Beech Tree News Network

On July 1, a new Kentucky law is expected to bring greater transparency and accountability to area development districts, Auditor Mike Harmon said.

State Rep. Jim DeCesare, R-Bowling Green, who worked on the legislation for two sessions of the Kentucky General Assembly, said the effort worked because all parties affected by the proposed law worked together.

“Everybody had a seat at the table. The intent of the legislation was to allow more transparency in the process,” DeCesare said Tuesday. DeCesare publicly voiced concerns about the ADDs in Kentucky.

“They were doing some things in Kentucky that they were never chartered for,” DeCesare said. “The ADDs are subsidiaries of the state.”

Harmon recently penned an op-ed piece that he sent to the Daily News that offered his viewpoint on the new law.

“My office is keenly familiar with past issues uncovered by our auditors during a 2014 examination of the Bluegrass Area Development District,” Harmon wrote. “The prior auditor, in releasing the findings of the Bluegrass ADD, said the examination ‘… depicted an agency with rogue management that conducted activity far outside its scope and without proper oversight, used federal money for questionable purposes and failed to report potential criminal activity to law enforcement.’ ”

Harmon said the questions about ADDs were also broached in this region.

“Most recently, questions were raised with the Barren River Area Development District after it was discovered more than $82,000 in funds designated for aging and independent living services were instead used to pay bonuses to BRADD employees between 2009 and 2014,” Harmon wrote. “A report issued at the end of 2016 by the Kentucky Office and Employment and Training questioned expenditures made to workforce clients by BRADD, and led to the state asking the ADD to repay more than $91,000,” the auditor said.

BRADD paid the state Department of Aging and Independent Living more than $82,000 after a two-year fight and later paid more than $91,000 to the state OET. The latter sum was recently returned to the South Central Workforce Development Board by the state. The workforce board removed BRADD as direct-service provider and chose ResCare Workforce Services of Louisville to replace it. Before that, the workforce board discontinued BRADD’s fiscal oversight of workforce and gave that responsibility to the city of Bowling Green.

Harmon reasons in his op-ed that the BRADD situations, coupled with the Bluegrass ADD concerns, indicated change was needed.

“While BRADD’s situation did not result in a special examination by my office, it illustrated to many people that legislative changes were needed in the oversight of ADDs,” Harmon wrote. “Shortly after the release of the Bluegrass ADD examination, Rep. Susan Westrom of Lexington began pushing for more accountability and transparency for area development districts.”

Harmon outlined the provisions of the new law.

“House Bill 189 will require Area Development Districts to comply with transparency and accountability laws already in place for similar agencies like the Kentucky Association of Counties. The new law, among a number of requirements, specifically prohibits the awarding of bonuses and one-time salary adjustments for ADD employees, and requires ADDs to submit financial reports to the legislature that detail how funds are allocated and spent, and the number of people served by ADD programs ... ,” the auditor wrote. “House Bill 189 gives us a right of first refusal to conduct each of the ADDs annual financial statement audits, which is the same process we use for county fiscal court audits.

“We also will have the ability to review audits of the ADDs conducted by outside accounting firms, both before and after the audit reports are released, to ensure all 15 (development) districts are being audited consistently and appropriately. This review process will also give my office an effective way to determine if there are any red flags or areas of concerns that would necessitate further examination of particular ADDs in the future.”

BRADD Interim Executive Director Gene Becker said Tuesday that the agency serving 10 counties is reviewing the new law.

“The Kentucky ADD Council went on record to support it,” Becker said. “We can always make improvements. Internally, we are looking at abiding with everything.”

Becker said resources used by BRADD come from the federal government, which often has more stringent requirements than the state.

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Date: 04-26-2017
By Charles A. Mason
Bowling Green Daily News

Kentucky Press News Service