State Audit Cites Illegal Payouts In Monarch Fire District

Audit results of the Monarch Fire Protection District presented Wednesday evening resulted in a handful of issues being cited:

• Providing retirement incentives after the fact
• Spending $212,000 on legal fees in 2010 without issuing a competitive bidding process prior to awarding the work
• Spending $26,000 on an awards banquet was deemed questionable
• Paying $12,000 for a lobbyist without detailed descriptions of work provided to the district
• Need for better way to track fuel usage across the district

State auditors found extra pay worth $280,000 to seven senior employees of the fire district violated the Missouri Constitution, officials said Wednesday night at a public meeting.

The audit also found duplicate payments to the pension attorney.

The payments to employees were retirement incentives, which in effect raised the past salaries of senior employees by $2,000 and $1,500 more per year. 

"The Missouri Constitution forbids granting any extra compensation to public employees for services already rendered," according to a summary supplied by Missouri Auditor Thomas Schweich's office.

Schweich rated the district "Fair" on a scale of excellent, good, fair and poor. 

In addition, the district paid "excessive health, vacation and sick leave benefits," officials said. The seven are paid in full for vacation and sick leave, which is a violation of regular policy. One of the seven was given $34,000 in leave time, the audit found.

The district's board members said they approved the deals with a labor law attorney's advice.

Missouri Gov. Jay Nixon called for the audit of the Monarch district on Feb. 24, after Kim Evans, who at the time was the board's treasurer, inquired to Susan Montee, former State Auditor in the spring of 2010 about excessive legal fees paid out by the district. Rick Gans was the president of the district at that time, and Robin Harris served as the third board member.

Evans said, "I believe the (legal fees) figure topped one million dollars on a five year look-back from 2006-2011."

Other violations referenced in the audit included some 40 meetings closed to the public by the three-person district board of trustees, yet provided no public explanations why, as required by law.

"I have not done an audit with that many violations," Schweich said. The state will follow-up with the district in 90 days, he said.

Schweich told Fox 2 TV that it was not the best audit, but that they have "seen worse." Reporter Elliot Davis referenced $1.1 million issued by the district to three major law firms between 2007 to 2011, law firms that he said then contributed to the re-election campaigns of Gans and Harris.

The audit found $200,000 worth of discrepencies in accounting, Schweich said, which the district said was due to converting to a new system. He said the district later got the discrepancy down to $2,000.

"It shows a little sloppiness," Schweich said. Sloppy reconciliation leaves room for theft, fraud and embezzlement, he said, but found no evidence of those crimes at Monarch.

A $26,000 service awards banquet for Monarch employees in September, Schweich said, "is a questionable use of district funds" for a district of Monarch's size. "Such costs should be kept to a minimum." The audit itemized the costs:

• $16,000 for 63 awards of rings, watches, etc.
• $5,000 for conference room and dinner
• $2,000 for speaker's fee
• $2,000 for party favors, etc.
• $500 for photography

After the auditor's 30-minute public review of the findings Wednesday, Board Secretary Steven Swyers said he was "disappointed" by the district's "Fair" rating, but not surprised by it.

"We need more discipline," Swyers said, about the district. He said it was likely the district would survey the salaries of 18 management level jobs, as suggested by the audit.

"I think it's a worthwhile process," Swyers said.

District fire Chief Tom Vineyard agreed.

"It would be nice to do," he said. Vineyard started on the job with Monarch just this year after the retirement of Chip Biele.

Next Steps

After the meeting, Evans said in an email:

"Overall, the audit findings revealed that previous board leadership was irresponsible in managing the district's policies and finances." Evans was elected to the board nearly five years ago and became president in 2011.

She stated she saw no surprises in the audit report:  "I believe State Auditor Thomas Schweich and his team did a thorough review of the district's finances and practices."

"The current board is committed to ensuring strong leadership and improved fiscal responsibility. We (the board) had implemented several changes once Director Steve Swyers was elected to office and I assumed the role of board president. This was well before the audit deficiencies were revealed to the district," she stated.

"I assure the residents of the Monarch Fire Protection District there is an action plan in place to address every issue raised in the audit report, and I personally look forward to State Auditor Schweich's return visit in three months. I am sure he will be very pleased with the changes that have taken place in Monarch, including stronger internal controls and improved documentation."

Monarch's House No. 2, at 18424 Wildhorse Creek Rd., services Wildwood residents.

Editor's Note:  "Fair" rating definition by state audit: Indicates needs to improve operations in several areas. Contains several findings, or one or more findings that require management's immediate attention, and/or the entity has indicated several recommendations will not be implemented. Also, if applicable, several prior recommendations have not been implemented.