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Council split on need for a new form of county government; Audit reports point out problems

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Continued audit reports have half the Morgan County Council looking for a new form of government while the other half is set against it.

Councilmembers Roland Haslam, Robert Kilmer and Austin Turner voted June 20 against putting it on voters’ ballots to study the issue of changing the county’s form of government.  Councilmembers Daryl Ballantyne, John Barber and Tina Cannon want it on the ballot.

With a 3-3 tie vote, the issue will be on the council’s next agenda July 18. Councilman Ned Mecham was not present and did not vote at the June 20 meeting, but told The Morgan County News earlier that he was not in favor of a change in county government.

“It all comes back to the administrative responsibilities of the council,” Chairwoman Cannon said.  “We do not have a well-defined administrative position.  The duties and responsibilities of administration do not go away with this form of government.  This form of government just failed to define it.”

Under the current form of government, the seven-member governing body exercises all legislative power and duties, including administrative powers.  Morgan County Council membership is not intended to be a full-time position involving extensive day-to-day administrative oversight of county operations and functions.  However, in 2003 the Utah State Legislature passed a code limiting the ability of county councils to delegate administrative functions to any other person. That leads to a conflicting role for council members, who are to serve part-time primarily in a legislative, policy-making role according to its current form of government, Cannon said.

Morgan and Grand counties are the only two counties in the state with a seven-member form of government, one grandfathered in because the state currently only allows four other forms.  Three county commissioners ran Morgan County before voters threw them out in favor of the current seven part-timers.

Cannon is pushing to initiate what she estimates could be a two-year process to change the county’s form of government.  The first step is studying the issue.  But voters would have to first approve the act of appointing a committee.

“Morgan County is nestled between two nationally known ski resorts and has an interstate running through.  For some reason, we can’t get our school districted or roads funded,” said Porterville resident Bret Haney.  “It is time to review and put on the ballot to let citizens decide if we should study and review our current form of government, or if one of the four allowed by state law is more appropriate.  The end result is a recommendation.  The recommendation may even be to keep the status quo.  What would be the harm of the study?”

Problems pointed out

Failure to take on full administrative responsibilities has led to ongoing problems that need immediate attention, Cannon said.

For example, there have been problems reconciling payroll accounts stretching back to 2000, the largest of which are garnishments taken from employees but not paid to a company and insurance hitting the wrong account.

“I want the council to be aware.  We need to address this,” Cannon said.  “It is not optional.  This has to start happening.  It is the council’s responsibility to implement the policies and procedures to make sure these reconciliations are done.”

A lack of “understanding” and perhaps training of employees and elected officials has caused the ongoing problem, said Cannon, who recommended that the clerk, treasurer and council secretary get Caselle government accounting software training.

“I am not trying to throw anyone under the bus, but address a very real problem that needs to be fixed,” Cannon said.  “The public has a right to know how their money is governed.”

And the council needs to work at better oversight of county finances as well as setting policies, Cannon said.

“The council has final financial oversight.  If that means we take the blame, I am more than happy to do that,” Cannon said.  “I am asking that every (council member) is aware and we are working to fix the problem and come to a solution.  I would appreciate everyone’s support in doing that.”

Auditor letters

It seems external and state auditors have been aware of such issues for some time, and often link it to Morgan’s form of government.  At the June 20 meeting, Cannon read from three separate audit letters issued over the years to Morgan County.

On Aug. 2, 2011, the county’s external auditor penned, “Within the county, individual departments over the years have adapted policies and procedures to serve their own purposes or preferences. As a result, there are functional areas that lack uniformity and consistency. The council does not seem to understand their role and authority in establishing county-wide policy.”

The 2011 letter goes on to say, “The final item for consideration is one that will likely fuel continued debate among county personnel, elected officials and citizens. Based on the current form of government, it became obvious to us why the previous council created the council administrator position. Our observations noted that the county is fragmented into its departments with no effective means to coordinate and oversee the implementation of the decision and policies of the council or the overall administration of county operations.  Without some other means or methods, these responsibilities fall back on council members to assume. Even now, council members are so busy with individual county responsibilities that it is difficult to coordinate anything outside normal council meetings. Recognizing there is a need for change, there are no easy solutions. Tight resources make it difficult to justify a high-level salary position.

“Past experience” of the prior administrator who embezzled funds, “has left a bad taste in the mouth of many. The solution can be as extreme as changing the form of government or as simple as designating someone presently employed or elected to act as an acting coordinator of sorts. The solution will likely require further discussion and perhaps debate. But the problem is real and needs to be addressed.”

On July 1, 2015, the external auditor verbally recommended a unified payroll system.

In May of 2016, the state auditor issued a letter.  “The weakness appears to have been caused by the council’s failure to understand their governing role and effectively evaluate and implement recommendations received from their external auditor.”

Another audit letter, this one issued in June of 2016, reads, “In prior years we have noted that within the county, the individual departments function quite independently of each other. This autonomy requires a higher level of communication between departments and the council in order for the county to function at its most productive level. Several incidents this year highlighted the need for more effective communication, one of which was the opening of an investment account by the treasurer’s department. Although this action was consistent with the treasurer’s duties, and there was no wrongdoing involved, it came as a surprise to the council and the auditor’s office and caused undue suspicion over the action.”

Haunted by embezzlement

From June 2008 to August 2010, Garth Day held the position of Morgan County Council Administrator. In this capacity, Day had responsibility for all of the non-elected employee departments in the county. In a 2011 plea agreement reached with federal prosecutors, Day admitted that he had misappropriated approximately $1 million in funds to pay off personal debt. A portion of this $1 million was taken from Morgan County and a portion was from fraudulent accounts opened in the county’s name.

Day plead guilty to felony counts of wire fraud, money laundering, bank fraud, mail fraud, false loan and credit applications, and theft from a program receiving federal funds.  He was sent to federal prison for four years, beginning in 2011.

In 2011, Morgan County Treasurer Bonnie Thomson told how she had found inconsistencies that lead to unraveling Day’s malfeasance.  Fast forward five years, and Thomson’s action of opening a $2 million investment account with Zion’s Bank is lifting auditors’ eyebrows.

Garth Day “opened an account without anyone else’s knowledge and then used the funds.  This is the same thing,” Cannon said June 20.  “We have not fixed any of those problems. I believe it is reasonable and appropriate for the citizens of the county to make a decision if this can be fixed under the form of government or if this needs to be looked at and addressed.”

Changing form of government may not be the answer

Changing the form of Morgan’s government would not necessarily avoid future embezzlement, County Councilman Robert Kilmer said.

“All of these are very serious and need to be addressed and have been on our plate for a very long time,” Kilmer said.  “There are problems and we need to fix those problems.”

It is important that Morgan voters understand that there are not just council members making decisions and running the county, Kilmer said.  “It is all the people you have elected.  It is not only seven in here to do this role, but also the county attorney, clerk auditor, sheriff, assessor, treasurer, recorder.  There are certain things they provide,” Kilmer said.  “You need to make sure they are meeting your needs and demands also.”

Cannon said there are two other options aside from changing the form of government.  Council members can increase their time commitment for their positions in order to provide proper administrative oversight even though the current form of government calls for limited day-to-day administration, or they can hire a county administrator with financial management experience, something County Attorney Jann Farris has discouraged in the recent past.

Commitment to fix problems

“Someone needs to be here to maintain oversight over a $7.7 million budget more than twice a month,” Cannon said, referring to regular council meetings.

And there is recourse when that oversight identifies inefficiencies, she said.

If a department or elected official is not performing satisfactorily, state law prohibits the council from cutting their budget or taking items out of their budget, noted Cannon.  But “it is the council’s responsibility to hire someone else to come in and do those functions for them,” she said.  “But that is an administrative function.  That is the question that has come before us time and time again:  Who is the administrator?  Who is ultimately responsible to make sure those administrative functions are done?”

When Kilmer asked for public identification of “who is not doing their job,” Cannon responded with, “The functions we are talking about have been handled in the treasurer’s department and the clerk’s department.  But it comes back to (the council’s) final say on financials.  This is this body,” she told her fellow council members.

“This body has to fix a lot of things before we start looking at doing a new form of government.  I don’t believe changing the form of government will fix it,” Kilmer said.  “I don’t feel comfortable passing this on to somebody else in a new form of government trying to figure it all out and trying to fix everything that was screwed up before.”

“Whatever it is, we need to get on task and figure out how to fix it,” Councilman Barber said.

Turner agreed. “We need to buckle down and fix some of these issues.”

Kilmer said in order to fix the problems, the council must be united.

“It cannot be fixed with one member of this council.  It has to be a council project,” Kilmer said.  “It has to be the entire council.  We need to work on it on a regular basis.”

Cannon told the council.  “We need to spend serious time looking at financials and getting our house in order fixing all the problems that are piling up over time.”

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