Capital Outlays (fiscal years 2006–2016):
– Capital outlay accounting requires strengthening to prevent or discourage fraud. No fraud/gross mismanagement found.
– Unable to determine cause of 311 percent increase in general fund capital outlay spending because the city could not provide supporting information. In this instance, the city was not in violation of its records retention policy.
– A series of shortsighted expenditures and weak financial controls created a situation in which the council repeatedly voted for large increases in capital improvement without a clear vision of the future.
– City department heads had in the past overseen and managed vertical construction projects, including the construction of two fire stations in fiscal year 2010 and the Killeen police headquarters on Featherline Road. The firm recommended the city create a “vertical construction” team for capital improvement projects to take those projects out from under department head management.
– The firm recommended the city institute a comprehensive capital improvements plan.
Use of Bond Money (2002–2017):
– $3 million of bond money was improperly spent on purposes unrelated to the intent of the bond between 2002 and February 2017. Another $115,153 was spent without supporting documents.
– 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.
– The city violated bond document retention requirements for bond fund 344-2012/CO, a $6.7 million fund for U.S. 190 expansion and police vehicles.
Interfund Transfers (2002-2017):
– The city did not have adequate policies governing the transfer of money out of the enterprise funds — trash, water and sewer, drainage and airport funds — to prevent misuse or misallocation of restricted funds. The city transferred $14.3 million total between enterprise funds and other funds in fiscal year 2016.
– The city purchased vehicles from the ISF (internal services or fleet) fund that did not benefit the respective enterprise funds.
– The city transferred $4.5 million in enterprise fund money to a new fleet services fund in 2016.
– There were no policies and procedures documented for the operations for the fleet services program.
– Even when the city transferred money for an allowed purpose, it had problems. The city overcharged, sometimes undercharged and occasionally double charged these business accounts.
– The city’s fiscal year 2016 Certified Annual Financial Report fails to describe the nature or purpose of interfund transfer transactions or a summary of the source and destination funds.
Pay Increases (June 2014 and October 2014):
– Retroactive pay increases were authorized, and could break with state law that prohibits it
– No long-term budget impact considered for 3 percent pay increases in June 2014
– No long-term planning or analysis done for 8 percent pay increase to civil service (public safety) positions in October 2014
City/Owner Agreements (2002–2016):
– Four companies secure the majority of city owner agreements.
– The city has never reviewed developers’ books for construction estimates that were paid in part by public money, despite having the authority to do so.
– Goodnight Ranch subdivision in 2011 and the Landing at Clear Creek in 2013 were paid out of the city’s general fund that is designated for city operations.
– Four city/owner agreements appeared to have been executed prior to City Council approval, although the city contended no agreements were formally signed by the city manager until they were approved by the council.
– Documents were shredded in violation of state record retention policies and auditors could not independently confirm payments to developers were made with council approval for agreements signed before October 2010.
Roadway Ownership (2002–2016):
– No policies or procedures in place to monitor roadway ownership
Post-Recall Spending (November 2011–May 2012):
– Based on audit procedures, no indicators of fraud or abuse detected
– Weak internal controls that could result in undetected fraud
– There is no contingency plan in the event a full council is not seated.
Compiled by Herald staff