After citizen-initiated audit of Monroe City resulted in lowest possible rating, follow-up report from Auditor Galloway finds city is making some progress on audit’s recommendations, while other concerns remain
JEFFERSON CITY, Mo. — A report from State Auditor Nicole Galloway finds that Monroe City has implemented some recommendations from a 2020 audit, but that other concerns remain. The June 2020 audit of Monroe City was initiated through a citizen petition, which required 200 valid signatures of qualified voters in the city. That audit highlighted concerns in several areas, including city utilities, year-end employee bonuses, and a lack of transparency around city budgets and real estate transactions. Because the audit gave a rating of “poor” — the lowest possible — the Auditor’s Office conducted a follow-up review to measure the progress the city has made.
“The taxpayers of Monroe City asked for my help to ensure that their tax dollars are being used responsibly and efficiently,” Auditor Galloway said. “This follow-up report shows that while city officials have implemented some of my recommendations, other concerns remain. I urge Monroe City to implement all of the audit recommendations to ensure they are transparent with taxpayers.”
The 2020 audit found that the city made periodic transfers from restricted utility funds to the general fund, including a 2018 transfer of $150,000 each from the electric and gas funds to the general fund to prevent the general fund from having a deficit balance. Auditors recommended that the Board of Aldermen ensure any future payments from the Electric, Gas, Water, and Sewer Funds to the General Fund represent reimbursement of actual costs of operations and maintain documentation to support the amounts transferred. However, in the follow-up report, auditors found that the city continued to make payments from the Electric, Gas, Water, and Sewer Funds to the General Fund totaling $741,936 during the year ended September 30, 2020, without documented support for the amounts transferred.
After city officials could not provide auditors with documentation that a formal review of electric, water, and sewer rates has ever been performed, Galloway recommended that the city review utility costs to ensure rates are set at an appropriate level. After a contractor performed a water and sewer rate study, the Board of Aldermen passed a new flat rate that was added to both the water and sewer bills in November 2020. However, the flat rate for water is more than the rate recommended by the study and the flat rate for sewer is less than the rate recommended by the study. As a result, the city may not generate enough sewer revenues to cover costs and will likely generate more water revenues than needed to cover costs.
Additionally, after the 2020 audit recommended that the Board of Aldermen discontinue paying employee year-end bonuses in violation of state law, the Board authorized the payment of $2,422 in year-end bonuses in December 2020. The Missouri Constitution forbids the payment of additional compensation, such as bonuses, to public employees for services already rendered.
In all, of the 20 recommendations followed up on from the initial audit, three recommendations have been fully implemented by the city. Another three recommendations are in the process of being implemented. Six have not been implemented and eight were only partially implemented.
A copy of the complete follow-up report can be found here.