The Richmond Register

December 4, 2012

Auditor: Confusion about districts illustrates need for reform

By Bill Robinson
Register Editor

RICHMOND — The recent confusion about special districts that provide governmental services in Madison and other counties illustrates why the patchwork system itself is confusing and needs better organization and transparency, according to Stephenie Steitzer, spokesperson for state Auditor Adam Edelen.

Even if the system wasn’t a hodgepodge, just the number of districts – about 1,200 – makes them difficult to track, she said.

Edelen’s office has made what Steitzer calls the first-ever attempt to systematically track all the districts, Steitzer said, and there should be no surprise that it contains imperfections.

The database was started with information from the state Department of Local Government to which all cities and counties and most districts must submit budgets, she said.

The auditor’s office also reviewed its audits of county budgets looking for entities receiving public funds that could be considered special districts. Also, the auditor surveyed county clerks, sheriffs and fiscal courts asking for information about special districts.

That is how the special district list on the auditor’s website included an entry for “Madison County Tourism,” Steitzer explained

The Madison Fiscal Court in the past has made contributions to certain activities of Richmond and Berea city governments that also appeal to county residents, such as July 4 celebrations, Judge/Executive Kent Clark confirmed.

In Richmond, the activity is staged by the tourism commission, but in Berea it is conducted by the city’s parks and recreation department.

Applying state law, the Department of Local Government has now classified the tourism commissions created by both the Richmond and Berea city governments as special districts, Steitzer said.

The auditor’s website originally listed Madison County Tourism when it should have listed Richmond Tourism on its website, Steitzer said. The confusion in this instance probably arose after the auditor’s staff found Madison Fiscal Court had appropriated some funding for Richmond Tourism, and the list incorrectly combined the two names into Madison Tourism.

After stories in the Richmond Register prompted the auditor’s office to investigate the Madison Tourism listing, that name was deleted and replaced by listings for the two cities’ tourism commissions. That brings the total of special districts in the county to 14.

Applying state law, the Department of Local Government classifies both city’s tourism commissions as special districts, Steitzer said.

The auditor’s office realizes the list is not perfect and has asked officials of local governments and districts, as well as the media, to review it, ask questions and bring discrepancies to the auditor’s attention, Steitzer said.

The auditor’s review of the database has identified three ways errors have crept into it, she said.

One was a “systemic problem” when data was transferred from other departments. That caused some to be incorrectly identified as noncompliant. Those were fixed within 48 hours, Steitzer said.

Another problem was human error. While some data was downloaded from electronic files, others were entered manually. In the case of the Madison County Ambulance Board, the list contained two entries, only one of which was accurate, she said. When an employee deleted the duplicate entry, the wrong one was deleted, she said.

That error has been fixed, Steitzer said, and Edelen called Madison County EMS Director Jimmy Cornelison over the weekend to apologize.

A third reason for errors in the listing is simply the result of the complex and confusing nature of special districts, according to Steitzer.

Some entities that officials in the auditor’s office or the local-government department regard as special districts dispute that classification, she said, and don’t believe they are required to file their budgets with the state.

For example, the Louisville Water Authority was able to convince state officials that it is not a special district, and the auditor’s database has been changed to reflect that.

A Christian County situation, however, is more complicated. The county has about 14 rural fire districts, Steitzer said, and some were created as nonprofit corporations. Christian County officials don’t regard the nonprofits as special districts subject to Department of Local Government reporting, she said.

The auditor’s review, and even the subsequent disputes, all point to the need for consistency and transparency of the system, Steitzer said.

That will be called for in legislation that House Speaker Greg Stumbo and Edelen will jointly propose to the General Assembly when it convenes in January, she said.

Contrary to a column on the Register’s editorial page Dec. 2, the proposal would not shift the setting of special district tax rates to fiscal courts, Steitzer said.

“In a time in which accountability demands precision, the people of Kentucky deserve a system of oversight for what very well may be the second-largest level of government in Kentucky,” Edelen said during a press conference with Stumbo late last month.

Both Stumbo and Edelen said they recognize the majority of the districts do good work and noted that often the law itself was a hindrance, with more than 1,000 statutes governing one or more aspects of special districts.

In some cases, for example, there is no way to dissolve certain special districts while there are about 50 different ways to form one, a joint news release from the two officials stated.

While the legislation is still being finalized, the release stated their proposal would:

• Clean up the statutes that govern special districts

• Add teeth to compel compliance with reporting requirements

• Create an online centralized registry for special districts to report their financials

• Establish education and ethics for special district board members and staff.

“We just want to clarify the rules,” Stumbo said.

Bill Robinson can be reached at brobinson@richmondregister.com or at 624-6690.