Auditors continue to work on the mysteries of the Killeen city financial decline, and the public can only hope they have the right focus and access to the information they need.

McConnell & Jones gave only brief updates publicly to the council May 2, then failed to hold the scheduled interim briefing May 16. When auditors returned to the council in public session June 6, they gave even fewer remarks, and the council, cautioned by City Manager Ron Olson, asked few questions.

The public will not hear the results of the audit until it is long over and that has been a concern because some city staff and council members in place during the time under investigation have had closed door sessions with the auditors to go over the early findings.

Part of the public’s worry is whether auditors are on the right track and have access to insightful documents. Auditors earlier told the council they couldn’t find some older documents. Then, on June 27, auditors told the council they said they received an “extensive data submission” but it’s unclear if the source was someone providing meaningful information or a document dump of clutter.

Olson, who joined the city in February, told the Herald that updating the city’s document storage policy is on his to-do list.

The Herald, in public information requests to the city, is asking where any files recently moved from City Hall are located, where files recently moved from the North Precinct are located and where the files on the federal grants to police and fire are stored.

Within one month of becoming interim city manager, longtime Police Chief Dennis Baldwin made decisions that would shake up the order. Baldwin became interim city manager in October 2016. By Nov. 1, 2016, Baldwin directed movement of police documents from the North Precinct to the main police station some seven miles south and launched a move of city offices from City Hall to a city building partially occupied by other groups.

Baldwin put another insider, Deputy City Manager Ann Farris, in charge of the City Hall move.

Baldwin and Farris both worked for the city during the time period auditors are investigating. Farris also served as interim city manager before Baldwin, from April 2016 to October 2016, and announced to the council in June last year that the city was nearly $8 million short of a balanced budget and had been overspending for years. When Baldwin took over, he made Farris the deputy city manager. Baldwin became assistant city manager when Olson joined the city in February.

Meanwhile, the city continued to shred documents until March 31 this year, when Olson ordered a temporary halt to preserve evidence for the audit, which had been approved March 14. That was nearly a year after former City Manager Glenn Morrison announced his sudden retirement and about a year after calls for a forensic audit began to surface.

City officials have said the city follows state retention guidelines, which include a category for keeping some documents only as long as officials deemed them valuable. The city’s copy of a file containing documents collected in a 2012 whistleblower case were deemed no longer valuable by long-time City Attorney Kathryn Davis. Davis ordered them shredded in April 2016, according to city retention reports acquired by the Herald in document requests.

Former Finance Director Barbara Gonzales’ court file, which is open to the public, includes documents of some city spending decisions Gonzales found objectionable.


Among documents in the Gonzales file were objections from Gonzales and then-Purchasing Manager Brian Supak to former City Manager Glenn Morrison and City Attorney Davis.

The disputed decisions included choosing to not seek bids for contracts, approving spending that went beyond city policy and approving a $10,000 annual pay raise retroactively. See this Herald story at:

In another case from her files, Gonzales criticized the city for failing to withhold IRS and Social Security money in a settlement that led to a recall vote unseating five council members.

Former City Manager Connie Green and the city decided to part company in March 2011 with a settlement to Green. The $750,000 figure drew public attention, and the way it was handled drew Gonzales’ attention.

The city should have withheld federal income tax and the Social Security payment, Gonzales argued. The city also should have issued a budget amendment to pay for it. Gonzales’ deposition describes her struggle.

“We requested to have a conference call with Steve Niemeier, who was the external auditor at the time, (for) Brockway, Gersbach.”

On the city’s side of the call were Morrison, City Attorney Kathryn Davis, then-Human-Resources Director Debbie Maynor and Gonzales, according to her deposition.

“Niemeier contended that it should have been handled as a payroll. There should have been deductions,” Gonzales said in her deposition.

“The city did the wrong thing by not paying the taxes. Anytime there’s any type of settlement like that, within that time period, within the same year, taxes should be withheld, whenever we were already issuing him any type of paychecks,” Gonzales said in her deposition.

The attorney representing the city told Gonzales that Green paid the taxes. The city’s settlement papers show Green agreed to pay all taxes, not limited to income taxes and Social Security, and to hold the city harmless from liability for such taxes.

IRS rules, however, state the employer must withhold tax and is responsible for paying the taxes.

Gonzales’ other concern was that the city did not do a budget amendment to pay for the settlement. Instead, the city dipped into several accounts.

Gonzales’ documents show the payment was funded with money from ratepayers, as well as from the operating budget. The indirect cost allocation for fiscal year 2010-11 shows portions of the $750,000 coming from the general fund, the aviation fund, the solid waste (trash) fund, water and sewer and the drainage fund.

Auditors have not said whether they are reviewing documents related to Gonzales’ and Supak’s questions.

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