MONROE CITY, Mo. | The office of Missouri Auditor Nicole Galloway gave Monroe City the lowest possible rating as it released the results of a long-awaiting review of city finances on Thursday.
Auditors cited the city for poor contracting practices, utility issues and weak financial controls.
Auditor Nicole Galloway launched the review in January 2019, after a grassroots citizen petition campaign led by Jerry Potterfield, who recently became the new mayor.
“Citizens should feel assured their tax dollars are being used responsibly and efficiently. That means properly documenting financial transfers and other major decisions involving city utilities,” Galloway said in a news release announcing the audit results. “I encourage the Board of Aldermen and other officials in Monroe City to implement the recommendations we are making to ensure they are transparent with taxpayers.”
As reported earlier this week in the Hannibal Courier-Post, the auditor faulted the city for a $3.2 million no-bid contract issued in 2018 to PeopleService of Omaha, Neb., for work on water and sewer systems. The audit found the city did not perform a cost-benefit analysis to determine if the contract would save taxpayer money in addition to not seeking competitive bids.
The audit also faults the city for transfers of money from restricted utility funds.
“The city makes periodic transfers from the utility funds to the general fund related to the assessment of an administrative fee and franchise tax,” the auditor's office said on Thursday. “Also, in 2018, the city transferred $150,000 each from the electric and gas funds to the general fund to prevent the general fund from having a deficit balance. City officials could not provide documentation supporting the basis for the assessed fees and taxes paid and the transfers made.”
Auditors added that the city used restricted utility money in the electric and gas funds to make two loans totaling $788,000 to the industrial development fund. The report recommended the remaining balance of the loans be repaid and that transfers from restricted funds only be made to reimburse the actual costs of operations.
The report was released several hours ahead of Potterfield taking the oath of office on Thursday. He was elected on June 2, ousting incumbent Mayor John Long.
“I have not reviewed 100 percent of the audit, but common sense would tell me it will take time to work through the issues,” Potterfield said.
Potterfield said he will work with Monroe City Administrator Jackie Pangborn and her staff to begin making changes recommended by the auditors. He placed blame for the audit issues on previous city elected leaders.
“I am not concerned with staff. They did what was directed by previous mayors and city attorneys,” he said. “From their perspective, when your boss comes along and tells you to do something a certain way, that is what you do.”
Potterfield said that addressing all the issues raised by the auditors will be a huge task for the city.
“This is definitely the way it has been for years. This stuff did not happen overnight, and we will not fix it overnight,” he said. “I look forward to working with the council and staff to make mprovements.”
“My approach will be different than in the past. We may need a few committees, but not many. Fewer hands in the pot makes it easier to stir,” he said. “I need to sit down with Jackie and the city attorney (John Russell) to formulate ideas and then run them past the council to see if they want to further groom them.”