Interim City Manager Jack Miller granted city personnel pay increases without the approval of the city council during his last tenure as city manager, a 2007 audit report states. However, Miller said he was unaware of some of the audit findings listed and responses he had prepared to other findings in the fall of 2007 were not part of the official audit report.
Miller said, “Either there was a total lack of competence in the preparation and response to the audit in '07, their version, not mine, or it appears there is some kind of conspiracy designed to discredit me.”
The report, prepared by Plemmons, Jackson & Cabaniss CPA firm Jan. 24, 2008, for the fiscal year ended June 30, 2007, finds several deficiencies in the financial dealings of the city, including improper hiring practices and unauthorized salary increases. The report also addresses some items that took place after the end of the fiscal year, extending into the 2008 fiscal year. Miller said he prepared management response to the 2007 audit in October or November of 2007, but many of the findings in the audit report were not part of the audit he prepared that fall and none of the management responses in the audit report were prepared by him.
Janice Plemmons, the auditor who prepared the report, told the Chronicle notes relative to the 2007 audit were destroyed after five years and she could not confirm who penned the city's management responses. Miller was no longer in the employment of the city at the time the report was presented to the city Jan. 24, 2008. She also noted it was standard accounting procedure to consider any items that could impact the financial statements from the time the audit review begins, even though that time may be after the end of the fiscal year being reviewed.
Miller served as city manager for Crossville from January 2000 until Jan. 8, 2008, when he was dismissed following a $15,017.90 payment of accumulated sick leave to a former part-time city employee. The auditor noted city personnel rules stated an employee who left employment for any reason other than retirement forfeited all sick leave. A department head requested the pay for unused sick time, and the city manager approved the payment without council approval. The employee in question subsequently repaid those funds in full.
The city allows retiring employees to have accrued sick time counted as additional working time when calculating benefits; however, this employee had not retired. The city had eliminated his position and Miller said, "We felt that the logical thing to do was to award him some semblance of severance pay.
"We cleared this, we thought. We cleared this with one council member who advised us that he had cleared it with a sufficient number of the other council members outside of a meeting," Miller said. "We thought everything was all right until the evening of my dismissal."
The report also found Miller had approved a new position within the city without council approval and increased wages without council approval.
According to the report, a water quality/laboratory manager position was requested during the 2007-'08 budget process but the request was denied. "Subsequently, on Aug. 31, 2007, the promotion of the son of the department head was approved by his father and the city manager," the report states. The promotion included a 30 percent increase in pay to the employee.
The auditor noted the new position had been denied by council and was not advertised as other city positions are. No other applicants were interviewed and the committee that assists with interviews was not part of the process.
The auditor recommended the salary increase and promotion be immediately changed back to the position and salary approved in the budget, with any new positions properly advertised and standard hiring procedures adhered to. In management's response, the city stated it agreed with the finding, but said the employee had taken the job in good faith.
"The employee should not be punished for something the city manager did," the response states. "This was done under the direction of the former city manager, who was terminated. This will be watched more closely by the new management."
Miller said that phrase, "who was terminated," indicated the finding was a reason for his termination, though it was not mentioned at the meeting when he was fired from his position.
"Just another nail in the coffin of Jack Miller,” he said.
The report also noted audit reports for fiscal years ending June 30, 2000, 2001, 2002, 2003 and 2004 found salary increases were given without formal council approval.
"The City Manager's approval has always been indicated, but there is not indication in the minutes of the City Council that they have given approval to these raises, which violates the City code," wrote the auditor. "No legal authority exists for the City Manager to authorize any salary changes without formal Council approval, as established by the Crossville Municipal Code."
These salary increases were "over and above" the cost of living raises provided employees during the budget process. Some increases were given for added duties, lab certifications or other changes in employment or education for various employees. Some were "non-merit" increases, including a five-percent increase to the water resources director and a five percent increase to the water resources operating and maintenance supervisor, which was called an "equity adjustment."
Miller said the same auditor had a similar finding in the 2004 audit. At that time, Miller's response noted the city's charter was in conflict with the practiced personnel policies, which had been formally and informally authorized by the city council, specifically the city's Pay Classification Plan approved by Crossville City Council in 1998.
"As long as the PCP is adhered to, the Council infers that the City Manager may adjust salaries of individual employees within budgetary limits. During the budget work sessions, the Council even provided for additional personnel funds for the City Manager to adjust salaries to bring employees performing the same job duties on an even pay range on an 'as needed' basis," wrote Miller in the 2004 audit response.
No findings were noted for this item in the 2005 audit.
"This same auditor was apparently completely satisfied," Miller said. "We continued to do exactly the same thing on salary increases because the council as a whole, all of them, understood that I had certain authority as city manager to do that, and they had no problems at all with it."
The 2007 response concurred with the auditor's finding, adding, "This issue needs to be addressed by amending the Crossville Municipal Charter to reflect the council's true duties delegated to the City Manager. During the upcoming year, management will be evaluating both the personnel handbook and the charter. This will provide formal documentation of council's expectations for the city manager's personnel duties as well as coordinate any conflicts between the two authoritative sources."
The 2008 audit, performed by Work & Greer, PC, noted new positions were advertised and the city council approved the hiring, advancement and salary increases of employees during the following fiscal year.
Other audit findings included:
•Employment situations in violation of the city's nepotism policy, specifically a husband and wife working together in the recreation department during summer months and a father, son and uncle/brother working together in the water department.
•Discrepency in the number of residences receiving garbage collection and the number billed. In 2008, the audit report finds the city compared the number of residences billed with the number of customers recorded by E-911 Communications District.
•Salaried employees did not accurately record actual time worked, allowing them to accumulate more vacation and sick time than actually available. Honor system time sheets or time cards are required by the Internal Control and Compliance Manual for Tennessee Municipalities. The 2008 report notes all vacation and sick leave time taken was documented, with appropriate supervisors approving requests.
•There was no advertisement for proposals prior to a new fixed base operator being selected for the Crossville Memorial Airport Aug. 30, 2007, with contract terms more favorable than those given the previous operator. The city responded the position would be bid but action was taken to quickly correct problems noted at the airport facility. The 2008 report noted advertisements for bids for airport operation were solicited and a new contract approved in March 2008.
•The city contracted for telephone service without taking sealed bids; approved adding eight customers to a waterline project previously bid; and several "post facto" requests for approval by the city manager, such as sponsorship of the TPGA sectional golf tournament for $5,500. The 2008 audit found no instances of items greater than $5,000 that were not competitively bid.
•No one responsible for tracking criminal cases originating in the city limits through Cumberland County General Sessions Court and ensuring the city received the proper revenue from fines; ensuring the city's general fund received 50 percent of drug-related fine revenue, as allowed by law; or ensuring evidence from closed cases was properly disposed of and removed from the evidence room. The 2008 audit noted those issues were resolved.
•Financial records did not include value of donated infrastructure, un-billed water revenues, deferred tax revenues or other year-end accruals. The city responded the method of recording infrastructure donations had changed and that year-end adjustments and accruals would be under the finance director's supervision.
A weakness in segregation of duties over cash collections and related record keeping was noted. These continued in 2008.
•The auditor noted instances of not following contract details, specifically for performance expectations, specifications or pricing. The following year, the city's engineer reviewed requested change orders and those were presented to the council for consideration.
Miller pointed to the 2008 audit report and noted he was city manager for roughly half the fiscal year of 2007-'08.
"That tells you nothing occurred in fiscal year '08 with all this other stuff, or that Jack Miller, the city manager for over half of the current fiscal year, corrected all of those things,” Miller said.
He described the 2007 audit report as a "nitpicking, amateurish audit,” and said such detailed reporting of personnel issues, including documentation of sick and vacation time, nepotism and other issues, instead of focusing on accounting systems and administration systems, was not standard procedure for a financial audit.
"I can't believe that the auditor went into this kind of detail on nitpicking personnel issues,” Miller said.
Finance Director Fred Houston said such detail on personnel issues had not been provided in annual audits since the 2007 audit.