The lawsuit filed last week by Killeen’s former finance director hinges on a document — allegedly written by an outside auditor one year ago — that exposes several unsound financial practices at City Hall.
Former Killeen finance director Barbara Gonzales sued the city Monday under the Texas Whistleblower Act, alleging that Killeen City Manager Glenn Morrison ignored warnings of unlawful spending, presented by the city’s external auditors, Sheryl Mess and Steve Niemeier, in early 2012.
The outside auditors allegedly flagged 11 issues in the city’s financial policies, calling them outdated and noncompliant with the Texas Government Code and city policy.
“The city is committed to vigorously defending itself again against these claims,” said Hilary Shine, Killeen’s spokeswoman. “The facts will speak for themselves.”
Call for oversight
The lawsuit claims that “because (the external auditors) were not getting cooperation from the city manager, they provided Ms. Gonzales a draft list of audit comments that made reference to expenditures and practices that violate state law or city ordinances and policies.”
The “draft list” of issues centers on a lack of oversight in the city’s employee purchasing, travel, reimbursement, car and computer allowance programs.
Gonzales’ lawsuit also alleges Morrison spent $16,000 on a dinner that included alcohol, at a conference in Washington, D.C., although city policy does not permit the use of city funds for alcohol.
Currently the city charter gives the city manager — not the Killeen City Council — the ability to hire and fire the city’s internal auditor.
In 2012, external auditors suggested that the city realign its internal auditor position to “ensure that the internal auditor remains independent and the external auditor could rely on work performed.”
The official external audit, or Comprehensive Annual Financial Report, released in April 2012, just a month before the new council took office, did not contain any of the external auditor’s critical “draft list” comments.
Under the heading “Compliance and other matters,” the external audit stated, “The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under the Government Auditing Standards.”
It’s unknown why the draft list comments were not contained in the 2012 audit when it was released in April. Calls to Niemeier were not returned last week.
Gonzales claims she blew the whistle on Morrison when she handed the list of unlawful spending procedures to Killeen Police Chief Dennis Baldwin in early 2012.
The lawsuit claims that standing up to Morrison in such instances ultimately led to her Dec. 12 termination. She is seeking between $200,000 and $1 million in compensatory damages from the city.
The official reason for firing Gonzales was a loss of confidence “due to a number of issues” that occurred under her management, according to her termination letter.
Gonzales was fired after a two-month investigation of the Killeen Fleet Services division, which is technically under Gonzales’ purview.
A former fleet services mechanic, John Acker, also was fired Dec. 12.
Acker also sued the city under the Texas Whistleblower Act, alleging he was fired for revealing incriminating information about a member of the Killeen Police Department.
The city’s internal investigation included an audit of fleet services performed by the city’s internal auditor, who reports to the city manager.
Because of that relationship, the lawsuit claims, the fleet services audit was an “undocumented, unfounded and unprofessional hit job on Barbara Gonzales.”
Shine said the internal auditor works directly for the city manager; however, Morrison supports a realignment of the position in the May 11 charter election.
“The city manager is in favor of the amendment for the internal auditor to report directly to the city council,” Shine said. “Now, it will be left to the voters to decide.”
While highlighting a lack of fiscal control in the city’s government, Gonzales’ lawsuit also alleges a misuse of power by the city manager during the six-month period when Killeen was without a working council.
After the city paid its former city manager Connie Green $750,000 to step down in early 2011, five of the seven council members were recalled by voters in November 2011.
From then until May 2012, the council was unable to conduct regular city business without enough members to establish a quorum.
Under the unusual circumstances of the recall, the interim city manager — Morrison — was able to issue certain actions to keep the city running, giving him more power than under normal circumstances.
Morrison approved 10 resolutions during the period without a council, which were later ratified by the incoming council.
Gonzales’ lawsuit alleges Morrison made illegal change orders and unlawful salary increases, including seven months of backpay to Shine, the executive director of public information.
Article III, Section 53 of the Texas Constitution prohibits compensation for county or municipal employees, “after the service has been rendered.”
Checks and balances
Killeen Mayor Dan Corbin said he is looking forward to the opportunity for the city to defend itself from the allegations made by Gonzales.
He also said he wanted to change the internal auditor situation since he first joined the council in 2003.
“Nobody listened to me back then,” Corbin said.
Corbin left the council in 2006 and was elected mayor in May.
If supported by voters May 11, Proposition 12 will require the council to hire the internal auditor in the future.
Corbin proposed the ballot initiative during the charter review in October.
Internal auditors in other cities, including Temple, report to the council and not the city manager. Harker Heights and Copperas Cove do not have internal auditors.
“I believe that there is a pretty well accepted way to use an internal auditor throughout the nation in government, and it is for it to be responsible to the legislative body instead of the executive,” Corbin said.
“The legislative body needs someone to ask questions to and get straight answers and you can’t do that unless they are accountable and reportable to you.”
Despite supporting the charter change, Corbin said he has found no evidence of poor financial practices performed under Morrison’s administration.
“I can’t put my finger on anything where the present system has resulted in some sort of failure of internal controls,” Corbin said. “I have not come across any such things, and I believe the auditors believe that, too.”
Other council members have echoed the mayor’s sentiments in the past week since the lawsuit was filed.
Councilman Terry Clark, who does not support much of the charter election, said he would support Proposition 12.
“The continued employment of the internal auditor should not be determined by the city manager because it is the auditor’s responsibility to report discrepancies,” Clark said. “The discrepancies should be reported to the city council.”
Gonzales has requested a jury trial, which is expected to take place in early 2014.