State auditor says fund transfers, budgeting process in Jackson County left taxpayers in the dark

Audit Graphic

Missouri State Auditor Nicole Galloway today released a report on Jackson County government focusing on budgeting and funds transfers which found that more can be done to ensure transparency in county spending. The audit was completed at the request of the Jackson County Legislature and the recommendation of the county executive.

“Jackson County taxpayers deserve to see exactly where every one of their dollars are going, but budgeting practices and the way money was transferred between funds made that difficult,” Auditor Galloway said. “The county needs better processes so that citizens can be confident all spending is appropriate and transparent.”

The audit found the county frequently underestimated fund balances, underestimated revenues, and overestimated spending. As a result, county funds have a higher balance than expected and taxpayers do not have a clear understanding of the county’s finances. In 2018, for example, the general fund was budgeted to end with a zero-dollar balance. Instead, the fund totaled more than $50 million at the end of the fiscal year.

The poor estimates of beginning and ending fund balances resulted in undesignated fund balances. Instead of following the budget process established by state law, which would require public hearings, the audit found the county legislature improperly transferred these undesignated fund balances. During 2017 and 2018, the county legislature authorized more than $3 million in transfers for use throughout the county. In order to ensure all spending is transparent, the audit recommends the legislature discontinue authorizing these transfers of undesignated fund balances.

The audit also reviewed the county executive office’s use of administrative transfers, which are permitted as long as they do not exceed $10,000. Between 2016 and 2018, the audit found these administrative transfers totaled $10 million, and the majority of those that were more closely examined by auditors were completed without proper approval or did not have sufficient documentation or explanation.

The audit also found that between 2016 and 2018, the county executive approved $3 million in multiple-object-code administrative transfers. In these cases, individual transfers were under the $10,000 threshold but went towards a single purchase that exceeded $10,000. In these cases, the purchase may have otherwise required legislative approval.

In 2019, the county consolidated departments into a single fund, which officials say will eliminate the need for similar transfers. The audit recommended county officials review and update the county code to ensure the necessity of administrative transfers.

The complete audit report is available here.