No conditions, just approval by Henderson for Kerr-Tar

May. 14, 2013 @ 08:25 PM

The Kerr-Tar Council of Governments apologized to the Henderson City Council and leaders for poor accounting practices that left it in need of a $311,367 boost from member governments as the fiscal year comes to a close.

City council members did not squabble about paying their $21,362 share requested by Kerr-Tar, and they did not stipulate any added conditions before payment is made. They did question the proposed city fund from which the money would be provided.

Danny Wright, representing Kerr-Tar, explained federal authorities directed Kerr-Tar leaders to pay back a revolving loan fund immediately because the error resulted in restricted funds being used inappropriately.

“Let me say that there was no illegal activity,” Wright said. “The council of governments is currently in serious financial difficulty. As a member of the board, I take responsibility for the situation.”

The error took place during the 2012 fiscal year (last year) and was found during the annual auditing process by an independent accounting firm.

Part of correcting their financial situation for the loan meant keeping several employment positions, including their executive director position open, to save more than $100,000, Wright said.

The other major part is the one-time assessment add-on for the member local governments to pay. The rate is based on population for each of the 21 government entities making up the five-county Region K. The per capita rate is $1.39.

A majority consensus emerged against drawing down on the $50,000 Recreational, Educational, Entertainment and Family project fund for fiscal year 2013, even with assurances that it would soon be replenished during the new fiscal year budgeting process. They opted instead to use the city’s general savings.

“We were just talking with the Golden LEAF people, who asked if that $50,000 was on account, and it was,” Councilwoman Sara Coffey said. “It was important that the money was there.”

City Manager Ray Griffin said the council’s stance to simply provide what was asked reveals their respect for Wright and his honesty.

“They regard Mr. Wright very highly, and found him to be very forthright in his comments,” Griffin said after the decision.

Kerr-Tar Board Chairman Bryan Pfohl, in a letter dated April 26, wrote the Kerr-Tar council received notification about a week earlier of the requirement to pay off the loan fund.

“The COG is statutorily prohibited from borrowing money, and as a result, there is no quicker mechanism for obtaining the funds,” Pfohl wrote.

Wright repeated Pfohl’s assurance to council members that the internal control problems leading to the error have been corrected, “which make a reoccurrence impossible,” Pfohl said.

Wright added that the Kerr-Tar council will pay the $21,362 back through marginal reductions on member municipality assessments in future years.

“As long as I am on the COG, we will work on that, I assure you,” Wright said.

The $311,367 from member governments will repay the missing loan money and re-establish working funds. Council members noted that without the funding, Kerr-Tar would be at risk of closing.

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