Holding Local Government Associations Accountable

Unions are paid for by union members, business associations are paid for by businesses, but local government associations are paid for by taxpayers, not by local governments. And yet while unions represent members, and business associations represent businesses, local government associations represent local governments. This setup is asking for trouble.

In past blog posts, I've touched on the representation side of the equation, for example, local government associations opposing government ethics laws and required ethics training. In a third blog post, as well as the first one in the previous sentence, I also looked at the way politicians can use local government associations to get around gift limits.

But another sort problem came out last year via state auditor reports on the Kentucky Association of Counties (KACo) and the Kentucky League of Cities (KLC). According to the press release on the KACo report, the state auditor "found a 'self-serving' culture that resulted in more than $3 million in excessive or questionable spending over a three-year period," including "$334,300 to pay board members for meetings, $278,154 for legal defense for convicted officials, $247,944 for a sports advertising contract, $83,000 for donations and sponsorships, and $12,600 for use of two condominiums."

In addition, there was a lack of board oversight, which included "weak internal controls, minimal conflicts of interest and ethics policies, and no whistleblower policy."

The auditor's report on KLC found a similar situation, as described in its press release: "a 'staff-driven' organization with weak board oversight and inadequate policies governing ethical conduct, compensation, spending, conflicts of interest and procurement.This lack of oversight resulted in executive staff receiving unprecedented salaries and exorbitant retirement bonuses that cost more than $500,000; spending more than $350,000 in excessive or questionable spending; and developing numerous conflicts of interest – including inappropriate relationships with KLC vendors. Many of the exam’s major findings occurred with little or no board knowledge or understanding."

Here's a selection from the long list of KLC staff conflicts of interest:

$1.4 million for legal services with a law firm where the spouse of KLC’s executive director is a partner.
$28,600 at a restaurant owned, in part, by the spouse of the executive director.
Several family members of the chief insurance services officer either currently work or previously worked for vendors of KLC.
Housing and other expenses were paid annually for the chief insurance services officer, the administrator of product development, the general counsel, and their spouses at a vendor president’s home on a Caribbean island.
Reimbursement was made to KLC by a vendor for a cover charge for admission to a strip club in Las Vegas for three KLC staff members.

Remember that the same people who run our local governments run these local government associations. All the money that goes into these associations is taxpayer money, for which they are responsible. And yet, at least in Kentucky, these government officials, who know full well about accountability and conflicts of interest, did almost nothing to hold staff accountable or to disclose or limit their conflicts of interest.

According to an nky.com article last month, bills have been filed in the state legislature to impose more oversight of the groups and require greater transparency. It's sad when local government officials can't get their own house in order.

Robert Wechsler
Director of Research-Retired, City Ethics

---