Killeen finances

Killeen had a whopping $252.9 million in debt by Sept. 30, 2016, with more than a fourth — 26 cents — of every property tax dollar, going to pay debt service in that fiscal year.

That was part of the bond history pieced together by auditors in a report released Tuesday. The study included the total amount of bonds, $330.6 million; the amount of that debt initiated by the city manager or council, not voters, $185 million; and the misuse of some money.

Some of the bond money was misspent, improperly transferred or improperly documented, according to the management audit report released last week.

Not listed in the report are who and why.

The report by auditors McConnell & Jones, which started with fiscal year 2002, said:

More than $3 million of bond money was improperly spent on purposes unrelated to the intent of the bond. Another $115,153 was spent without supporting documents.

Among dollars transferred out of bond accounts to other accounts, the city transferred $4.3 million to accounts that could not be documented as allowed uses. In addition, auditors found that $488,300 of the bond money was transferred to a fund unrelated to the bond.

Auditors found that $2.4 million in bond transfers were deemed not properly approved, and $101,865 of that were undeterminable.

Much of the questionable spending — more than $2.8 million — was done between 2011 and 2016, when Glenn Morrison was city manager. Morrison retired suddenly in April 2016 as some city financial problems were coming to light. Of the questionable transfers, more than $2.7 million was noted during the Morrison years. Auditors, who did not name any names, said a city manager in 2016 initiated the transfer $1.1 million of that amount.

Some of the bond money came from bonds approved by voters. Some came from pass-through accounts that included state money. Other money came from certificates of obligation issued by the city.


$1,140,629 of pass-through funds for state road construction was spent to pay employees without timesheets or papers to show how the employees’ time related to the bond. “This documentation is insufficient to justify paying the employees with bond funds,” according to the report. The amount includes operational costs such as machinery, maintenance, tools, supplies uniforms, dues and memberships and was used in fiscal years 2011 through 2016.

$907,707 in water and sewer revenue bonds were used for salaries without documentation they were related to the bond in fiscal years 2014, 2015, 2016

$586,943 of the Killeen Arts and Activities Center construction fund used for operational expenses in fiscal years 2011-2014

$222,615 of the State Highway 195/201 interchange construction money used for operational expenses in fiscal years 2011-2014

$146,687 of police and fire building construction bond money was used to fund operational expenses in fiscal years 2005, 2006, 2007

Some expenditures didn’t have supporting documents. Auditors could not tell whether spending $115,153 slated for golf course improvements on operational expenses in fiscal year 2005 was related to the bond’s purpose.


Auditors found $4.3 million was transferred from bond funds to other accounts without proof the second funds were related to the bond, and $488,300 transferred to funds unrelated to the bond money. Some of questionable transfers were approved by respective city councils or initiated by the city manager, which the city charter allows.


$67,183 taken in 2011 from a 2007 bond for public safety renovations was put into Fire Department Special Revenue Fund 246, which was unrelated to the purpose of the bond. Still, the transfer was approved in a budget amendment.

$421,117 taken from a voter approved bond was put into Fire Special Revenue Fund 246, which is unrelated to the purpose of the bond. The bulk of it was approved in the 2011 budget and $29,000 was approved in a budget ordinance.


$1,646,585 in pass-through funds intended for U.S. 190/FM 2410 construction were transferred to the general fund for operational costs and used for salaries. Management was unable to justify why salaries were paid with bond funds. The transfer was not approved and management also failed to include the money in the fiscal year 2012 budget. The Texas Department of Transportation provided pass-through funding, according to the audit.

$1,100,000 of 2011 pass-through bond money designated for U.S. Highways 190 and 2410 was sent to a city fund for Fire Station No. 9, parks and streets without documentation. The transfer was initiated by the city manager in 2016, who was not named.

$1,400,976 taken from the airport construction bond fund and put into a fund associated with the airport. Auditors said they couldn’t determine whether it was properly spent but noted the city had put it in the respective budgets for years 2005, 2006, 2007 and 2017 and approved it.

$177,200 taken from a bond fund for airport access roads and put into airport Fund 525 in 2007. Auditors could not determine how the funds were spent. The city had approved the transfer by ordinance.


$101,865 transferred to the golf fund in fiscal year 2005 was determined to go along with the goal of the fund, but the city did not have approval documents available, nor were they required to retain them.

$15,362 transferred for street construction in 2015 appeared to be a proper use, but the city did not approve it.

$776,018 transferred from an airport improvement fund to an airport road construction fund in 2009 appeared to be a proper transfer but it was not in the fiscal year 2009 budget and no transfer documents were provided.


Auditors, who had politely referred to city administrators as lacking necessary skill sets, said equally politely: The debt management policy has not been updated since 1997. Economic, social and political circumstances have changed over the past 20 years creating different challenges, opportunities and condition than those existing in 1997.”

That flawed policy wasn’t followed, auditors said.

“In addition, the City has not adhered to the provisions of its Debt Management Policy. For example, the City has not developed a formal capital planning and financing system as required by the policy. Moreover, the City’s lack of planning and reserving for ongoing maintenance needs has placed financial pressure on the City’s budget over the years. The need for enforcing, documenting, and monitoring compliance with the policy is further underscored by the 516 percent increase in the City’s bond debt since FY 2002.”


The city-initiated certificate of obligation portion of overall bond debt increased by 214 percent.

The city’s bond indebtedness from original issues increased 240 percent from fiscal year 2002 through 2016. The amount of bond debt per dollar from the general fund, which is the operating budget, increased 150 percent from $4 to $10 from 2002 to 2016.

The amount of taxpayers money dedicated to debt service increased while the amount of taxpayers money spent on maintenance and operations decreased.

The city was not in compliance with the state for keeping bond documents. Killeen says bond records should be kept for three years but the state requires at least five years and six in some cases, according to the report compiled by McConnell & Jones.

“We also noted that the City was in violation of its bond document retention requirements for bond fund 344-2012/CO (a $6.7 million certificate of obligations designated for U.S. 190 expansion and police vehicles). We were unable to trace the initial proceeds of the bond fund to the investment statements because the statements were not available. According to the City’s retention schedule, the investment statements should have been retained at least through August 2017.”

Go to for more coverage.

Go to to read the firm’s final report, see for more articles on how municipal government impacts you, and check out for continuing coverage of the investigative audit's results.

254-501-7469 |

(4) comments


Sounds like fraud to me.


Sounds like fraud and/or abuse to me!

Pharon Enochs

The following comments are indeed the opinions of Pharon Enochs. I guess some folks define abuse as poor management . I think when you use money which was given as a grant for a specific purpose and it is used for something different as abuse. What is even more rotten is petty politicians over right lie and say everything is great we are in great financial shape. I am still confused if Baldwin found five million dollars to make up the difference of the eight million which was short but it was not short just a method to make a budget then where is this money? I was under the impression some of the five million came from salaries which was allocated for police salaries but the positions were not filled. I now understand this money is going somewhere else to pay for for vehicle engines something in the neighborhood of $174,000 . So is this money coming out of the rainy day funds if in fact it was found and used for this purpose? There is an old Korean saying "Too many captains the ship goes into the mountains." I love the fresh air in the mountains but I prefer a different way to get there than by a ship. God bless America, President Trump and John Wayne wherever he may be.


People are told to evacuate when a hurricane is on the prowl. Hurricanes aren't the only predators that stalk you. Some predators wear expensive business attire and present themselves as helpful elected officials. Beware, they are greedy, confiscatory predators who only wish to buy churches, build waterparks, pay for sexual harassment lawsuits for their cronies, give exorbitant wage increases to keep their HIRELINGS in place, take trips to beautiful locations on your DIMES, and live high on the hog off that $50 a month they want to increase to $5,000 a month. Meanwhile your homes are burglarized, prostitutes ply their trade right outside your windows, murders increase, dope addicts wander aimlessly seeking their next fix, veterans go homeless, the homeless population rises, and the little city that says NO to you is getting ready to RIP you off.

Welcome to the discussion.

Keep it Clean. Please avoid obscene, vulgar, lewd, racist or sexually-oriented language.
Don't Threaten. Threats of harming another person will not be tolerated.
Be Truthful. Don't knowingly lie about anyone or anything.
Be Nice. No racism, sexism or any sort of -ism that is degrading to another person.
Be Proactive. Use the 'Report' link on each comment to let us know of abusive posts.
Share with Us. We'd love to hear eyewitness accounts, the history behind an article.