Kankakee County - Committee of the Whole met July 20.
Kankakee County - Committee of the Whole met July 20.
Here is the minutes provided by the Committee:
Executive Session - Part 1
(9:05 a.m.) Mr. Wheeler read the following Open Meetings Act 2(c)(11) notes, in part, to the County Board members:
"...Section 2(c)(11) permits a public body to close a portion of a meeting to discuss "Litigation, when an action against, affecting or on behalf of the particular public body has been filed and is pending before a court or administrative tribunal, or when the public body finds that an action is probable or imminent, in which case the basis for the finding shall be recorded and entered into the minutes of the closed meeting."
"...Confine its closed session discussion to the litigation itself. Section 2(c)(11) does not authorize a public body to discuss in closed session taking an action or making a decision on the underlying issue that is likely to be the subject of the litigation."
"...strategies, posture, theories, and consequences of pending, probable, or imminent litigation..."
Chairman Wheeler encouraged the discussion to stay within these parameters.
Mr. Sirois asked why there was no one from the State's Attorney's office present.
Chairman Wheeler explained the conflict to the Committee.
Chairman Wheeler explained the three pending or imminent legal issues, as follows:
(1) County bringing suit against the Auditor for not fulfilling duties of office;
(2) Auditor bringing suit against the County Board for reasons to be discussed;
(3) Probable criminal/ethical violations by the Auditor's office.
Chairman Wheeler stated that the Auditor took office, and the Chairman wanted to get him acclimated as quickly as possible to the County. He provided access to the Finance Department. The Finance Department has provided over 40 hours of training to the Auditor on the MIP system and continually has to explain and re-train Mr. Lee for things on which they have already trained him. He provided access to the outside auditors and audit process. He provided access to access to finance discussions.
Chairman Wheeler read aloud the auditor's statutes as found in ILCS 5/3-1001 - 1006, with particular emphasis on 1006(a), 1005(a)(b) (c) (e) (g) (h).
Chairman Wheeler discussed how the Auditor approached him about 5/3- 1006(a), and said that the County was in violation of that statute. This happened around mid-December, 2016.
Chairman Wheeler stated that, on December 28, 2016, it was Communicated to the State's Attorney's office that there was a need for interpretation of this broad statute, one that conflicts with many other statutes. Chairman Wheeler cited Some of the Conflicts:
Admin Code 20701.250 (Commissary Audit by Treasurer or Auditor)
55 LCS 5/3-1006
55 LCS 5/5-1017
55 LCS 5/5-1018
55 LCS 5/5-1019
55 LCS 5/5-1082
Chairman Wheeler also discussed how many "general" accounting duties are being done in other departments:
Sheriff - Aimee Luedtke
Circuit Clerk - bookkeeper
County Clerk - Levy and TIF and cash before entry
Treasurer - (bank reconciliations, not in ILCS 5/3-10005 - Duties)
Etc. (under the broad interpretation)
Chairman Wheeler stated that, on April 8, he officially requested that the State's Attorney's office ask the Attorney General for an interpretive opinion on 5/3- 1006(a).
Chairman Wheeler explained that he has been a champion of getting this clarification, and was the one that pursued the process of resolution. There is extensive evidence of this. There are Conflicts, like in the resolution where it defines the Finance Department as being the general accountant.
Chairman Wheeler explained that from December 24, to date, the Auditor has become increasingly aggressive toward employees, himself, and elected Department Heads who Mr. Lee feels are not complying with the statute in question. Mr. Lee has mentioned openly that the Finance Department was Created illegally, and as a "political payoff". Mr. Lee has told Chairman Wheeler and Finance employees the same, and that they all should be working in his office.
Chairman Wheeler stated that the outside auditors asked Chairman Wheeler and also communicated with Mr. Lee that it was improper for him to be included in the audits. They asked that he not be present as he was making the process CdiffiCult.
Chairman Wheeler stated that it is his job to act on facts with respect to the statute, will bring the interpretation to the Board, and will take appropriate action at that point.
Mr. Washington provided the history on how the Finance Department was created by the County Board. There were audit findings that there needed to be a separation of duties. There was also a shift in governmental accounting practices. The same people could not be involved in all parts of the claims process.
Chairman Wheeler mentioned that our outside auditors have not found any malfeasance, illegal activity, or bad accounting practices within our County. We have won national awards resulting from our checks and balances. We have a system based on government accounting practices, and our financial policy handbook is built to ensure this integrity. Our federal grants once were at risk of repayment when We had a system set up as the Auditor demands, and are at risk if we go in this direction.
Chairman Wheeler stated that he, Mr. Lee, and the former Board Chairman who set up the Finance Department as a response to federal and auditor recommendations, all met for lunch last Friday to discuss the history and how we can move forward. It was a good, respectful conversation where everything was put on the table -- his concerns, our concerns, the history from the former Board Chairman, and Our concerns of the other duties of his office. At the end of the meeting, it was understood that the County needed clarification from our accounting firm/consultant because of the inability of the Auditor to provide specific accounting duties that the Finance Department is doing. Chairman Wheeler explained the relevance of this consultation.
AS Chairman Wheeler understood it, Mr. Lee asked the State's Attorney's office for representation against the County Board. That request was modified to a request for interpretation of ILCS 5/3-1006(a).
Chairman Wheeler read the opinion, in part, to the committee, as follows:
"As you all know, we await the decision of the Attorney General regarding What the definition of "general accountant" and "general accounting" means under 55 ILCS 5/3-1006. The AG is not close to issuing a
decision; we inquired last Friday. Therefore, in an effort to try and resolve the inquiry pending an AG opinion, I have done a great deal of research on this matter and am rendering the following response."
"Despite an exhaustive search online, there is very little legislative history on Public Act 86-962 - House Bill 0312; in fact, when you go to the online database for the legislative session on the days the bill was called for a vote, there was no discussion. There was some mention of the House Bill in conjunction with a discussion about what happens when a County absorbs another county due to growth and expansion; but other than that, was not successful in trying to find out why this legislation was passed.
Prior to that, a county board, per a 1985 Attorney General opinion, had the authority to alter the duties and powers and functions of county officers that are not specifically imposed by law. At that time, the County Board could delegate the duties of general accounting to a separate Finance Department. If it is a statutorily imposed duty, then they cannot. 1985 |||...AG LEXIS 24.
55 ILCS 5/3-1005 was then changed to remove the following item from the duties of the Auditor: 1) be the general financial accountant of the County and keep its general accounts. If it is a statutorily imposed duty, then they Cannot alter it or remove it from the auditor.
However, 55 ILCS 5/3-1006 stills allows for that function in Counties with 275,000 residents or less. The issue then Comes down to what is a "general financial accountant" and what are "general accounts". Since there is no case law to assist in interpreting this, we then look for definitions of the terms as they are used in their intended field:
"General accounting relates to a business entity as a whole versus a specific subgroup within that entity. A general accountant provides his client with the following services: financial statements based on debits and credits for the calendar year, income and balance sheets, and quarterly reports. General accounting, much like its name suggests, deals with the collection and ledger of general account activity including debits and credits as well as how financial statements are documented for the fiscal year"
The County auditor shall cause to be published in at least one newspaper of general circulation in the County, a notice of the availability of the quarterly report for public inspection in the office of the county auditor. Such notice shall be published within 30 days of the date of the scheduled release of the report.
(f) Audit the receipts of all county officers and departments presented for deposit with the County treasurer.
(g) Maintain a continuous internal audit of the operations and financial records of the officers, agents or divisions of the county. The County auditor shall have access to all records, documents, and resources necessary for the discharge of this responsibility.
(h) Audit the inventory of all real and personal property owned by the county under the control and management of the various officers and departments of the County.
(i) Audit the documentation, records, and bases for the amounts billed to the county, as maintained by County vendors, under agreements between the county and its vendors, when those agreements provide that the amounts billed to the county are based upon actual costs incurred by the vendor, or when those agreements include the requirement that the county provide a reimbursement for out-of-pocket costs incurred by the vendors. The County auditor shall audit the documentation, records, and bases for the amounts required to be paid to the county under agreements with outside parties, when those amounts are based upon records and documentation generated, compiled, and maintained by the outside party. The vendors and outside parties affected by this Section shall provide to the County auditor, on a timely basis, all records and documents required by the county auditor relative to the county auditor's duties under this subsection.
The auditor is of the opinion that the county finance department is doing general Accounting duties that belong to his elected office. He has not provided our office with a list of what he believes those general accounting functions to be. I WOuld recommend he put together a list of what he believes those functions are and meet with the County board chairman and finance director to work toward resolution".
Chairman Wheeler asked for the specific accounting duties, and then he read the response from the Auditor, in part, as follows:
"As requested per the SA opinion il received, I have provided a list of Specific activities that would fall under "general practice of accounting". believe that the Auditor's Office would need the staff and resources to execute these duties to be in Compliance. I am willing to work with anyone to get this done in the most effective an efficient manner. None of the duties below are performed by the Auditor's Office that should be."
"Being new to the County, it is important that be trained in detail on the system. Those who use the system currently know its functionality and should be charged with training me step by step on the execution of the various functions."
"It is my recommendation that the staff and the duties be returned to the Office of the Auditor, to be in compliance with the state statute. Some of these Specific activities include (but are not limited to):
1. Journal entries for claims
2. Adjusting entries in the accounting software
3. Posting sessions to the general ledger
4. Creation of vendors
5. Creation of funds
6. Creation/deletion of any Chart of Account lines
7. Creation/editing of any financial reports
8. Management of upgrades to accounting system
10. General management of the system (i.e. where expenses are charged in the Chart of Accounts)
11. Security of accounting software (control of user access and authorization)"
Chairman Wheeler explained that he, as well as the State's Attorney's office, believes these are overly broad interpretations of the statute, and that the Attorney General needs to clarify. Their opinion supported the action he took in December, and again in March. Since the Auditor is unwilling to be specific, and demands to have duties that are in conflict with separation powers/duties (fox in the henhouse), he feels that there is a high probability of legal action from the Auditor.
Mr. Othoff stated that the auditor is a "checker".
Mr. Sirois stated that the auditor is not a "doer'.
Mr. Vickery asked why the Auditor isn't worried about other departments' aCCOunting practices.
Chairman Wheeler stated that, for some reason, Mr. Lee is focused like a laser on the Finance Department.
Chairman Wheeler stated that this is based on the meeting on Friday, where it was agreed that we need perspective, and the statement that either we "give the duties to his office, or eliminate the office via referendum". At the meeting, Chairman Wheeler asked if there was a suit in process, and the Auditor said no. But he did mention "action" he was taking.
Chairman Wheeler then then recapped all of the cases where he has supported, and even promoted, the Auditor's duties and the clarification process.
Chairman Wheeler then read portions of the June 1, 2017, email where the Board pushed back on assertions of impropriety, and the need for openness and transparency, as follows:
"Out of professional courtesy, and to get more Smart people in the room, I asked you to join us while Worked out which bills were going to be paid first. Being new, you needed to see what we go through in juggling these payments. You having knowledge of Our Cash position is always beneficial, and something you have absolute right to know. But it is Steve that manages that for the board, and that will not change regardless of any opinion. Those are our rights by the Illinois Counties Code. You still get the email of what is being paid, again... out of Courtesy.
While we wait for the Accounting question to be answered by the AG, this is in no way related to that question. Paying the bills is, and always will be far outside of the purview of the Auditors office. That is purely a Board function, and as such, prioritize what bills are going to be paid and when. By no means did I intend to slight you in the informational process, and for that I do apologize. But I have no obligation to ask for and get approval for the paying of the bills that have been processed through the system.
Steve is the agent of the board, and as such he is tasked with the AVP functions. I have to be clear on this.....that will Continue with whatever the AG opinion of what "Keeps the general accounts" is defined as. There will never be a time that your office can approve, audit, and pay the bills. MIP provides all of the information necessary to audit these transactions.
Rather than have this difficult situation spiral into what appears to be becoming a very bad situation, I strongly suggest we meet with Jim Rowe and his #1 so we can work through this.
I look forward to the resolution of some of these questions, and getting back to the business we were charged with doing... however that is ultimately defined. I am all in for helping your office fulfill its obligations, as have said.
Before forget.....there were no Management Letters the previous two years, but there will besis one this year. Your statement in Committee about how the board was not fulfilling its statutory obligation was accusatory and quite unfair to the board and the Finance Department. I am Copying in Jim on this because it is now to the point of involving the board's Counsel. Any answer you need to finance questions can be found in MIP. If there is a policy question, feel free to come to me for answers. Until we get this worked out, I need to remove the aggressiveness from the situation. My employees, as well as the outside auditors are very uncomfortable with the tenor and tone, so communicate with me of you need something specific about policy. MIP has the data."
Chairman Wheeler reiterated the fact that the same person cannot enter a claim, process to payment of that claim, have the check issued, and then audit the entire process. This is what Mr. Lee is demanding and this is absolutely not acceptable according to accounting standards, and is a fox in the henhouse scenario. This is why things like we hear in the news happen... no check and balance.
Chairman Wheeler stated that he is sure that the Auditor would not do anything Wrong, but it puts our federal and state grants in jeopardy. Our separation of duties is a protective process in this regard, and was set up to safeguard against fraud. Our System Works, and Our Auditor does a great job catching errors.
Chairman Wheeler refocused on the problem we have with the Auditor not doing his job while he argues for what he feels we are not allowing him to do:
Those statutes regarding publishing notice, auditing departments, and auditing County property
Chairman Wheeler mentioned the Auditor changed the approval system without advising anyone, and then claimed his "instructions", which is an inappropriate term under the statutes, are being ignored.
Chairman Wheeler feels that the Auditor is not fulfilling the duties of his office, and we need to take action. The public good is not being served:
1. No publications, admittedly, in the newspaper, ignoring the statutes
2. No audits of departments
3. No audits of property through three office moves
Mr. Othoff asked who can remove an elected official.
Chairman Wheeler stated that the public can vote to do that, or they can be removed by the Attorney General's office or a judge based on illegal activity.
Mr. LaGesse Stated that this sounds like one big ego trip, and that he approves hiring outside Counsel and audit.
Chairman Wheeler asked for representation from the State's Attorney's office under these grounds. There are other issues at play that could be litigious as well. The State's Attorney says that he is in a conflict, so he cannot represent either party. That should answer Mr. Sirois' question earlier in the meeting.
Chairman Wheeler stated that he offered to give, as it could be general accounting, the entry of payroll into the system, and possibly the bank reconciliation from the Treasurer, to the Auditor's office...along with other appropriate parts of his demand list. This was at the Friday lunch with Karl Kruse. Mr. Lee said, and Chairman Wheeler paraphrased, "I don't want that. I want everything in Finance."
Chairman Wheeler stated that, at this point, our best option, one supported by the State's Attorney's office's opinion, is to await the Attorney General's opinion.
Chairman Wheeler also stated that, unfortunately, now the Auditor is making Facebook accusations against the board, and has his website containing the same accusation of illegal allocation of duties and board complicity. It appears he has gone to the newspaper over the weekend as well. Chairman Wheeler was called to comment on the "conversations they have been having all day with the Auditor".
Mr. Olthoff stated that Mr. Lee sees the Finance Department as the enemy and the County Board as well.
Chairman Wheeler stated that it is our intent to file a lawsuit, so another meeting will require authorization for outside legal representation approval, both to prosecute and defend.
Mr. LaGesse asked if Mr. Lee's predecessor published her quarterly reports in the newspapers.
*At this Point, at Approximately 12:00 p.m., a Power Outage Occurred Throughout the Entire County Administration Building"
Executive Session - Part 2
(approximately 12:15 p.m.) Mr. Wheeler wanted to note for the record that the power went off, and we had to reboot the executive session digital tape. He just Wanted to note that We're back in executive Session and all members are still present.
Mr. LaGesse wanted to finish up with what he was saying before we lost power. He wants to make sure that we're not asking Mr. Lee to do something that his predecessor didn't do, so did the auditor previously publish the quarterly report?
Mr. Wheeler Stated that he hasn't checked.
Mr. LaGesse stated that he would like to know that because Mr. Lee Could say She didn't do it either.
Mr. Wheeler stated that it's important, but Mr. Lee did say up here that he knows it's his statutory obligation, so he did admit that he wasn't following the statute.
Mr. LaGesse stated that he doesn't think Mr. Lee has an argument that it's not in his budget because the money we give him in his budget should cover that.
Mr. Wheeler stated that you're not over budget until you're over budget. That's what Contingency is for so we can plug holes at the end of the year. He agrees that we should at least know going forward.
Mr. Payton asked if Mr. Wheeler thought it would help the issue if some of the board members he heard comment know the history of it, and if Mr. Lee could meet with Some of them.
Mr. Wheeler stated that he would like to think that would be the Case, but now we're in a legal situation, so we can't really do that. He tried to do that beforehand with the State's Attorney. Even they're saying they're done. Mr. Lee makes an agreement with the State's Attorney that we're going to do this, and then the next day, something shows up on Facebook on something that was said in a meeting, so we passed that point actually. Even having lunch and discussing things, Mr. Wheeler doesn't know how you segregate the Conversations about the County Board with this matter because they're so intermingled at this point.
Ms. Parker asked about something Mr. Wheeler stated a little while ago and she has been thinking about it, that Mr. Lee has the opportunity of every claim that comes through to question. He was not making two separate piles. He was just sending those to Finance to pay? Is this what he's been doing?
Mr. Wheeler stated right, he's been mixing them all together.
Ms. Parker asked why he wasn't separating those out.
Mr. Wheeler stated that no one really knows. He brought one of the claims to the meeting today, with a sticky note where Mr. Lee wrote, "Andy, this is one of many examples where my instructions are ignored". He doesn't quite know what that means. It could mean recommendations, but "instructions" is the wrong terminology. Mr. Lee also wrote, "...and we found more money as a result policy impact". The invoice is from a company who charged us tax, and Mr. Lee drew a line through the tax, in red, and said, "Do not pay". But then it's in the same pile with everything else, so as part of the system, it goes all the way through. It just exasperated the feeling that, "I'm not signing off on this and you're still cutting checks for it". What he doesn't sign off on, all those invoices are supposed to come here, and should say, "These are all the invoices we're questioning and don't recommend payment for", and he finds things that we shouldn't pay. That part is perfect about what he's doing. Mr. Wheeler loves this kind of detail. But, when it's being sent down in this manner, the Finance Department didn't know what was going on because it was never done like that before. We have a process and a procedure, and So when we figured it out, it was a good-sized stack, and we started sending it back up. We're Working through it, and it would have been a positive discussion to have if it wasn't so aggressive, like, "Well, why are you ignoring my instructions?" We're not against him. Mr. Wheeler is actually for the auditor being a great auditor. He wants Mr. Lee to find waste within these departments, but he's not doing that part, besides the claims. He's doing all of these other things.
Mr. Wheeler stated that there is one last legal issue that he wanted to mention, and this is disappointing. There's an ethical and a legal issue potentially out of this. Back before Mr. Bossert left office, he purchased six UCC books, which is the County's code. That's what we have from our association. They cost $180. The three new Board members got a book. Mr. Wheeler took one because he wanted the latest version. That left two, and then one disappeared. Some months later, Diane and I talked about where that book went. Mr. Lee told Diane that he had taken one of the books off of the shelf. That is the reason why he doesn't like that door being open between the offices and why he has a lock on his door now, because people can just walk in, mainly out of the auditor's office and do whatever they want. This right here is a legal situation, potentially, for theft. He's not going down this road, but is thinking about it because you can't walk into someone's area and take something that is not yours. Mr. Wheeler would have given it to him. He would have ordered Mr. Lee five if he wanted, but he took it and didn't say anything. That's a problem.
Mr. Othoff asked if Mr. Lee returned it.
Mr. Wheeler stated no, he still has it. He's going to ask him about in the Finance Committee Meeting.
Mr. Wheeler stated that the other problem is, on Tuesday he came in and told Brian Gadbois to put a sign on the door. We're in charge of Building & Grounds. We have purview over the safety and everything for all of the offices. He asked Mr. Gadbois to put a sign on the door saying this is an emergency exit only - we have to leave it open because we have to have two exits for every office - if you have business with the County, please use the front window. Mr. Lee ripped it up and threw it in the garbage, so that's destroying County property, which is now an ethical issue. We may have two cases for the Ethics Committee as well.
Mr. Olthoff asked how Mr. Wheeler knew he ripped it up.
Mr. Wheeler stated that Mr. Lee told people he did it, and his person it in his office watched him do it. That's disappointing on a lot of different levels. He will just leave it to the board members to decide what we want to do on the ethics side of things later. He stated that he wouldn't just take something out of Someone's Office.
Mr. Othoff asked where the book was located.
Mr. Wheeler stated that it was in the hallway by Diane's office, where all of the books are. He stated that the board members know that his history is that he'll do anything he can to work with you, help you, and provide you what you need, but then, just to take it? That's a problem for him. He doesn't know how to address it, but thinks it will be brought up.
Mr. Vickery stated that he thinks that's a spinoff of what's been going on. It's led to that.
Mr. Sirois made a motion to come out of executive session, and Mr. Vickery seconded it. Motion carried with a voice vote.