State audit: City of Joplin limiting public input on ordinances, violating state law in budget process

(From State Auditor Scott Fitzpatrick)

A new audit report released today by State Auditor Scott Fitzpatrick details how the City of Joplin misused a process to approve city ordinances that limited opportunities for input from the public. The report, which gives the city a rating of "fair," also highlights the need for the city to improve its budgeting process and its accounting controls and procedures.

"It is absolutely essential that citizens have an adequate opportunity to have their voices heard on policy changes that will impact their day-to-day lives, and the City of Joplin's frequent use of the emergency ordinance process likely prevented some citizens from providing input to the City Council when time was not of the essence" said Auditor Fitzpatrick. "It's understandable that some ordinance changes fall into the emergency category but it simply is not the case that 80% of the ordinances considered by the city during the period of time we examined needed to be classified this way. It's good to see the city has significantly reduced its use of this process and, for the sake of the citizens of Joplin, I hope city officials will emphasize the use of the normal process that ensures citizens have ample opportunity to be heard."

The report found that during the fiscal year ended October 31, 2023, 130 of the 162 ordinances (80%) discussed in City Council meetings were emergency ordinances. When an ordinance is classified as an emergency, the amount of time it takes to pass the bill is reduced and the Home Rule Charter does not require allowance for public comment, potentially limiting the transparency of the action. The audit points out that passing ordinances under the regular process with greater opportunity for public input would help ensure citizens the City Council is taking their concerns into consideration, provide additional assurance the City Council is fulfilling its fiduciary responsibilities, and could increase public support for Council decisions.

The audit also found the Joplin City Council did not prepare complete budgets as required by state law or properly amend the budget prior to fiscal year end. The City Council did not include the amount of encumbrances not yet paid at the end of the prior year in the adopted city budget for the fiscal year ended October 31, 2023. In total, approximately $12,769,000 in planned expenditures from encumbrances were not included in the approved fiscal year 2023 budget and only added in late November 2022. The City Council did not disclose the additional expenditures to the public. Additionally, the Finance Director did not timely prepare, and the City Council did not timely approve, the final budget amendments for the fiscal year. The Finance Director indicated budget amendments are typically done after the city's fiscal year end to adjust budgeted amounts to agree to actual disbursements after year end entries. The report notes proper monitoring and amending prior to disbursing funds is necessary for the budget to be an effective management tool and to comply with state law.

Another finding in the report details how the city needs to improve its accounting controls and procedures. User activity for users with complete access to the financial and budgeting accounting system is not adequately reviewed, which increases the risk of erroneous changes or improper activity. The city has also failed to implement adequate receipting and reconciling procedures, which increases the risk that errors, loss, theft, or misuse of money will occur and go undetected. Additionally, Finance Department personnel do not have adequate procedures to collect outstanding accounts receivable balances. As of October 31, 2023, there were 1,485 customers with outstanding balances due totaling approximately $2.7 million, of which 710 accounts, totaling $745,628, were over a year old. The Finance Director indicated department personnel were not following up on outstanding account balances due to understaffing. Finance Department personnel also fail to reconcile utility records monthly, including total billings, payments received, and amounts remaining unpaid for utility services, which increases the risk that errors or discrepancies aren't detected timely.

The report also examined the city's payroll and allowance procedures and found they need improvement. The city does not have a process to ensure the leave balances of department directors and employees appointed by the City Council are accurate. Without adequate records of leave taken, the city cannot ensure hours worked and leave earned and taken by employees are properly documented. The city has no documentation supporting vehicle allowance amounts are reasonable or necessary. The city pays vehicle allowances ranging from $1,800 to $6,000 annually to 17 employees for using their personal vehicles to conduct city business. In total, the city paid approximately $74,000 in vehicle allowances for the fiscal year ended October 31, 2023. Using the federal reimbursement rate of $0.655 per mile, the employees would have to travel approximately 379 to 826 miles per month or 12 to 27 miles per day to equal the allowance.

Other findings in the report include the city's lack of an internal audit function, the failure of Building Department personnel to report all dangerous buildings to the Building Board of Appeals as required by city code, lacking oversight of the Joplin Sports Authority by the City Council, the failure of the City Council to review and approve closed meeting minutes, a failure by the Convention and Visitors Bureau to bid some purchases as required, and the lack of a records management and retention policy that includes electronic communication in compliance with the Missouri Secretary of State Records Services Division guidance, as approved by the Missouri Local Records Commission.

Read the complete audit report here.