Jerry Kellog, Sr.
After reading The Gardner News Sept. 12 editorial, “OUR VIEW: Number of Gardner’s purchase cards surprising,” I was a bit perplexed. Since there was no expressed implication or allegation of abuse or wrongdoing, I wondered why the newspaper would even bother writing this piece. It appeared to me that last Monday was a rather slow day in the newsroom and I felt the editorial board had the time for a more thorough review of the facts available to them in order to answer the questions they were pondering.
Certainly not having all the answers myself, I decided maybe all us could benefit from some additional information that might help us have a better understanding of the purchase card program. So, I did some research, sent a few emails, made a couple of phone calls and submitted a KORA request to the Gardner City Clerk, requesting that the City Director of Finance answer several questions I had regarding the policy on employee use of purchase cards. Like The Gardner News, I also received a quick and professional response from Director Laura Gourley, with additional information provided by other city staff members.
Please note that, at the request of current City Council members, City administration has made expenditure reports easily accessible for review by anyone since Aug. 1, 2011. Simply click on the link in the Consent Agenda section of the Council Meeting Agenda, which is published on the City website on the Friday preceding each meeting.
There is no basis, in my opinion, for The Gardner News editors to conclude from the expenditure report that city employees frequently take time away from the office to run “to the store” to make impulsive purchases, or for the editors to ponder why items are not procured in bulk to save money and time. Maybe it is more prudent to be penny wise rather than pound foolish, particularly when the lack of appropriate and economical storage space is a concern. As I recall, Parks and Recreation has outgrown its facilities, lacking adequate space for its supplies and equipment to the point of having to utilize self-storage rental units in exchange for advertising opportunities at park facilities.
While examining the expenditure report I noticed that six (not four) “dish soaps” were purchased at one store, on one day, at the same time and by one employee, subsequently confirmed by City Hall as the city’s Building Maintenance Specialist. I called the store manager, who confirmed that a one-time purchase of six large-sized $7 containers of dish soap could be considered buying in bulk. I took the editorial’s advice and asked the store manager if monthly invoices would be preferred rather than credit or purchase card transactions with a service fee. He replied he “did not care one way or the other, as long as the bills are paid on time.” However, I did not contact his corporate office to verify if this was the official company policy.
City Hall told me there are 117 full-time employee positions funded in the current budget. As mentioned in a related Sept. 9 Gardner News article, purchase cards have been issued to 76 employees and by my calculation the aggregate monthly purchasing power of those cards is $193,000, not $250,000, which was confirmed by Ms. Gourley.
Purchases are recorded separately on the expenditure report because there are designated budgetary codes for each of the city’s facilities to which the procured items are distributed, such as the six soaps, which went to City Hall, the Public Works maintenance shop, Gardner Energy administration building, the electric distribution facility, Parks and Recreation maintenance and the Senior Center.
Ms. Gourley said, “In summary, the reason why it appears to be multiple purchases is due to the requirements of governmental fund accounting. Our Building Maintenance Specialist is diligently tracking where the soap is being used because not only is he managing his own Building Maintenance Internal Service Fund budget, but he also is recording where the purchases are being used so that the expense incurred in that internal service fund is charged back to the appropriate fund. (electric purchases from the electric fund, parks from the General Fund, etc; those funds are then transferred to the Building Maintenance Fund as revenues for that internal service fund to use to operate.)”
Ms. Gourley explained to me that the City had, in fact, used the “running a tab” procurement method in the past before switching to the purchase cards process. She stated the previous system was inefficient and even more labor intensive than purchase cards. Instead of oversight, staff had to reconcile accounts with personnel at the businesses and was sometimes issuing checks and incurring mailing costs for tiny purchases – thus, processing costs at times exceeded the purchase prices.
All purchases are made with funds previously budgeted and approved by the City Council and the use of purchasing cards is subject to the City’s purchasing policy. As mentioned in The Gardner News related story on Sept. 9, city administration has internal controls to monitor the use of all cards. Department directors establish the card limits and review every purchase receipt before it goes to the finance department. All purchases are then reviewed again by finance staff and audited by accounting staff. If a questionable purchase is determined to be unwarranted, the City has 20 to 25 days to reject payment.
I asked the Finance Director how a card purchase would be rejected. What happens to the employee, the item(s) procured and the merchant involved?
Ms. Gourley responded, “As with a credit card, the charge is disputed (by phone call) with our p-card provider, UMB. The purchases are placed on “hold” pending investigation by UMB and/or the City. The City pays the p-card invoice less the disputed charges until the issue is resolved. If the charges are fraudulent, UMB will remove them from the City’s invoice… As for what would happen to the merchant, that would depend on the outcome of an investigation.”
“Further, per Human Resource Manager [Mary] Bush, ‘If there were ever wrongdoing by a city employee, finance staff would dispute the charge, and report it to the Human Resource Manager who would launch an investigation. If a determination was made of wrongdoing or fraudulent charges being incurred, the City’s employment attorney would be contacted and appropriate disciplinary action up to and including termination would be rendered. This is in accordance with the City of Gardner’s Personnel Policy.’”
Regarding the editorial’s assertion of a “double whammy to the city coffers when purchases are made at businesses that profit from some type of tax abatement,” I admit to having very limited knowledge on abatements, but Ms. Gourley explained to me “retailers aren’t eligible for tax abatements per Kansas statute. Even if one wants to consider ‘tax abatements’ to include those businesses that are in the now-expired downtown enhancement district (which receive tax rebates), most of them are service providers, and the actual retailers are ones that the City has done little business with (with the possible exception of an automotive parts store).”
City Planner Amy Kynard said, “The Downtown Enhancement District was implemented on Dec. 1, 1997 and the last day to apply for a rebate through the program was Dec. 31, 2007. Rebates run for a ten-year period following approval. Twenty-two properties have benefited from rebates through this program (though one was rendered ineligible after receiving two years of rebates due to being delinquent on taxes). To date, these properties have received $767,391 in rebates (Gardner’s portion of that amount totals $142,539).
Many of these properties remain eligible for rebates for future years, so when all is said and done, our projection is that approximately $1,285,000 will have been refunded to these properties through the rebate program, depending on future tax rates (Gardner’s portion would be approximately $255,000).
I don’t have figures on the actual amount these businesses invested in the city, but the increase in improvement valuation among these properties totals $3,932,460. Keep in mind that any natural fluctuations of property values are included in this figure.”
I hope this information aids others in better understanding the subject of the editorial. In my opinion, good journalism should involve examining and reporting both sides of the issues. I appreciate the time-honored tradition of the press being a watchdog on powerful institutions to help ensure our democratic society functions properly, openly, and honestly. However, I feel the efficacy of the watchdog process can become questionable if the public senses bias one way or the other, resulting in the value of the press itself becoming diminished.