Alexander audit report doesn’t mean what it appears to say

Two sentences in the 2014-2015 City of Alexander Audit Report could definitely fall into the “We knew what we meant when we wrote it” category. The two statements in question concern funds transferred from Parks and Recreation to the General Fund and not enough sales tax revenue being transferred from the General Fund to the Police Fund. In an E-mail this week city bookkeeper JoAn Churchill explained that the two instances of financial mishandling stated in the report only occurred in 2014, even though it appears activity in 2015 is also involved.

In the audit it says, “[R]estricted monies were paid from the Parks and Recreation Fund to the General Fund. As a result of these transactions $46,254 and $46,654 are due to the Parks and Recreation Fund from the General Fund in 2015 and 2014, respectively.”

“Restricted” refers to a one-cent sales tax, approved by voters, with the added stipulation that two-eighths (one-quarter) of the collected tax goes to parks and recreation, one-eighth to the fire department and five-eighths to the police department. That revenue can only be spent in those departments.

The second statement says, “In 2014 Sales and Use Tax monies were not prorated correctly. As a result of these transactions $42,617 and $42,736 are due to the Police Fund from the General Fund in 2015 and 2014, respectively.”

Churchill said because additional revenue was placed in the two funds during 2015 the auditors were trying to convey the new amounts owed both funds. As of December 31, 2015 The General Fund owes the Parks and Recreation Fund $46,254 and the Police Fund is owed $42,617.

The mayor in 2014 was Michelle Hobbs and the bookkeeper was Ruby Whittaker. Hobbs was appointed mayor in November 2012 when current mayor Paul Mitchell lost a recall election after serving only two years of his first term. Hobbs lost her attempt to be elected mayor to Mitchell in 2014. Mitchell has been mayor since January 1, 2015. Whittaker was bookkeeper from May 6, 2013 until she resigned effective January 2, 2015. Whittaker was replaced by the current bookkeeper JoAn Churchill on January 2, 2015.

New tractor delivered to City of Alexander

The City of Alexander Street Department’s new 
Mahindra tractor was delivered Thursday 
(March 23). Council members approved the 
purchase Monday evening at their regular 
March 20 meeting. Central Arkansas Mahindra 

in Little Rock was the low-bidder at $32,200.

Audit shows former Alexander mayor & bookkeeper received unauthorized payments

(Corrections made 8/01/17)
According to an audit conducted by the Arkansas Department of Legislative Audit former City of Alexander Mayor Michelle Hobbs and former bookkeeper Ruby Whittaker received payments that were not authorized by the city council. This latest audit covers the years 2014 and 2015. Audits of municipalities and counties, who can’t afford an independent audit, are normally conducted by the state annually.

The audit states, “In 2014, the Mayor was paid $1,680, and the Treasurer (payroll preparer) received a pay increase of $0.25 per hour, without Council authorization.”

Alderman Dan Church asked Mayor Paul Mitchell if the salary increase was in that year’s budget. Mitchell said, “No,” and also said the auditors couldn’t find any meeting minutes approving the pay increase or giving Hobbs an additional $1,680.

Hobbs was appointed mayor in November 2012 when current mayor Paul Mitchell lost a recall election after serving only two years of his first term. Hobbs lost her attempt to be elected mayor to Mitchell in 2014. Mitchell has been mayor since January 1, 2015.

Whittaker was appointed bookkeeper by Hobbs May 6, 2013 and served in that position until she resigned effective January 2, 2015. Whittaker was replaced by the current bookkeeper JoAn Churchill on January 2, 2015.

The audit was reviewed during the council’s March 20 meeting. Mitchell told aldermen Legislative Audit has sent a letter to Pulaski County Prosecutor Larry Jegley explaining the violation. It will be up to Jegley to determine if his office will proceed with prosecution.

Just when Alexander officials thought the city was nearly out of its long-time financial hole, the audit says otherwise. According to the “Treasurer and Bookkeeper” section of the audit $46,654 in 2014 and $46,254 in 2015 ($92,908 total) of, “restricted monies were paid from the Parks and Recreation Fund to the General Fund.”

“Restricted” refers to a one-cent sales tax, approved by voters, with the added stipulation that two-eighths (one-quarter) of the collected tax goes to parks and recreation, one-eighth to the fire department and five-eighths to the police department. That revenue can only be spent in those departments.

The audit also states the Police Department Fund did not receive all of its five-eighths-cent sales tax revenue in both 2014 and 2015.

“In 2014 Sales and Use Tax monies were not prorated correctly,” the audit states. “As a result of these transactions $42,617 and $42,736,” ($85,353 total), “are due to the Police Fund from the General Fund in 2015 and 2014, respectively.”

“We got a big surprise after the audit was over,” Mitchell said. “We discovered we didn’t have as much money in the General Fund as we thought we did.”

Neither Mitchell nor Treasurer Kenneth Miller can explain what happened. After the meeting Miller said there were many financial related documents the auditors wanted for 2014 that couldn’t be located. Miller said the city will have to develop a payment plan in the budget to refund those two accounts.

Mitchell has been mayor since January 1, 2015. Miller was appointed treasurer April 6, 2015. He was then elected treasurer in the November 8, 2016 election.

Some good news did come out of the audit. At the end of 2015 the General Fund owed the Street Fund only $648. A major jump from the $87,248 owed at the end of 2014. In an E-mail since the meeting Bookkeeper JoAn Churchill verified the last amount owed to the Street Fund was paid.

The issue of street fund revenue being used by the General Fund goes back to former Mayor Shirley Johnson. Cities and counties receive a share of the state fuel tax monthly. Under state law that revenue must be deposited in to the street fund and can only be used for street purposes. According to past audits by 2008 $132,792 had been kept in the General Fund rather than transferring it to the Street Fund.

In 2006 Woodland Hills, now known as South Alexander, was annexed requiring a reorganization of the city council. When the new aldermen discovered the misuse of street funds the council voted to require Johnson to deposit all street revenue from the state into the Street Fund. Future budgets were also written to pay back the revenue owed the Street Fund.

Johnson’s 20-year reign as mayor ended in 2010 when she was defeated for re-election by Paul Mitchell. Mitchell was sworn-in as mayor January 1, 2011.

In other business during the March 20 meeting;

Council members approved Mitchell’s recommendation to purchase a Mahindra 2538CHIL tractor for $32,200 from Central Arkansas Mahindra in Little Rock. The tractor includes an all-weather enclosed cab, front loader, a rear rotary cutter (bush hog), and a rear finish mower. The council agreed to appropriate $37,000 to cover sales tax, safety-light bar and adding “City of Alexander Street Department” to the tractor.

Central Arkansas Mahindra was the lowest of three bidders. Greenway Equipment, Inc. of Bryant quoted a John Deere 3039R Compact tractor at $36,954.53. Fiser Tractor in Bryant quoted a Kubota L4060HSTC at $40,259.03.

In another purchase for the street department council members appropriated $27,000 towards the purchase of a 2016 RAM (Dodge) 1500 Crew Cab Tradesman pickup truck. The truck will be purchased from Landers in Benton through a state contract.

Mayor Mitchell said the street department currently has one truck with seating for two people, or three close together. Once he hires a street department superintendent Mitchell said that person will be able to use the new truck while the street crew still has a truck available for them.

Aldermen appropriated $25,000 to outfit four new police cars and one pickup truck for the fire chief. The money will be used to add light bars, prisoner cages, radios, and stenciling the city name on the side of the vehicles.

Council members approved using $10,000 from the Park and Recreation Fund to buy benches and trash receptacles for the city park.

The next regular meeting of the Alexander City Council will be held Monday, April 17. The meeting will be at 6 PM in the courtroom at the City of Alexander Municipal Complex. The public is invited to attend.

Long-awaited tractor purchase on Alexander agenda

(Update; correction made to second paragraph.)

The Alexander City Council may finally be deciding on a replacement for the street department’s tractor, which hasn’t worked since 2015. Three bids have been received and are on the agenda for the city’s monthly meeting set for this coming Monday. After it stopped working the old tractor, which is used for mowing tall grass and weeds, was eventually deemed too expensive to repair considering its age.

Also listed on the March 20 agenda is a report of the recently released the annual audit of the years 2014 and 2015 2016 budgets and accounting practices, “street department purchase” and “truck.” The meeting will be held at 6 PM in the courtroom in the City Municipal Complex. The public is invited to attend.

Bryant School District mill tax increase passes

Voters on Tuesday approved a 3.6 mill tax increase for the Bryant School District. The property tax will increase from 37.2 to 40.8 mills.

FOR ……….... 4,759   59.96%

AGAINST … 3,178   40.04%

City of Alexander has good chance of receiving gift of 65 acres from state

(Edited paragraph concerning Meadow’s Edge. 03/02/17)

City of Alexander Mayor Paul Mitchell says officials from the Arkansas Department of Human Services (DHS) seem willing to deed the abandoned Alexander Human Development Center to the city. He told city council members a state board has to give final approval but there’s no expectations of any problems. The property is located in Alexander along Highway 111.

At the February 27 council meeting Mitchell suggested one of the three buildings could serve as an animal shelter. He also pointed out having 65 acres owned by the city can be useful as a bargaining chip to attract a major development like a super market or strip mall.

Alexander Human Development Center

Of the 65 acres four acres are leased by Pathfinder, Inc., which operates apartments for adults with special needs. If the city accepts the state’s offer the city would inherit the lease as well.

DHS has been trying to sell the property and buildings to developers since it was closed several years ago as the result of a state-wide lawsuit. To settle the suit residents were moved to apartment-like settings and the buildings have been vacant ever since.

This is the second time this issue has been brought before the council. During a July 27, 2015 meeting a report by the planning commission to the previous city council indicated there were too many problems with the buildings so council members turned down the offer. The report was written after three commission members were given a tour of the property and facilities by DHS officials.

According to the report the areas not being leased by Pathfinder are, “[T]he brown building, main hospital building, greenhouse & the small park behind the main hospital building.”

As to the condition of the structures the report states, “The buildings have been trashed and totally gutted of any and most all electrical wiring, plumbing, etc. of any value. There is graffiti on the walls, windows knocked out, (and) ceiling tiles gone.”

There was also concern in 2015 about any asbestos remaining in the buildings. Even if the buildings were to be demolished the asbestos would have to be removed first at a cost.

According to state officials Mitchell says most of the asbestos has been “abated.” He said the asbestos remaining is mostly in the floor tiles and the wrapping around pipes. Mitchell has been assured there are federal grants to help fund the removal of that type of asbestos.

If the state decides to deed the property to the city council members will still have to decide if they want to accept the offer.

In other business at the February 27 meeting;

Council members voted to give Mayor Mitchell and City Attorney Pat Marshall the authority to solve an easement issue. The building in question is at the corner of First and Main streets, behind Hess, and was the home of Royal Communications. The business has moved out and the owners are ready to sell the property to Haynes Equipment. When conducting a survey, as part of the sale, it was determined the wrong survey marker was used when determining where to place the current building. The building is four feet inside the city’s right-of-way. It’s expected the city will deed that four feet to the owners.

The city council approved an ordinance establishing the position of Street Department Superintendent. The salary for the position is already in this year’s budget and Mitchell has been interviewing applicants.

Council members also approved an ordinance establishing the “Clerk of the Court” as the person responsible for collecting fines. The ordinance was suggested by state auditors who are currently conducting their annual audit of the city’s financial practices.

Council members approved Phase-2 of Meadow’s Edge. Phase-2 adds 37 38 lots to the new subdivision currently under construction along Highway 111. This brings the total number of available lots to 244.

City Treasurer Kenneth Miller was given permission to establish a new bank account for payroll only. The company Paychex handles the city’s payroll check printing and accounting duties. To do this it has access to all the city’s bank accounts. Miller said the city can add an extra layer of control by giving Paychex access to one account. The city will transfer funds necessary to meet payroll into the account.

The next regular meeting of the Alexander City Council is Monday, March 20. Meetings start at 6 PM and are held in the courtroom at the City of Alexander Municipal Complex. The public is invited to attend.