Whitesburg KY

Audit finds ‘self-serving’ culture at county group


Kentucky Association of Counties officials indulged in a three-year spending spree — on booze, sports tickets and, in some cases, strippers — totaling more than $3 million in excessive or questionable spending, State Auditor Crit Luallen said.

In a blistering report, Luallen outlined a “selfserving” culture where board members, management and top-level staff spent KACo funds on lavish dinners, birthdays, Christmas parties and even personal escorts.

More than $1.4 million in spending had “inadequate or no supporting documentation” and was either excessive or not clearly business related, the audit found.

“Our examination provides the leadership of KACo the proper tools to continue to strengthen accountability and to fulfill its responsibilities to the counties and the taxpayers,” Luallen said in a press release. “I believe the public expects no less. In this current economic downturn, when our counties are struggling, our citizens have no patience for waste and excess from those who hold their trust and handle their tax dollars.”

Luallen’s office reviewed KACo’s expenses from July 1, 2006, through June 30, 2009, and made more than 150 recommendations for improved oversight. KACO is a nonprofit group, funded largely by public money, that advocates on behalf of the state’s 120 counties and its elected officials.

Luallen’s office began reviewing the organization’s spending following newspaper reports on top officials’ extravagance. A separate audit on spending at the Kentucky League of Cities is forthcoming.

Former KACo executive director Bob Arnold resigned last month.

Overall, auditors questioned more than $3 million in spending during the three-year period, and found nearly $1.5 million in what they determined to be questionable credit card spending. That included nearly $220,000 in restaurant charges — 77 of which cost more than $1,000, the audit found.

One restaurant charge was for nearly $8,900 at Mike Ditka’s Restaurant in Chicago. There was also an $8,100 meal at Z’s Oyster Bar and Steakhouse in Louisville, about $7,200 at Sal’s Italian Chophouse in Lexington, and more than $7,000 at Starker’s Restaurant in Kansas City, the audit found.

Association officials also spent nearly $50,000 for two board Christmas parties — held in 2007 and 2008 — for management, staff and board members. They also spent at least $43,000 on booze and nearly $30,000 on tickets for different types of entertainment, including football and basketball games and the Kentucky Derby.

Organization officials spent nearly $12,000 on staff birthday lunches, nearly $7,300 on Christmas gifts for the staff and $890 on adult entertainment. Auditors found two different charges to escort services and four charges to two different strip clubs.

KACo President J. Michael Foster, in an Oct. 27 letter to Luallen, said the organization has adopted new policies and procedures that should address “many, if not most” of the audit’s findings. Foster said the organization would value the audit’s recommendations.

“The Kentucky Association of Counties can, and will, transform itself from an organization that not only provides outstanding programs and services to counties and to special districts,” Foster wrote, “but also does so in an efficient, responsible, and ethical manner.”

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