City of St. Louis / Office of Treasurer
City of St. Louis / Department of Parks, Recreation, and Forestry
City of St. Louis / Office of the Comptroller

(JEFFERSON CITY, MO) - State Auditor Susan Montee released three reports on the audit of the City of St. Louis. These reports looked at the City of St. Louis Office of Comptroller, Department of Parks, Recreation, and Forestry, and City of St. Louis Office of Treasurer.

The Comptroller's Office processes approximately $13.5 million through its payroll computer system each pay period. The 1970's era payroll computer system does not provide the information necessary to efficiently operate the city and is heavily reliant on manual processes. In addition, the 1980's era financial computer system utilized by the Comptroller's Office does not provide the information necessary to efficiently operate the city. Of the eleven city offices contacted, eight maintain additional separate financial records because the city's system does not provide adequate information. The Comptroller used a city-owned vehicle for commuting purposes and did not report the commuting mileage as additional compensation. Also included in the audit report are recommendations related to revenue maximization, capital asset controls and procedures, and federal travel advances.

The Forestry Division is not adequately documenting adjustments and write-offs made in the billing system. The employees who authorized and posted the adjustments or write-offs are not identified and the reason and supporting documentation are not maintained. An administrative fee of 10 percent is added to each customer's bill for handling the billings of the Department of Public Safety, Building Division; however, the Forestry Division had no documentation to show how the administrative fee was determined and does not have written authorization to charge this administrative fee. Further, the Forestry Division has not entered into a written agreement for grass cutting, weed maintenance, and debris removal on property owned by the Land Reutilization Authority and the Parks Division performed grass cutting services without charge for a not-for-profit organization, which is prohibited by the Missouri Constitution. Also, some emergency purchases did not appear to meet the city's definition of "emergency" and the department does not have one individual responsible for approving emergency purchases. It appears the department may be using emergency purchases to circumvent normal city purchasing procedures.

The Treasurer's Office is comprised of the Treasury Division and the Parking Division. At March 10, 2008, city funds held by the Treasurer's Office totaled approximately $41 million in bank accounts and $292 million in various investments. The Parking Division had not ensured a developer complied with contract terms regarding invoices, documentation, and payment for the Euclid/Buckingham garage under construction. As of December 31, 2007, the Treasurer's Office had paid the developer $3 million of the $4 million contract for construction; however, billings and payments to-date significantly exceeded the actual construction progress. Additionally, the Treasurer's Office does not have a formal procurement policy. Costs were incurred during the eighteen months ended December 31, 2007, for some professional services without soliciting competitive bids/proposals, including legal services, financial advisory services, investment management services, feasibility studies, and engineering services. The Treasurer's Office did not execute formal written contracts for these legal services, engineering services, and feasibility study services as required by state law. Payments made to the contractor responsible for processing parking tickets during the eighteen months ended December 31, 2007, totaled about $2.7 million. The Treasurer's Office does not adequately verify the contractor's monthly billings and the contract was amended in March 2005 to provide additional bonuses while requiring no increased services. Further, vehicle usage/maintenance logs are not complete and the review of fuel usage is not adequately documented.

City of St. Louis / Department of Personnel
City of St. Louis / Supply Division
City of St. Louis / Board of Public Service
City of St. Louis / Board of Aldermen

Metro Needs Stronger Financial Controls
This audit looked at Metro operations, focusing on the Cross County Extension project. Metro did not control the cost of the Cross County Extension Project and did not ensure the final design of the project prepared by the Cross County Collaborative, a joint venture of four engineering companies, was substantially complete and free of errors and omissions before proceeding with solicitation of construction bids. Metro also (1) did not retain the services of a project management oversight consultant prior to the completion of the final design, (2) did not ensure utility relocation design work was completed timely and did not ensure utility relocation work was coordinated with construction work, (3) did not follow federal guidance by requesting lump sum bids, and (4) issued bid documents that contained conflicting provisions regarding the contractors' responsibility for excavation of rock and utility relocation. As a result, the final estimated cost of the project, $686 million, exceeded the original project budget by about $136 million.

The Metro Board of Commissioners approved and paid bonuses, executive stipends, severance payments, and retroactive raises to three executive employees and salaried employees totaling over $1,680,600, and retention incentives totaling $145,460 to 14 employees of the engineering department.

Weaknesses Identified in School Districts' Application of Safe Schools Initiatives
This audit identified weaknesses, outlined below, on the district and state level, including incomplete discipline policies, inadequate communication of said policies, and inaccurate incident data.

Improvements Needed to Increase Oversight of School Bus Drivers
School districts do not always ensure persons employed as school bus drivers and/or aides have completed fingerprint based criminal record checks, federally required drug tests, and met training requirements. In addition, school districts are not required to conduct statewide periodic driver history checks through the Department of Revenue or to verify social security numbers for new employees, which could disclose problem drivers. Further, the Department of Elementary and Secondary Education's oversight of school transportation could be improved by requiring school districts to conduct periodic self assessments of compliance with state and federal regulations governing the employment of school bus drivers.

Missouri Clients Need Greater Protection From Abuse
The departments of Social Services (DSS), Mental Health (DMH), and Health and Senior Services (DHSS) have responsibility to protect clients who receive department services. Our audit found DSS policy and state law have not automatically precluded individuals with child abuse charges or criminal convictions from being employed at residential facilities. In addition, four DMH state-run facilities reviewed did not perform periodic criminal history and Central Registry checks of employees because DMH did not require it. Auditors found employers are not always required to conduct FCSR screenings for individuals required to register and DHSS data disclosed delays in processing initial Family Care Safety Registry (FCSR) registrations.
Department of Mental Health Clients Not Protected From Abusive Workers

Missouri Higher Education Loan Authority Needs More Oversight
Missouri State Auditor Susan Montee released an audit of the Missouri Higher Education Loan Authority (MOHELA) that found millions of dollars spent on executive employee salaries and perks. At June 30, 2006, the MOHELA's net assets totaled about $234 million, with operating revenues exceeding operating expenses by over $25 million in fiscal year 2006. During 2007, a law was enacted that will require the MOHELA to distribute $350 million to the state over the next six years, primarily for various capital improvement projects at the state's public colleges and universities. The MOHELA has paid or will pay almost $2.3 million in severance benefits to four former executives who either resigned or whose employment was terminated in recent years. Approximately $2 million of this amount represented severance pay to these individuals and included: health insurance payments, pension benefits, and other lump sum payments. In addition, from fiscal year 2001 through fiscal year 2004, five MOHELA executives received annual performance bonuses totaling almost $1.5 million. Other findings include, a lack of competitive bidding for construction of the MOHELA new $11 million headquarters, no formal procurement policy, imprudent use of funds for retreats and parties, fixed assets and closed meetings.

Insufficient Personnel Background Checks May Endanger Students
An audit of the Department of Elementary and Secondary Education Educator Certification Background Checks found that Missouri laws regarding background checks for educators are not adequate to ensure students' safety. The Department of Elementary and Secondary Education (DESE) is responsible for ensuring background checks are conducted on applicants for educator certificates and for reviewing background check results. State law requires applicants for most school district positions to submit to both a criminal history background check and a Family Care Safety Registry (FCSR) background check prior to having contact with a student. However, due to the imprecise language in the law, DESE officials have not been requiring, and not all school districts are performing, FCSR background checks prior to employing educators and other school district personnel. State law does not require FCSR background checks for educators before they can obtain a certificate to teach. While state law intended the Child Abuse/Neglect Central Registry to be checked as part of the FCSR background checks, state law does not specifically require Central Registry background checks for educators. Our review found instances of certified educators who had a criminal background and/or a history of committing other offenses, such as child abuse or neglect.

Transportation Development Districts Continue Taxing Missourians Without Their Knowledge
As of December 31, 2005, 98 TDDs had been established in Missouri, including 29 established in 2005. An additional 22 were established in 2006. Officials or representatives of 97 of the TDDs reported total estimated transportation project costs of over $923 million, while 87 of those TDDs reported total estimated revenues of over $1 billion would be collected over the lives of the TDDs.

TDDs are established for the construction of transportation-related projects, and governed by a board of directors with the authority to impose sales taxes within that district to pay those costs. In 95 percent of the districts the property owner/developer petitioned for its creation. All of the districts have additional sales tax on retail items sold within the districts' boundaries imposed by the property owner/developer. This results in higher sales tax than the retail establishments outside the district's boundaries. The TDDs are created without public input and sales tax is increased without a public vote.

The audit found issues in the areas of construction contracts and project management, professional services, budgetary matters, and financial reporting.
Missourians to Pay Nearly $800 Million in New Taxes; Developers Taxing Consumers Without Their Knowledge

Second Injury Fund Going Broke
Missouri State Auditor Susan Montee's audit of the Department of Labor and Industrial Relations (DOLIR), Second Injury Fund (fund), states the fund will run out of money in 2008.

Montee's audit found expenditures are estimated to outpace revenues by approximately $19.2 million per year from 2007 through 2009. A 2005 legislative change capping the fund surcharge rate restricts DOLIR's ability to generate adequate revenues to cover the fund's expenditures. Worker's benefits will be endangered when the fund becomes insolvent, as state law only guarantees their payment through the Second Injury Fund. The DOLIR paid approximately $68 million during 2006 on fund claims by injured employees and for administrative costs.

State Auditor Uncovers Numerous Concerns at Riverview Gardens School District
The Riverview Gardens School District's financial condition has declined significantly in the past year and based on the amended fiscal year 2007 budget, is expected to further deteriorate. The district is considered "financially stressed" per state law and has been classified as "Provisionally Accredited" by the Missouri Department of Elementary and Secondary Education.

During the four year, six month period ended December 31, 2006, the superintendent was apparently overpaid by approximately $158,400, received 12 unauthorized salary advances and the district paid interest totaling approximately $39,000 on the superintendent's personal loans against his insurance policies. In addition, the superintendent carried forward more vacation days than allowed by his contract and was paid $27,551 for 45 vacation days in June 2005 and $26,122 for 40 vacation days in February 2006.

Original budgets approved by the board were not accurate and complete, reasons for budget amendments were not clearly documented, and the district’s final actual operating funds disbursements exceeded budgeted amounts by $5.7 million for the year ended June 30, 2006. Also, there were concerns regarding bidding and contracts. Several purchases were not competitively bid or competitive requests for proposals were not obtained, including: alternative education services, $2,020,188; custodial equipment and supplies, $410,743; classroom learning materials, $364,034; and educational software, $250,000 to name a few.

Included in the report are recommendations related to personnel policies, payroll records, district credit card use, cellular phones and capital improvements.

Auditor Finds First Steps Program Should Serve More Children
First Steps is Missouri's early intervention system for infants and toddlers with special needs. Nationally, Missouri's First Steps Program ranks 45th in percentage of children served to age three. Missouri is one of three states requiring a developmental delay of 50 percent or more for early intervention eligibility. Such restrictive criteria results in children with known delays waiting too long before they can receive services, and as a result, some children have not received needed services.

Our audit found that some children eligible for the program did not receive all needed services or received reduced services as a result of shortage of providers due to low pay rates, lack of mileage reimbursement, and insufficient local funding to supplement provider pay. Workload issues and low pay caused provider turnover.