Melton talked with us.
Senator Kim Hammer Okay. So how is it that if you were talked to by the auditors three years ago that these are findings that are still here? Or did you start working on them three years?
Judy Smotherman Yes. But in a small town, sir, you tend to have lots of interruptions.
Senator Kim Hammer Yes, ma'am.
Judy Smotherman And when you're a small town, you tend to try to help them. But our goal is to correct all these citations.
Senator Kim Hammer Yes, ma'am. Okay. Thank you.
Representative Johnny Rye Okay. Is there anyone else that would like to ask a question? Because this is a fairly complex situation we're in here. Okay. Okay. Representative Karilyn.
Representative Karilyn Brown Thank you, Mr. Chair. Ma'am, do you feel like you're going to be able to bring things current within the allotted time?
Judy Smotherman Yes, ma'am.
Representative Karilyn Brown It's not an overwhelming amount of work.
Judy Smotherman It is an overwhelming amount, but Ms. Melton is going to help me. And I'm going to ask for help from AML.
Representative Karilyn Brown Thank you.
Representative Johnny Rye Okay. I need a motion to accept this. If we do, it's going to be May of next year when this comes out. There'll be 60 days before this will actually come in for the auditors. But actually, before we actually hear all this, it's going to be in May of next year, isn't it?
Audit Staff Yes, sir.
Representative Carol Dalby So question. Is it a motion to defer? Is that what we're really looking for?
Audit Staff I think we're looking for a motion to put them on the 14-59-117 track which starts the clock on 60 days.
Representative Carol Dalby So moved.
Representative Johnny Rye Okay. I got a second. All those in favor say aye. Okay. All those opposed say no. All right. Thank you all for coming.
Senator Steve Crowell So just so you understand that, they're going to send you a letter and it's 60 days. You have 60 days to tell them that you're ready. They're going to come out and verify that you've got everything done. And so 60 days from now, everything has to be done.
Audit Staff Or sooner.
Senator Steve Crowell Or sooner. Yeah.
Representative Johnny Rye And thank you all. It looks like you're trying to be serious with it, which is a very important thing. Because those were fairly serious situations that were going on there.
Audit Staff One point of clarification. I think Senator Hammer was trying to make this clarification. In May, 50% of your turnback, if you're not in compliance, will be withheld in an escrow until another 60 days. And then there will be more chances to come into compliance and then it will be redistributed. You'll lose it. That's general fund and Street fund turnback from the state. Okay. If you get it done in the 60 days, we'll just file the report in May and we'll be good.
Representative Johnny Rye Which is a great thing. We hope that's what happens to you. And thank you all for coming today. Okay. We're down to review of reports.
Audit Staff Thank you, Mr. Chairman. I'm going to review the reports. We have 16 reports deferred from the previous meeting, starting on pages one through five. We have Lonoke County. The committee in the October meeting asked staff-- they deferred this report and asked staff to refer this, the county clerk's finding that reads, "A review of payroll records in the county clerk's office for the period January 1, 2022, through July 22, 2023, revealed the following questionable payments totaling over $4,200, involving three employees as follows: Vacation leave taken before leave was earned, comp time without taxes withheld, overpayments due to hours work being reported in incorrect pay periods, duplicate payments for inclement weather, personal leave without adequate supporting documentation for hours available, and miscalculation of comp time. We recommend that the county consult with legal counsel regarding the legality and irreconcilable nature of the clerk's policy when compared to the county's policy."
We did refer this on October 10th. We sent a letter to the Department of Labor and minimum wage and overtime. We checked with them on Monday. We have not received a response from them. We also checked with the county clerk. She has not been contacted by them. Just a reminder, staff follows up on all findings from the prior year. So unless there's another directive, staff recommends that we file this report.
Representative Johnny Rye You heard that. We would need a motion to file the report.
Senator Steve Crowell We've got a motion.
Representative Johnny Rye And a second? A second. All those in favor say aye. Okay.
Audit Staff Continuing on pages six through eight, we have Searcy County that was deferred from October 2022. We deferred this because we didn't have a response from the Airport Commission chairman, Mr. Joe Wilson. Mr. Wilson was invited to this meeting and we have not heard from him. Staff recommends that we defer this report.
Representative Johnny Rye Okay. I need a motion to defer the report.
Senator Steve Crowell We got a motion and a second.
Representative Johnny Rye Second. All those in favor say aye. Those opposed. Okay.
Audit Staff Continuing on page eight, under deferred reports, we have two regional water districts that we deferred because we had a lack of proper responses in October. We have since received proper responses. Staff recommends that we file both reports.
Representative Johnny Rye We need a motion to file the report.
Senator Steve Crowell Motion. We got a second.
Representative Johnny Rye Got a second. All those in favor say aye. Right. Okay.
Audit Staff Continuing under deferred reports. On page ten, we have the town of Patmos, 23, 22 and 21 under the recorder-treasurer. Pre-numbered receipts were not issued for revenues in the general fund, fire department and ARPA funds for 23, 22 and 21 and the park fund for 21 as required by code. This is a repeat finding for the prior year. Salaries paid to officials were reported on IRS form 1099 instead of a W-2. This is a repeat pattern as well. And we have recorder Treasurer Randy Peters here today.
Representative Johnny Rye Mr. Peters, could you come to the end of the table, please, sir?
Audit Staff Page ten.
Representative Johnny Rye Thank you, gentlemen, for being here today. Could y'all just give us an explanation of what has went on here?
Senator Steve Crowell Push your button, please.
Randy Peters We did do some of the receipts, but we didn't do all of them.
Representative Johnny Rye Mr. Peters, can you pull that a little closer to you, sir?
Randy Peters We did do some of the receipts, but apparently we didn't do all of them. And on the 1099 thing, we had always used a 1099 instead of W2 because we thought it was contract labor. But we're going to start using the w2 on that one.
Representative Johnny Rye Are there any questions here? No questions.
Audit Staff Staff recommends we file.
Senator Steve Crowell I've got a motion and a second. All in favor. And it's filed. Okay. Thank you, gentlemen. Appreciate you.
Audit Staff On pages 11 and 12, we have 10 private water and sewer reports that were deferred for lack of proper response from October. We have since received proper responses on all ten. Staff recommends that we file.
Representative Johnny Rye A motion to accept the report and file.
Senator Steve Crowell We got a motion and a second. All in favor.
Audit Staff On page 12. We've got one report that was certified to the bond board and referred to the PA and AG. Sharp County 2023 under other issues. The county discovered and we verified that a county employee deposited five 2023 payroll checks totaling over $2,600 in 2023 and again in 2024. The bank returned the duplicate deposit amount to the county's bank account and the individual was terminated from employment on June 27, 2024.
Representative Johnny Rye Question here. What do we usually do in a situation like that right there when it deals with money that's going to folks and actually it's not being repaid in the right manner?
Audit Staff I mean, this was payroll checks. He took his payroll check, mobile deposited it in one year, kept it and mobile deposited it again six months later was the issue here. They terminated him. The bank gave the money back to the county. But since it's a county employee, we went ahead and certified it to the bond board so that if he gets another employment with another government agency, he won't be bonded.
Representative Johnny Rye Okay. So do we just need to file this?
Audit Staff Yes, the bond board will do their job and so will the prosecutor.
Representative Johnny Rye Looks like the county got their money back. Need a motion.
Senator Steve Crowell Got a motion and a second.
Representative Johnny Rye A second. All those in favor say aye. Okay.
Audit Staff Starting on page 13, we have eight reports that we referred to the PA and the AG, starting with the city of West Memphis 2023 under the Mayor, the Treasurer and the finance director. The city discover the following unauthorized transactions totaling over $5,500 in fiscal year 24 and 23. On July 5, 2024, a city employee purchased three gift cards totaling $2,000 after receiving a request from an email address that appeared to belong to the mayor. After discovering the email was fictitious, the employee reported the issue to the finance director. However, funds could not be recovered. On May 16 of 2023, an unauthorized withdrawal of over $3,500 was made from the city's bank account. City personnel discovered the unauthorized withdrawal upon reconciliation of the affected bank account. However, since the withdrawal was approved previously through Polity Pay, the city was unable to recover the funds.
Representative Johnny Rye Okay. Let me ask you this, Joe, has this been turned over to a prosecutor?
Audit Staff Yes, sir. And the AG.
Representative Johnny Rye Okay. So we really just need to file this?
Audit Staff If there's no questions. Yes, sir.
Representative Johnny Rye Okay. Need a motion to file. Need a second.
Senator Steve Crowell First and second.
Representative Johnny Rye All say aye. Okay.
Audit Staff Continuing on page 13 and 14 under referred to the prosecuting attorney and the AGs, we have Baxter County 2023, under the county judge, county and circuit clerk. A review of two credit card payments revealed over $600 in credit card charges for meals that did not include itemized receipt or documented business purpose, in some cases completely undocumented. We referred this to the PA and the AG.
Representative Johnny Rye Okay. So we just need to file it, Joe?
Audit Staff If there's no questions.
Representative Johnny Rye Motion and second. All those in favor, say aye.
Audit Staff Continuing under referred to the PA and the AG, on page 14, we have Carroll County 2023 under the sheriff's office. On December 14, 2023, former Carroll County Deputy Blake Greenberg was charged with forgery, theft of property and tampering with public records. Prior to resigning from employment on October 8th of 2022, Greenberg served as coordinator of and received unallowable compensation from the STEP Grant. Staff recommends we file if no questions.
Representative Johnny Rye Okay. Motion made. Second. All those in favor say aye.
Audit Staff Okay continuing with referred to the PA and the AG, on pages 15 and 16, we have Independence County 2023 under the county judge. On May 1, 2024, the county discovered a collection notice in the desk of a former employee who resigned on March 11th of 2024. The notice indicated a balance owed on a credit card account established by the previous county judge who indicated the account was established using his personal credit but was utilized primarily for county business. The previous county judge and the former employee have access to the card and allowed other officials to use it as well.
Based on our review of credit card statements from November 10, 2022 through October 11, 2023 provided by the previous county judge and current county official, we determined the balance owed consist of the following: almost $3,800 of unpaid charges incurred prior to our review period, almost $1,400 in fees and interest charges incurred in 2023, and $416 of purchases made in January of 2023. Without supporting documentation, we were unable to determine the validity of the purchases made. Additionally, statements were not reconciled and balances were not always paid in full each month, resulting in fees and interest noted. February 2023, the county paid a little over $1,300 for charges made in 2022 for which documentation was provided. And the county employee reimbursed $5,500 for personal charges made in 2023.
Statements received after these payments were not provided to the current or previous county judges. As of the report date, the $4,212 balance remains unpaid. The recommendation of the county attorney and that the county was working to obtain additional documentation to substantiate the amounts owed.
Representative Johnny Rye Okay. So, Joe, they're going at this in the right direction, isn't that right?
Audit Staff I've talked to the judge and, yes, they're doing their best to research these charges. And his concern, if you read his response, is that if they pay them without documentation, he's in trouble. If he doesn't pay them, he's in trouble. So they've got themselves in a bad situation. Yeah.
Representative Johnny Rye And what really bothers me about this, I know y'all, too, I mean, really, a county card or city card is not meant to be used for anything except the use of city property obtained and sold. Did they turn it over to a prosecuting attorney?
Audit Staff Yes, sir.
Representative Johnny Rye Okay. All those in favor-- I mean, I need a motion. I need a second. All those in favor say aye.
Audit Staff Continuing on page 16 and 17 under reports referred to the prosecutor and the AG, we've got Jefferson County. County Judge Gerald Roberson was invited today, but he called with a prior conflict and he requested that we defer this to the May meeting.
Representative Johnny Rye Okay. Need a motion to defer this to the May meeting.
Senator Steve Crowell Got a motion and a second.
Representative Johnny Rye All those in favor, say aye. Okay.
Audit Staff On page 18 and 19, continuing under prosecuting attorney and referred to the AG, we have the City of Gurdon under the mayor, recorder-treasurer and marshal. The city marshal, an elected official, was paid worker's compensation benefits and a full salary simultaneously, resulting in salary overpayments of almost $54,000 in noncompliance with code. These overpayments occurred from December 2020 through August of 2021 and January of 2022 through March of 2022 and in June of 2022. Additionally, under the same official, in December of 2020, the city sold a police vehicle for $1,000, according to the bill of sale that was signed by the marshal. The proceeds from the sale were not deposited in a city account. Also on page 19, under the mayor and recorder treasurer, city funds totaling almost $2,300 were used for a catered holiday dinner for employees and guests in apparent conflict with Article 12, Section 5, as interpreted by AG's Opinion 91-4-10.
Representative Johnny Rye Okay. Do you have a question? Joe, let me ask you this. Has this been turned over to a prosecutor?
Audit Staff Yes, sir.
Representative Johnny Rye Need to make a motion to file. A second. Okay. All those in favor say aye.
Senator Steve Crowell All right. We've had a request to go back to Jefferson County. There was a couple of comments. In our speed to get things moving, we didn't see the hands. So, Senator Hammer.
Audit Staff Would you like me to read the findings?
Senator Kim Hammer Yes, please.
Audit Staff Page 16 and 17. Jefferson County, 2023 under the county judge. On February 10th, 2021, the county paid over $305,000 for the installation of solar panels on three county buildings. As of the report date, the panels had not been installed in noncompliance of Article 12 Section 5. The county sold a truck in 2023 in noncompliance with code. Competitive bids were not solicited, properly waived or approved by the Quorum Court for the following items in noncompliance with code. Two consecutive invoices issued in 2023 dated one month apart for trimming limbs at $22,000 each. Three consecutive invoices issued in 2024 and dated the same day for tree and stump removal for almost $23,000 each.
The following equipment items, all of which were financed with a local bank: $645,000 for Caterpillar Road Reclaimer, $320,000 for two John Deere tractors, $201,000 for Ford GMC trucks, $155,000 for a 2023 International Water Truck, $86,000 and $50,000 for two 2023 GMC trucks respectively, $83,000 for Volvo Asphalt Roller, $75,000 for Kubota track loader, $74,000 for a bulldozer, $54,000 for a dump truck. The county added 34 new lines to the Road Department phone bill in 2023 and paid over $19,000 for services from September of 2023 through October of 2024. The new lines could not be traced to numbers in service or equipment being used.
Representative Johnny Rye Got a question for you, Mr. Archer. Of all of these different expenditures, was this included in the budget for the previous year, for the year of actually spending money?
Audit Staff There was not a filing for over budget in this year, in the 2023 year.
Representative Johnny Rye No. No over budget?
Audit Staff There wasn't a finding for such.
Representative Johnny Rye So if that was a county judge or if that was even a mayor, technically, if they had that in their funds under a certain code, would that not be lawful?
Audit Staff We're not questioning the type of expenditures. We're questioning the bid compliance. On the big one, with all those I listed, they didn't bid it. Let's just take the first one there, the two consecutive invoices. The law specifies that you can't split invoices to avoid bidding. Well, that looks a whole lot like the definition of splitting bids. You got two of them back to back on the same invoice numbers, one apart. And the two of them together, 22 each. 22 individually, they don't have to be bid. But when they total 44,000, that exceeds the limit of 35,000. The same thing with the three consecutive invoices, together, which it appears to be one project, it's over the $35,000.
Senator Steve Crowell Senator Gilmore, you're recognized.
Senator Ben Gilmore Thank you, Mr. Chair, and thank you for the latitude in going back to this, because I think it bears discussing. Members, we've sat in here month after month and heard issues with Jefferson County and how things are being handled there. I know the county judge is not here, so I have a question for staff then I have a question for the chair. So staff, if you don't mind, Mr. Archer, I know we voted defer. So what that means is won't be heard until May. I know that there's already other findings that are pending in front of a prosecutor and the attorney general's office. Do we have to hear from the county judge today or can we take action to move forward?
Audit Staff You mean to file the report?
Senator Ben Gilmore File the report.
Audit Staff That's up y'all.
Senator Ben Gilmore Okay. That's what I need to know. So, Mr. Chair, I know we have folks, I think, from Jefferson County here, may not be the judge. Is it possible to hear from the folks from Jefferson County if they're willing to speak? I don't know that they are. If they are, would they?
Representative Johnny Rye I know this man has been waiting to speak.
Senator Ben Gilmore Okay. If we can hear from him and see what he has to say, it would be helpful.
Senator Steve Crowell Senator Hammer.
Senator Kim Hammer I'd like to make a motion to rescind our motion to defer this so that we can bring it back up for discussion now.
Representative Johnny Rye I need a motion to rescind the vote.
Senator Kim Hammer I want to make a motion to rescind the vote to defer this report to May-- to expunge the vote, sorry. I make a motion to expunge the vote by which we deferred this report to May.
Senator Steve Crowell Second. All in favor, say aye.
Senator Kim Hammer All right. And then I got questions at the appropriate time.
Representative Johnny Rye Sir, one more time. We heard your name about a month or two ago. Can you identify yourself once again?
JP Lloyd Franklin II Lloyd. Lloyd Franklin II, Justice of the Peace, District five, Jefferson County. First off, I would like to clarify there was a question of whether or not, I guess with the invoices that was stated, whether or not the judge exceeded his appropriation. If you look back in the page, I think there is a finding in there 2003-1, the county judge actually went $1 million over budget in 2023. What he is doing to exceed his appropriation is he will create invoices and bills with vendors. And then what happens is he utilizes the money that is appropriated to spend on whatever he wants that he shouldn't be spending it on. And then he creates in 2023 $1 million worth of invoices which he brought over to 2024.
And in the Quorum court meeting basically told the quorum court, if you don't appropriate $1 million to pay these invoices, the vendors are going to sue, which in turn forced the Quorum court to appropriate $1 million out of our reserve account to the road department to cover these illegal transactions that he transpired with. Now, as far as the equipment and things that you notice there, it's almost about $2 million worth of equipment that he purchased in 2023. I believe that the law on the books says that you can't spend any money that has not been appropriated. So what he did was he contracted the county into a finance agreement with a local bank without an appropriation in place. So what he is basically done is he's obligated the county, which is in 2024 to around $1.2 million worth of lease payments to particular banks that he didn't have an appropriation for.
And he's also tied the county into lease payments for about 1.1 going into 2025. Now, he didn't have an appropriation for any of these contracts for finance that he entered into in 2023. And so he's spending money that he doesn't have, but he's also obligated the county to these payments and forcing the quorum court to make good on payments that he's obligated the county to.
Now, that also goes back to a particular instance that we reported to the Legislative Audit on another incident where we built three buildings and we have a mortgage note of about $660-something-thousand payable to Simmons Bank. Well, we appropriated this money in the county judge's budget and he set his budget for 2023. Well, the money that was obligated for the mortgage, he spent it on something else. So when it was time to actually pay the initial note, he wouldn't explain to the quorum court where the money went that was obligated for the note.
So in turn to pay the note, he took it upon himself to do a court order and authorized the County Treasurer to allow a bank to draft our bank note to make a payment on a loan that the county had. Now, this money wasn't appropriated. It didn't go through the county clerk's office. It didn't go through the county judge's office for approval. It didn't go through the treasurer's office. Now, this is just a court order that he did from his office, his desk to the Treasurer, and allowed somebody, a vendor, to draw 665-some-odd dollars off of a county money market account, and this was submitted to Legislative Audit. Now, he's not a circuit judge. I don't know how these court orders work or where he would have the authority to supersede the quorum court to spend money that hasn't been appropriated.
Representative Johnny Rye Sir, can I hold you up just for a minute?
JP Lloyd Franklin II Go for it.
Representative Johnny Rye For a minute, sir, we're going to come back because this is pretty important what's going on. Technically within a county, there's a 10% holdback each year for the budget. Isn't that right?
JP Lloyd Franklin II That's right.
Representative Johnny Rye Okay. Now the funding that you're speaking of, is this exceeding that money that actually was in the original form presented to the quorum court in either November or December of the previous year?
JP Lloyd Franklin II You may have to restate that question for me.
Representative Johnny Rye You know each budget that you do for a county like you do one in November-December like now for next year. And you withhold 10%. Okay. If money is spent the next year, is that exceeding the amount of money that was appropriated by the Quorum Court at the Finance Committee and the full Quorum Court?
JP Lloyd Franklin II Correct. His budget was around somewhere between 4 and 5 million, but he created in excess of $1 million in bills in 2023. And he brought the invoices over to 2024 and demanded payment for bills that he created in 2023 and 24.
Representative Johnny Rye Okay. Hold on just a second.
Senator Ben Gilmore I was going to let you know I have a motion at the proper time, but I think you might have another question.
Senator Steve Crowell Do we have anybody else that has questions?
Representative Johnny Rye Yes, sir. And we've heard a lot about this one already. You've helped us before.
Senator Steve Crowell So we appreciate it.
Senator Steve Crowell We are going to recognize Senator Hammer.
Representative Johnny Rye Yeah. Senator, I have a go right ahead. And fellas, let's go ahead and try to tie this together, okay?
Senator Kim Hammer I just want a little bit of information. How long have you been on the board or how long have you been on the court?
JP Lloyd Franklin II This is my second year on the court. But I've been on the Quorum Court for six years prior to this term.
Senator Kim Hammer Okay. Just enlighten me about that $22,000. If I'm reading this right, it's $22,000 to cut down a tree. Is that right?
JP Lloyd Franklin II Yes, sir.
Senator Kim Hammer That's a lot of money for a tree.
JP Lloyd Franklin II We don't have a clue which tree it is. There's several invoices there that-- a problem we've been dealing with for years is the bidding process. Cutting bids, as you see, duplicate bids, we don't know where the work took place, what was done. There's nothing to identify the work that's being done. I mean, it's just kind of what we've been dealing with in Jefferson County. I mean, even to the point where there's been repeated findings for illegal sales of county equipment where he's not following the process when he's selling equipment. I filed a lawsuit pro se. But, you know, there's only so much that we can do. I'm actually under litigation with a defamation lawsuit with the county judge right now for even reporting to you guys the violations that we found for investigation.
Senator Kim Hammer Okay. Let me get one question. Let's get it on the ground. Then the other question was, were you there during the time of the contract for the installation of the solar panels?
JP Lloyd Franklin II No, sir. That was prior to me in February of 2021, but I was the one that discovered it and brought it. Up for conversation. We're going into 2025, so I guess we're basically four years later we have not seen or located any solar panels in Jefferson County to be installed on buildings. And that money was paid for with state money and federal Covid funds.
Senator Kim Hammer Okay. I'm on hold there because you got a motion coming. Thank you.
Representative Johnny Rye And we do. But can I ask you one more question? On those solar panels, if they didn't spend the money on that, what did they do with the money?
JP Lloyd Franklin II Well, the money was actually spent for solar panels. And it was a cooperation between two different accounts. It was county money that was involved. And I'm sure it was involved in some state money. And there was also federal Covid money that was paid also into the invoice that went to the 3P Group for the solar panels. And they were supposed to be installed on three different buildings, but three going on, in two months, four years later, we've yet to see any solar panels being installed on those buildings.
Representative Johnny Rye Okay. Representative Lane Jean.
Representative Lane Jean Thank you, Mr. Chairman. It's been a while since I've read this. Did y'all have a budget in 2023 or were y'all working off a prior year budget?
JP Lloyd Franklin II We had a budget in 2023.
Representative Lane Jean But there has been some years y'all have not had a budget, is that right?
JP Lloyd Franklin II If they had a budget, they may have had a working budget maybe for 30 days starting off the year until they complete the finalized budget. But I haven't seen a time in Jefferson County where they went past 30 to 60 days into the beginning of the year without finalizing the budget for the continuing year. And generally that's if it's kind of tight and they do a 30 day budget, I believe that's kind of allowable just to get the year started off while they go ahead and complete and fine tune everything that they're looking for, like maybe the last settlement from the state to come in.
Representative Lane Jean Okay. So but 2023 did have a budget?
JP Lloyd Franklin II We had a budget for 2023. As a matter of fact, the county judge set his own budget for 2023. So he had carte blanche to set it at whatever he wanted. That was prior to me coming on to the quorum court on January 1st, 2020.
Representative Lane Jean Okay. Thank you. Okay.
Representative Johnny Rye Would you like to give us a recap of where we are as far as the auditing process?
Senator Kim Hammer Mr. Chair, can I just ask one question? When was the judge notified of this meeting, how long ago?
Audit Staff We actually, to make good on a promise that I made to y'all in the October meeting. We had an exit conference, I think it was two weeks ago. It hadn't been long, Senator. It was the 19th of November, 18th, 19th of November.
Senator Kim Hammer And when were you notified he couldn't be here?
Audit Staff That day. He told the supervisor at the exit conference that he had a conflict on that date. Because he asked, would he be invited back. And the meeting was set and he said, I can't be there that day. I've got a conflict.
Senator Kim Hammer All right. Thank you.
Representative Johnny Rye Okay. And Senator Gilmore.
Senator Ben Gilmore Thank you. And before I get to my motion, just back to Mr. Archer, he's failed to appear before this committee previously several times.
Audit Staff He missed the September meeting and showed up at the October meeting. That's correct.
Senator Ben Gilmore That's right. Okay. So with that, I want to make a motion because as I understand, this gets referred to the prosecutor and attorney general's office. And once it's filed, it will actually go to the attorney general's office once it's filed. And I know they're looking at other things that have been referred there from this committee as well. So with that, I want to make a motion to file. That's my motion.
Representative Johnny Rye Okay. Everyone heard Senator Gilmore's motion. Do I have a second? Second. All those in favor say aye. Thank you, sir. Again.
JP Lloyd Franklin II Thank you.
Audit Staff We're continuing under reports that would be referred to the prosecuting attorney and the AG. On page 21, we have Lafayette County 2023 and 2022 under the sheriff. The county's personnel policy states overtime shall be worked in emergencies or when the public health, welfare or safety of the general community is in danger. From January 1st of 2023 through March 16 to 2024, the administrative assistant of the sheriff's office received over $9,200 in overtime pay. The amount included over $2,200 for working holidays such as Thanksgiving, Christmas, Christmas Eve and New Year's Day. We identified at least one holiday on which the administrative assistant claimed to have worked eight hours but did not, resulting in a $167 overpayment. It should be noted that the administrative assistant approved her own time sheet using the sheriff's signature stamp. Furthermore, we were unable to determine if the overtime hours met the criteria outlined in the county policy.
Representative Johnny Rye Okay, so what has taken place with this on our end?
Audit Staff We have turned it over to the prosecuting attorney and the AG's office and they're looking into it.
Representative Johnny Rye Need a motion to file. Second. All those in favor say aye. Okay
Audit Staff Moving on to reports with repeat findings. We have nine such reports starting on page 22 with the town of Banks. Recorder-treasurer Leah Via was invited. She called with family medical issues, could not be here today. Staff recommends that we defer that report.
Representative Johnny Rye Okay. I need a motion to-- did you say to defer?
Audit Staff Defer.
Representative Johnny Rye I need a second. Carol. All those in favor say aye.
Audit Staff Continuing on page 22, more repeat findings. We have the City of DeWitt 2023 under the clerk-treasurer. Fixed asset records were established, but did not include additions, deletions, control totals and amounts as required by code. This finding has been repeated in the prior two reports. The District Court clerk, the balance remaining in the bank account of over $11,000 was not identified with receipts issued on cases not yet adjudicated and payments made for all unpaid individual time accounts as required by code. This is also a repeat finding. I believe we have Clerk-Treasurer Melanie Adams and District Court Clerk Caitlin Hargrove and District Judge Park Eldridge here today.
Representative Johnny Rye We want to welcome you all today. Welcome. Could you identify yourself? We've heard it, but let's hear it one more time.
Melanie Adams Melanie Adams, city clerk for DeWitt.
Mayor James Black And I'm James Black, mayor of Dewitt.
Representative Johnny Rye Thank you all for being here.
Mayor James Black I apologize.
Representative Johnny Rye Could y'all explain a little bit about what's happening, what we're doing to kind of get a correction because I talked to you a little bit before the meeting. I can tell that you all are serious about getting this straight.
Melanie Adams Yes, Mr. Chairman. I was appointed city clerk in October 2022. My predecessor had passed and I was not trained properly. And she didn't train me on all the duties that she had to do. And so as being appointed city clerk, I had a very huge and overwhelming job duty. I had an overload and I hired a deputy city clerk and some of the duties were neglected. And I have a new deputy city clerk and we are in the process of correcting all of the neglected duties.
Representative Johnny Rye Yes, ma'am.
Melanie Adams And then I have for the fixed assets, I have reached out to an elected official and she has helped me put a spreadsheet, Excel spreadsheet, and I'm in the process of putting our fixed assets in the computer to correct that issue. And then on the bank reconciliations, the second finding, I have contacted CSA Software Solutions and they're going to come to DeWitt and give us in-house training on bank reconciliations.
Representative Johnny Rye Okay. Okay, ma'am, Thank you. And are they on the right track with what's going on?
Audit Staff Yes, it sounds like it. Is the court clerk here? Okay. [voice from audience] That's up to the committee. I guess we need to see if there's any more questions for these two individuals.
Representative Johnny Rye Yes, sir. Any questions on these folks? And we have one more person that would like to speak. Yes. Come on up, sir.
Melanie Adams Thank you.
Judge Park Eldridge Yes, sir. For the record, I'd like to introduce myself. I'm Judge Park Eldridge, district judge for the DeWitt Department of the South Arkansas County District Court. Today I have with me my district court clerk, Caitlin Hargrove. Our finding was for once we had too much money. So our problem is we have unidentified funds. What is happening, Mr. Chairman, is it's a receipting issue that we've discovered with our receipting agent for our fines from our court. It's done through our police department.
So what's happening is sometimes when they receive funds in, say, for example, I pay a fine for you and I come into the police department and what they do is they issue the receipt in my name instead of your name. And your name is the one where the fine is and that's where the funds need to be applied. So the steps that have been taken by the clerk to correct this problem is they were not doing duplicate receipts. So what would happen is you would come in, pay your fine, you would get a computer generated receipt and that receipt would go out the door with you.
So therefore, what we're doing is asking them to basically give you a receipt, then hold a receipt back so it can be turned into the clerk. The city pays over our funds once a week, so we get a mass check and it's hard for us to identify things when we don't have a receipt to go back to. So that's how it was caused, these identified funds. We've had a few issues with credit cards when they're paid online. When you pay a fine online, an email is generated the clerk's office. Sometimes maybe that gets lost or whatever in the email process. So what's happening now is we requested a monthly report from the credit card company so we can reconcile with that instead of relying upon a receipt per individual who's paying those fines.
The only issue that I would ask the committee some leeway is they keep telling me, as the judge, the way I can solve this problem is issue an order and disburse these funds. But the problem is this is not a static number. This number is going up and down. So if I give an order disbursing these funds, I'm going to be above or below where I need to be. We're still working on it and we're finding things as we constantly go along. The finding shows that our balance was $11,544. We've gotten it down to $5,605. And that is strictly from just having people come to court and say, I paid my fine, and we're able to go back and find it.
And this will be an ongoing issue that we have, and I'll be more than glad-- I like being on your end of the table instead of this end. But I cannot issue that order to correct this problem until I get that static number. And once that number is static, I'll be more than glad to disburse these funds and not be here before the committee again.
Representative Johnny Rye Thank you, Judge.
Judge Park Eldridge Yes, sir.
Representative Johnny Rye Mr. Archer, is that the explanation we need?
Audit Staff They sound like they're working on it, and we recommend to file the report if there's no more questions.
Representative Johnny Rye Okay. Motion. Second? Oh, question. Go ahead, Representative Carol.
Representative Carol Dalby Thank you, Mr. Chair. Judge, we've heard this before. We understand exactly. We've had this come before this committee before, and we appreciate the fact that you're working diligently to bring it. And we know that the AOC will work with you, too. And it sounds like you've reached out to them. So we do appreciate that.
Judge Park Eldridge Yes, ma'am. And thank you, Representative Dalby, we have. And that's how we've been able to put some redundancies in place and try to correct this problem. But for the funds that are identified, we're working our way through them and hopefully we will not be adding to this number any more and it will keep coming down. And we're looking forward to getting this problem completely corrected.
Representative Johnny Rye Okay. Okay. Motion was made and seconded to file the report. All those in favor say aye. Judge, thank you all for coming today.
Judge Park Eldridge Yes. Thank you for the chance, and I hope everyone has a good holiday. Thank you very much.
Audit Staff Continuing on page 23 under reports with repeat findings, the city of Diaz 2023 under the mayor. General fund and street fund expenditures exceeded budgeted appropriations by $190,000 and $38,000 respectively, in noncompliance with code. This is a repeat finding. I believe Mayor Perry Stegall is here today to answer questions.
Representative Johnny Rye Perry Stegall? Okay.
Audit Staff Stegall. I believe that's how you pronounce it.
Representative Johnny Rye Mayor, just have you a seat there and identify yourself.
Mayor Perry Stegall Perry Stegall, Mayor of Diaz.
Representative Johnny Rye Mayor, can you give us kind of a recap of what is happening here?
Mayor Perry Stegall When I first came to the office, the clerk treasurer took care of all this stuff and she resigned. And I got a new one coming in. And she and I both are in the process of learning how to do the budget and I understand we can change during the year. We have done it for this year and we are on our way to get it straightened out.
Representative Johnny Rye Joe, give us a lineup of what we're expecting and where we're at.
Audit Staff Just need a motion to file it.
Representative Johnny Rye I guess that's it. Okay. I need a motion. Okay. And a second. All those in favor say aye. Thank you, sir.
Mayor Perry Stegall Thank you.
Representative Johnny Rye Yes, sir.
Audit Staff Continuing on page nine, under reports with repeat findings, we have Elm Springs, 2023 and 2022 under the Mayor. Our annual audit agreed upon procedure report has not been completed or submitted to audit for the Sewer Department for 2019 through 2023 as required by code. The mayor had some health issues and couldn't be here today. However, going back to our first agenda item, they have supplied with an engagement letter, so they are actually in compliance with the law now as far as doing what they can. So staff recommends we go ahead and file this if there's no objection.
Representative Johnny Rye Okay. I need a motion. Need a second. All those in favor say aye.
Audit Staff Continue on page 23 under reports with repeated findings for the town of Haynes, 2023 under the mayor and recorder treasurer. Although schedule one of this report shows a balance of over $2,100, it was brought to our attention that as of December 31st of 2023, the General Fund owed significant amounts of balances owed to the street fund and to the IRS, shown in note four of Schedule three. When these outstanding amounts are considered, the general fund has a deficit fund balance of over $35,000. This a repeat finding back from 2018.
If you look down two findings down, part of this issue is they owe money to the street fund. The committee back in February approved an alternative payment plan for them. They are in compliance with that. The mayor resigned after the exit conference and the recorder treasurer, Miss McFadden, called and said she didn't have proper transportation. But they're making payments on this per their approved payment plan. So if there's no objection, staff recommends that we file this one if there's no questions.
Representative Johnny Rye Okay. They're repaying this fund, what, 10% a year?
Audit Staff They're paying $100 a month based on their approved payment plan by this committee.
Representative Johnny Rye Okay. Okay. Representative Lanny, do you have a question?
Representative Lanny Fite Yes, Chairman Johnny. Under the code 27-70-207, weren't they supposed to have a direct deposit account?
Audit Staff It's been direct deposit, I believe, since about 2010 or 2011. I think the state allowed them two separate account numbers to deposit those direct deposits.
Representative Lanny Fite Okay. All right. All right. Well, that seems to be one of the problems, is that you get new people in, they don't know to separate the money out. And that was the purpose of that legislation was for it to go direct into that street fund to avoid that problem. That seemed to be their problem right here. Thank you, Mr. Chair.
Representative Johnny Rye You know, Representative Lanny, that's a very big thing that you just mentioned there. You change folks, and a lot of times they don't know what's going on as far as law. Thank you, sir. Do we need to file this one?
Audit Staff If it's the will of the committee, yes.
Representative Johnny Rye Okay. All those in favor say aye.
Audit Staff Continuing under reports with repeat findings on page 23, the town of Jacksonport. Recorder-treasurer Deanna Dodson was asked to be here today and she had to work today. And she called and asked could this be deferred.
Representative Johnny Rye Okay. Now, would you explain this one to us, Mr. Archer? I think it's basically dealing with road money.
Audit Staff No, the City of Jacksonport, they haven't reconciled their bank accounts or had someone other than the preparer approve it.
Representative Johnny Rye Okay. Okay. So everything as far as we can see is okay.
Audit Staff Well, and other than they're not in compliance with 14-59-109, which is why we were bringing them down today. But she had to work. But normally we would defer these until she can get here. But it's the will of the committee.
Representative Johnny Rye We can either defer it or we can file it.
Senator Steve Crowell We got a motion to defer and a second.
Representative Johnny Rye Motion to defer. And second. All those in favor say aye. Okay.
Audit Staff Continuing on page 25 of reports with repeat filings, we have Phillips County 2023 under the county judge. The following issues were noted with finance purchase agreements: lack of proper recordkeeping resulting in numerous duplicate payments, expenditures for finance purchases were not classified as principal and interest, and payments were not always made in a timely manner and resulted in late charges. This is a repeat finding from the previous report. And I believe we have County Judge Clark Hall here today to answer questions.
Representative Johnny Rye Judge Clark, explain the situation, sir.
Judge Clark Hall Good morning, ladies and gentlemen. I have with me one of my attorneys on record. Does he need to be introduced?
Representative Johnny Rye Yes, sir. Could you give us your name, ma'am?
Brittnay Webb Yes. Your chairman. My name is Brittany Webb with McDaniel Wolff.
Representative Johnny Rye Thank you. Thank you for being here.
Brittnay Webb Thank you, sir.
Judge Clark Hall The issue pertaining to your question was that the lack of oversight that has been aggressed, most of it is created by the newly elected county clerk and the newly elected treasurer that we have in our county. 2023 was mainly a learning curve for them. They finally got the county straightened out towards the end of the year. We were getting invoices that were sent to the county judge's office that was approved. The funds were available, and it's a legal debt owed by the county. It was sent, signed, sent down. The issue became the time for them signing checks and getting a delayed bill. When we looked at the computer, the computer did not show that the bill had been paid. So we would re-issue a warrant to get the bill paid. And then we'd find out that two checks had been sent to them. So it's been a learning curve for our elected officials, but it has been corrected. They're a lot more in control of how they handle the billing system, the payment systems.
Representative Johnny Rye Judge Clark, basically this probably was in the mail situation that quite possibly you had two payments made in one month for actually one that was owed, I guess, sir.
Judge Clark Hall Absolutely. But I will remind this body, if I may, to get a letter from Helena, Arkansas, to Marvel, Arkansas, that's 20 miles away takes four days. And so, you know, there could be a whole lot of days in between they got a check and we found out about it. The mailing system in that area is not as on top of their game as they should be..
Representative Johnny Rye Well, I say this, Judge, the mail has been given a big problem.
Judge Clark Hall It has on my part.
Representative Johnny Rye Yes, it has. What about this, Mr. Archer?
Audit Staff We're good with filing it if it's the will of the committee.
Representative Johnny Rye Do we want to file this one? If we know someone needs to make a motion. Motion by Senator Hammer. Second. Okay. All those in favor say aye. All right. All right. Thank you for being here.
Judge Clark Hall Thank you. And I would like to take a personal privilege if I may, Mr. Chairman. I want to apologize to this committee for the last time I was here, mainly because I was not prepared for the answers y'all were asking. And I do apologize. So because of that, I got a little testy for a better term. So I want to apologize to this committee on my behalf. I know better. And my wife was reminding me today before I got here.
Representative Johnny Rye Hey, Judge Clark, you've been in these seats before. You know what it's like, don't you? Thank you, sir, for being here. Ma'am, thank you for being here.
Audit Staff Continuing on page 30, 26 under reports with repeat findings, we've got Perry County. County Judge, County and circuit clerk and the treasurer were all invited. The county judge has major health issues. The court clerk is in court today and the Treasurer has resigned. Staff recommends that we defer this report.
Representative Johnny Rye I need a motion to defer the report. Representative Karilyn. Second by Representative Lane Jean. All those in favor say aye.
Audit Staff Continuing on page 27, we have eight private reports without responses. Staff recommends that we defer all eight of these.
Representative Johnny Rye Who made that motion? Okay. I need a motion. I need a second. Okay. All those in favor, say aye.
Audit Staff On pages 28 through 39, we have 45 reports with findings and good responses. If you'll take a minute to look through those and if you don't have any questions, staff recommends that we file them.
Representative Johnny Rye Motion. Second. All those in favor say aye.
Audit Staff On pages 40 through 44, we have 84 reports without findings. Staff recommends that we file them.
Representative Johnny Rye Representative Lanny, would you make that motion to file it? All those in favor say yea.
Audit Staff That's it.
Representative Johnny Rye The next meeting will be May the 8th. And thank you all so very much. And I hope you have a great, great Christmas. Thank you all for coming, all of you.
