Thursday, August 20, 2015
Joplin City Council to discuss Chamber contract during special session
The audit showed that Joplin pays the Chamber far more than what is paid in cities of similar size in Missouri.
From the audit:
The city did not properly monitor its contract with the Joplin Area Chamber of Commerce and provides the chamber significantly more funding than some other cities.
The city last amended its contract with the chamber in 1991. The contract provides for the city to fund the chamber for economic development based upon the amount approved in the city's annual budget and requires the chamber to submit receipts, vouchers, or other documentation to verify the expenses for economic development. The city's fiscal year 2014 budget provided for $335,000 in funding to the chamber.
The chamber invoices the city on a monthly basis for actual costs incurred including a portion of the salary and benefits of three employees, the Chamber President, the Director of Member Service and Development, and the Chamber President's executive assistant.
The city also reimburses the chamber a percentage of office telephone, vehicle, and equipment expenses, and actual expenses related to economic development including cell phone bills, meeting and travel expenses, membership costs, and other miscellaneous items. We noted concerns in our review of the city's contract with the chamber and various documentation.
-The city did not ensure the chamber complied with the terms of the contract. The contract requires the chamber to file its independent audit reports with the city, however, the chamber had not filed them with the city. At our request, the city obtained the chamber's independent audit report for the two years ended March 31, 2014.
-Invoices received from the chamber did not contain adequate detail and amounts charged to the city were inconsistent. For example, the chamber's March 2014 reimbursement request did not provide adequate documentation to support the salary and benefits paid to three chamber employees totaling $7,860. Also for March 2014, the chamber requested reimbursement for 30 percent of the phone bill ($485), and 40 percent for both automobile expenses ($188) and equipment expenses ($1,822). There is no basis for the variance in percentages between expense categories in how the percentages (which do not change from month to month) were originally established. Also, the chamber did not submit documentation, such as phone and mileage logs or invoices, to support those requests.
The city also did not adequately review documentation to ensure amounts requested for reimbursement were accurate prior to payment. For example, the chamber submitted a bill in December 2014 requesting the city reimburse $448 for an economic development breakfast meeting and the city paid the entire amount. However, the attached invoice indicated the chamber had also requested that the United Way reimburse the chamber half of the bill ($224).
Documentation received from the chamber for reimbursement of lobbying services costing $35,000 was also not adequate. The chamber did not provide an invoice or other documentation showing proof of payments or services rendered on behalf of the city by the lobbyist.
-The city reimbursed the chamber for several expenses that were either incurred by the chamber for several expenses that were either incurred by the chamber without prior knowledge of the city or were questionable. For example, in November 2013, the chamber requested reimbursement of some master developer (Wallace Bajjali) costs it had incurred totaling $7,500, including an economic impact study for professional baseball in Joplin costing $5,750 and architectural drawings for a medical school expansion/performing arts center costing $1,750. However, the finance director and former city manager were not aware these costs had been incurred on behalf of the city by the chamber. The former city manager subsequently approved reimbursement of these costs. Additionally, it is unclear why the city reimbursed the chamber $1,150 or half the cost of a custom mural in August 2014.
The finance director did not know the mural's location or why the city paid for part of it. In another example, during February, April, and October 2014, the chamber requested reimbursement for the purchase of three smartphones and a headset costing $1,446, and it is questionable why the city would be purchasing chamber equipment.
Also, we reviewed chamber invoices for the smartphone and determined the chamber (and as a result the city) was overcharged $450 for one smartphone. The smartphone vendor credited the chamber's account for this amount on its February 2015 statement, and it was adjusted from the economic development expense requested from the city for February 2015.
-The city paid the chamber $342,685 ($335,000 budgeted, plus $7,645 for miscellaneous expenses not budgeted) during fiscal year 2014. We contacted three cities with similar or larger population to determine the amount of funding provided to their local chamber organizations for each city's most recent fiscal year for comparable services. Joplin provides for significantly more funding than the other cities.
Joplin, population 50,150, annual amount of funding to Chamber $342,645
Jefferson City- 43,057, $185,000
St. Joseph- 76,780 $175,000
Chesterfield- 47,484 $25,983
To ensure city funds are spent wisely, the Council should evaluate the amount of funding provided to the chamber. The Finance Department should monitor the contract to ensure compliance with contract terms. Only by receiving detailed invoices to support the services provided and payments made can the city ensure the amount claimed for reimbursement is accurate.
The city's response was included in the audit:
The Chamber of Commerce provides economic development services for the city. The Council has begun the process of reviewing the level of funding provided for this service. Additionally, the city is also working on developing a new contract with the Chamber, which will outline various expectations such as the documentation required to make payment to the Chamber. The updated contract will assist the Finance Department in ensuring proper documentation is obtained prior to making payment.