Report: AC money spent on part-time fiscal analyst was unauthorized

The money spent on a part-time fiscal analyst hired one year ago by Anderson County Mayor Terry Frank was an unauthorized expenditure, a new state report said.

The Anderson County Commission had twice denied funding for the position, and the budget account for the position contained no money, said the annual financial report, which was prepared by the county’s Accounts and Budget Office and independent state auditors.

The report said the use of county revenues from such sources as taxes, county aid funds, and fines must be approved by county legislative bodies.

“Management failed to hold spending to the limits authorized by the County Commission, which resulted in unauthorized expenditures,” said the report, which is available on the Tennessee Comptroller’s website.

Frank announced in December 2012, four months after she was first elected, that she had hired local businessman Thomas Shope as a part-time fiscal analyst as part of a campaign pledge to audit the county’s books and look for efficiencies. Since then, in the fiscal year that ended June 30, the county had spent $22,740 in salaries on the position, using money from the county’s Accounting and Budgeting category—“despite denial of the appropriation for this salary by the County Commission,” the report said.

It said Chris Phillips, Anderson County accounts and budgets director, requested funding from the Anderson County Commission in budget amendments in December 2012 and May 2013, but commission rejected both amendments.

The fiscal analyst position was filled in late November, before funding had been requested, the report said.

When commissioners rejected funding for the second time this May, some said they weren’t satisfied with the results they had seen—or hadn’t seen—from Shope’s work.

Some also weren’t happy about the amount paid to Shope, and the request to approve a budget change to pay him after the money had already been spent.

Phillips said then that the county commission’s decision meant his budget would be overspent in its part-time code, but his overall budget would not be. The money was in his budget, but just not in the right place, Phillips said.

“This doesn’t direct me or make me stop paying him,” Phillips said.

Frank said then that she had been pleased with Shope’s performance and intended to continue using him through June 2013, the end of the fiscal year.

In their response to the state financial report, which was submitted to the county in November, Frank and Phillips acknowledged that a payroll code was overspent, but they pointed out that the Accounts and Budgets code was not overspent.

“We also feel that the detail given and length of the written finding is unprecedented,” the two officials said, referring to the finding on the spending for the fiscal analyst.

“Several concessions and budget cost savings measures were implemented in order to make available the funding within the Accounts and Budgets Office for the part-time position,” they said. “The commission chose not to approve the transfer request that the Budget Committee had approved in May after it was apparent that cost-savings measures were achieved without the need for an appropriation request.”

A separate finding for several departments was much greater—one department overspent a part-time code by more than $25,000—but that finding wasn’t as detailed, Frank and Phillips said.

“We feel it is inconsistent to detail one finding and not the other,” they said.

In response, the auditors said it is still the county commission’s authority to approve or deny transfer requests that are brought before them, regardless of cost-savings measures that have been put into place.

The auditors told Frank and Phillips that they had not tried to minimize the importance of other expenditures that exceeded appropriations.

But the issue addressed in the finding related to the part-time fiscal analyst was different, they said.

“It deals with an appropriation transfer request for a position within the office responsible for maintaining budget records for all departments; the budgetary account for the position contained no appropriation whatsoever; and the budget transfer request was specifically denied twice by the County Commission,” the report said. “In our opinion, these factors merited a separate finding.”

The Comprehensive Annual Financial Report for Anderson County for the fiscal year that ended June 30 is available here.