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County Attorney cautions Fiscal Court

In a memo to members of the McCreary County Fiscal Court, County Attorney Conley Chaney urged an internal audit of finances in order for the Court to make more-informed decisions regarding the budget.

Chaney issued the memo Friday to Judge Executive Doug Stephens, all four Magistrates and the media in an effort to advise the Court of the importance of having sufficient data when making budget decisions.

“With the grave concern of a deficit for this year’s budget and the orders from the McCreary Circuit and District Courts to house prisoners, the Fiscal Court needs a more detailed breakdown of all the costs associated with housing prisoners,” the memo stated. “In my attempt to audit these matters I have discovered the budget documents provided to be too deficient in detail for the decisions that you will need to make to alleviate any shortfalls.”

With Judge Stephens projecting a $300,000 budget shortfall by the end of the fiscal year, Chaney suggests the Fiscal Court take “whatever action is necessary” to obtain a more accurate idea of expenses.

While saying the issue is not over how the money is spent, Chaney contends the current data on the County website does not provide sufficient detail about the financial state of McCreary County government.

“Currently, the budget and claims documents do not clearly allow the reader to determine which expenses are attributed to which budgeted fund,” he said. “This is not a concern over appropriation of funds, but rather a concern over any court member’s ability to make accurate assessments of the budget projections.”

Chaney compared financial data from previous month’s claims lists over jail expenses to the jail budget.

Chaney states he reviewed the monthly claims for housing of prisoners for the months of May 2016 through December using numbers available on the County website.

Through December about $517,624 in prisoner housing has been spent, about $64,000 per month. Extrapolating those numbers to account for a full fiscal year (through the end of April, due to the May and June bills typically not being submitted to the Fiscal Court before the end of the fiscal year), Chaney estimates the total prisoner housing cost to be about $776,436 – about $176,000 over what was budgeted.

Chaney next looked at other expenses listed that possibly could be charged against the jail fund, such as medical expenses, fuel for transports and insurance. Those numbers totaled $39,135 for the 8-month period, and would amount to about $58,703 when projected out for a full year.

Together the two amounts total about $835,139, about $19,000 over the projected jail budget of $816,058.

Chaney’s numbers, however, do not take in to account the salary of Jailer Jessie Hatfield ($28,000) and the $62,000 budgeted for transport officers, which would push the budget to about $100,000 over the original projection.

Still, this number is far less than what Judge Stephens had previously projected as the deficit due to jail costs.

Chaney cautioned that under-budgeting items, such as jail costs, can be dangerous, and noted that the jail budget set last May was overly optimistic when it estimated a $150,000 reduction in housing costs based on a “hope and a prayer.”

“You are each advised to understand that some budget items cannot be accurately predicted from one year to the next, and that of these items, some are of such a nature that to under-budget them could be deemed to be a reckless or negligent action,” he said. “The obvious example of this type of budget item is the total jail fund, including all costs of providing for the transport, housing, and care of prisoners as this responsibility is so daringly mandated by the general assembly. I do suggest that fiscal courts over-estimate the cost of this unfunded mandate since neither the Fiscal Court, nor the well-informed Court of Justice has absolute power to control the unpredictable pace of criminal behavior.”

Chaney also took issue with the County Administrative Code, which calls for the County Attorney to be a part of, though that position has no authority to set policy.

“Currently, the Administrative Code calls for a budget committee that cannot lawfully meet except during during an open session of Fiscal Court, as this committee is required to consist of a group that would naturally result in a quorum of the Fiscal Court,” the memo read. “Further, the requirement of the County Attorney as a member of such a committee would suggest that the county attorney has a role as policy adviser. Rather, the County Attorney is a legal advisor who has no vote on the fiscal court and cannot make policy decisions for his/her client. While I am always available to consult with the Court on legal questions or on questions specific to my experience in criminal justice as may be relevant to the Fiscal Court, budget decisions are matters of fiscal policy to be determined by the magistrates and judge-executive.”

“In order to make such budget decisions, the court must meet in sufficient time and frequency to conduct its necessary investigation and the amending of any budget to be proposed by the judge-executive.  Therefore, the magistrates should determine an appropriate deadline for the judge-executive to submit the proposed budget, so that the entire court can make informed decisions.”

Tuesday Judge Stephens said his office is in the process of reviewing Chaney’s memo.

He noted the Magistrates had been given monthly reports such as the financial statements and claims lists, which had balances and expenditures each month, but after a request from Magistrate Roger Phillips a more detailed condition report is being issued as well.

Stephens said in his office’s most recent look at the budget, he still predicts a deficit of between $300,000 to $400,000, as revenues in other areas are contributing to the shortfall. He also added about 83 percent of the jail budget has already been spent.

The County is waiting on a PILT payment from the federal government, expected some time in the next two months.

The majority of the PILT payment must be spent on roads and schools, and it is unclear that it could be used to cover the  $200,000 loan from the road fund that the General Fund borrowed at the beginning of the fiscal year to pay for up-front insurance premium payments.

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