Area leaders who are trying to convince voters to dissolve the financially distressed Collinsville Area Recreation District (CARD) can point to a recently released report that helps explain why the district is in such bad shape.
A forensic audit of CARD's 2011 finances conducted in 2012, reveals loose spending practices and lax oversight in a district that faces $45 million in long term debt.
"Shocking" was a word that CARD attorney Paul Evans used to describe "not one or two, but multiple" concerns highlighted in the report, prepared by the accounting firm Hughes and Associates of Godfrey.
Evans, who has served as CARD's attorney since 2013, said the forensic audit shows the "extent and degree of financial practices that weren't anything near what they should have been."
Until recently, the report was held from public view because of ongoing litigation in which the district's former business director Rosemary Barczewski alleged wrongful termination in a suit against CARD. It settled a year ago in District Judge David Herndon's court in the Southern District of Illinois.
The forensic audit cited 36 areas of concern:
It showed that 20 employees had credit cards issued in their names, and in 2011 they charged $131,087 - of which $18,036 in spending was not accompanied with receipts.
Former CARD executive director Mark Badasch charged $47,946 in 2011, according to the report. He did not provide support for $3,167 in expenditures.
He spent $39,188 in "general commodities"; $62 for 15 gallons of fuel; and $5,259 in food and travel.
Badasch, announced in November 2011 that he would retire in January 2012. He earned approximately $90,000 annually.
"CARD's reimbursement procedure was to pay the credit card statements in full each month," the audit states. "Employees are not required to prepare expense reports to be turned in to the accounting department on a monthly basis supporting the need for the use of a credit card.
"Documentation was not always attached to the credit card statements. These issues and the lack of documentation with respect to the business purpose for many of these expenditures are serious internal control weaknesses.
"We recommend CARD's management determine if missing documents were misplaced or never filed and, going forward, a policy over credit cards should be developed and strictly enforced."
The audit also showed:
There was no oversight of payroll changes; hourly employees were paid for a 40 work week even though the work week was only 37.5 hours; salaried employees were paid overtime; an employee got overtime pay on the same day the employee received sick pay; a 2 percent approved pay raise actually calculated as 2.9; math errors were made in calculating sick, vacation and personal time; there was no clear definition as to what constituted personal days off; multiple formats of payroll reporting existed - punched time cards, automated time with rates and manual hours; continuing education was paid for an employee's studies that had no bearing on the employee's tasks with the district; out of town $40 meal policy was exceeded; cell phone reimbursents to some employees were not reported as income as required by the IRS; longevity pay was given to employees who exceeded "certain years of service"; there were instances of personal use of CARD vehicles for commuting in and outside of the district; employees were reimbursed for mileage at a higher rate, the IRS rate, rather than the rate the district established, 32.5 cents per mile; life and dental insurance was paid for certain employees without express authorization in the district's personnel manual.
Regarding credit cards issued in employees' names, the audit found that some unnecessarily paid sales tax on purchases.
It also found "numerous instances" where CARD held meetings at restaurants with meals charged to CARD credit cards.
"The board should determine if this is an appropriate and efficient use of CARD resources," the report says. "At a minimum, a policy should be established that prohibits or limits the use of CARD funded meetings/meals."
The report further showed that bank reconciliations for the month of December 2011 were out of balance by $1,321.29; it found that an improvement project involving the expenditure of $20,000 to a single contractor was made without soliciting bids.
Among the most curious items in the forensic audit was the category: "Below Market Residential Rental to Employee," in which a water park employee rented a three-bedroom, 2,000 square foot, lake-front home in Maryville.
Andrew Carruthers, who currently serves as spokesman for the "Dissolve CARD" group, said the house came as part of a deal acquiring land for Pleasant Ridge Park in 2008.
Carruthers served as a commissioner of the board from 2011-12 and as president of CARD from 2012-13.
He said that when he first came onto the board he wasn't aware that CARD owned a residential property. He asked questions when he saw that CARD made an expenditure to the Madison County Treasurer's office.
He said there's a way the district could have properly handled a lease agreement, but that the amount of rent the employee paid - $850 per month - was well under the market rate, and the excess amount was not reported as unpaid compensation. Both CARD and the employee could have had problems with the IRS had they faced audits, he said.
Carruthers also said that the rental arrangement with the employee ended while he served on the board.
Other findings from the special audit include:
- Fixed asset records were not maintained. Fixed assets represent approximately 90 percent of the total assets reported on the district's annual audit.
- No formal fixed assets capitalization policy exists.
- CARD does not have a formal procedure to ensure that disposals of fixed assets, whether by destruction, sale, scrapping or trade-in, are reported to the accounting department. "Without such a procedure, the likelihood of a disposal going unrecorded increases substantially."
Dissolve CARD movement
Maryville Mayor Larry Gulledge said he hadn't yet seen the forensic audit report, but that he has for a long time been a critic of CARD's past management.
"I have been a very vocal person..over the last 20 years voicing displeasure with CARD as a whole," he said.
The current board of directors are doing a good job of controlling costs, he said. But, their options in dealing with $23 million in debt - which would rise to $45 million long term - is to raise taxes, incur more debt or both. Another is dissolution, an effort that is currently under way.
Earlier this month, a group of local leaders and elected officials held a press conference announcing the move to dissolve.
In order to get a referendum question on the ballot in March, approximately 5,500 signatures from voters within the district are needed by mid December. For the referendum to succeed, two-thirds of voters have to recommend dissolution.
The district includes all of Collinsville and unincorporated Collinsville Township, as well as parts of Maryville, Glen Carbon and Pontoon Beach
"This is going to be a very difficult task," Gulledge said. Only one other park district in the state has ever been dissolved, as far as he knows.
"It's a daunting task and will take a lot of work, and volunteers to educate the public," he said.
A lot of questions still have to be answered regarding disposition of assets, he said. Taxpayers, however, would still be on the hook for existing debt for a period projected to be 20 years.
If this referendum attempt fails, Gulledge said efforts would continue for dissolution as it is the best option for taxpayers.
"The CARD executive board, they're the ones in a tough spot," he said. "They have to make all this work. They have to pay bills and still operate. There are a ton of moving parts."
Gulledge still remains an advocate for parks and recreation - Maryville operates four outside of CARD - Drost, Fireman's, Fred Winters and Michael Noga. And, CARD operates one park within Maryville - Pleasant Ridge Park.
"Parks are a great tool for communities," he said.
But, local communities are more capable of operating parks efficiently and at less of a cost to taxpayers, he said.