Audit of Springfield cites numerous liabilities

(Download the full audit report here.)

The report states that the city has accumulated “significant future liability” with investments in the Heer’s building and the Heer’s and College Station parking decks.

“After more than three years and contracting with two developers, the Heer’s Tower project is still in the initial phases,” the report reads. “During this time, the city pledged public funds to secure private financing for a developer to purchase the Heer’s Tower, paid $693,000 to the developer for demolition and design services without soliciting bids, subsequently paid $3.3 million to foreclose on the property, and then sold the Heer’s Tower for $3 million to a second developer.”

The city stands by its expenditures, particularly those for employee-appreciation activities and for substantial economic development in Springfield’s downtown, according to a city statement.

“City councils through the years made deliberate and calculated investments in center city in open meetings with substantial public discussion guided by voter-approved referendums, the Vision 20/20 process and the city’s commitment to develop the public infrastructure necessary to support significant private investment,” the city’s statement said.

The audit also points out the unfunded liability of the Police Officers and Firemen’s Retirement System Plan, which has increased by $100 million since 2000. The report says that while the city has contributed $37.7 million to the plan in that time, required funding is rising faster than the city’s contribution.

Several other city liabilities were noted:

• approximately $2.7 million in bonded debt for the state crime lab without a revenue source;

• $8 million in city funds used to subsidize the Jordan Valley Ice Park and Car Park, which a city feasibility study said should have been self-supporting in the first year of operations;

• needed improvements at the city’s cash-collection points, which collect more than $48 million annually. The report identifies weaknesses in recording and accounting for receipts, timely depositing receipts and restricting employee access to computerized accounting records; and

• inadequate controls on the $6.6 million charged to the city’s 450 credit cards issued to various city employees. The report also found excessive spending limits, unnecessary purchases and inadequate documentation.

In response to the audit’s recommendation for better accounting controls, the city has installed improved software for the city’s loan program and added a new level of supervisory oversight to its daily bank deposit process.

The report also notes that the city does not have an internal auditor as allowed by the city charter, “which could have helped in discovering and resolving several areas commented on in this report.” City officials said City Council will hire an internal auditor on a contract basis in the short term to specifically address the audit’s recommendations, and then council will determine how to structure the position for the long term.

The audit began last year as the result of a citizens’ petition from more than 5,000 registered voters. Council earlier this year approved a budget adjustment of up to $100,000 to pay for the audit, as state law requires.

“The lack of criminal allegations in this report should reinforce the fact that, overall, we have a quality work force in our municipality, and that city employees as a whole take their jobs very seriously,” said councilmember Doug Burlison, who was the original chief petitioner for the audit, in a written statement. “I believe that we, as a city, are committed to repairing what is broken, and to stepping up our level of oversight for an overall better government.”