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Financial Task Force Meeting Features Heated Exchange Between Commissioners

The Task Force to Restore Public Confidence in Covington's Finances met Monday night at City Hall, four days after State Auditor Adam Edelen released the findings of his office's examination of the finance department.

The task force was created late last summer, days after former finance director Bob Due was arrested on suspicion that he stole what the auditor's office reported to be $793,000 in city money.

Its task was to evaluate the system in which the finance department operates and to make suggestions on how to make that system better and safer from future thefts.

Monday's meeting was for the purpose of discussing Edelen's report and the City's corrective action plan that will be developed over the next two months, as required by the auditor.

However, the meeting took a turn for the tense when Commissioner Chuck Eilerman asked Commissioner Steve Frank, a member of the task force, to clarify his position on City Manager Larry Klein's future with the city.

Frank said Thursday after Edelen's presentation at City Hall that Klein was "on a slippery slope" and that he was unsure of whether the city manager would be retained.

Eilerman suggested that Frank still has "reservations about being satisfied" with Klein's handling of the aftermath of Due's arrest.

"I think the response has been very effective," Frank responded. "But no, I think there is a certain amount of hubris, guilt, I don't know the right word to use, to duck the responsibility that we didn't have basic things, things you didn't even need basic software for. It disturbs me.

Frank said he is "nowhere close to making a decision one way or the other" on Klein's future.

"How can anyone look at what happened and be pleased?," Frank asked. "I find I'm still very disturbed. The situation in life is that all of us screwed up at one time or another. Sometimes they involved things I was able to rectify, sometimes not. If we fired everybody who made a major mistake then no one would have a job."

"I as a commissioner have my threshold, you have a different threshold. Everybody's going to have a different threshold whether things will be viable or not," Frank continued. "If and when I make a decision, I will have made a decision."

Eilerman said that Frank was leaving his position on the matter vague.

"Watch what I'm going to do!," Frank shouted in response. "I'm not here to satisfy your sense of curiosity of what I'm going to do."

At that point the discussion ended when task force chairman Judge Douglas Stephens asked that the conversation return to the immediate agenda.

Eilerman was asked by The River City News to clarify the point of his questioning. 

"It's simple," Eilerman said. "I believe we owe our most important public servant the same professionalism we extend to our other employees in evaluating their job performance. This means we should clearly state our expectations, periodically meet with him to review performance against expectations, and work with him to establish agreed changes to meet those expectations."

"Only after that process should job termination be contemplated if the standards are not met. No employee's potential termination should rest on no more than his employer's undisclosed threshold or whim."

Task Force to decrease meeting frequency
It was determined Monday that the Task Force would no longer meet monthly, but more likely every couple of months as the immediate tasks transfer to the finance department and audit committee.
"I can assure you that everyone in here feels very badly about this, to put it mildly," Klein said of the auditor's report. "Last week was a reminder of how horrible that situation was finding out we had a criminal in our midst, a person regarded by everyone as an institution. But it was a big wake-up call. You have to do more than trust people. You have to verify and that's where we are now."
"I think the City's response was very proactive," said Linda Chapman, a member of the task force and finance director in Florence where a larger theft took place ten years ago. "Before we even get started, some things are already in place."
One immediate step will be to install new financial reporting software. The City appears to be considering its options in that regard. 
Klein and new Finance Director Lisa Goetz said they met with representatives from New World, the software that had previously been announced as what would be used but also said they are looking at another option to ensure that the software meets their newly required needs.
One benefit of moving forward on these corrective actions now, is that the auditor's report is here, said Russ Horsley, a citizen representative on the task force.
"We're at the point now, we can get the emotion out of this and start doing just cold hard facts. This is where it is, this is where it is documented, this is where the internal auditor can come in and audit what's going on," Horsley said. "This is the basis of not only the finance department but some of the other departments probably."
Mayor Sherry Carran, a member of the task force, agreed. 
"One of the things we were looking forward to with the auditor's report is we thought we were going in the right direction and now that is documented," Carran said. "It backs a lot of the decisions we made and steps we're going to make."
Some of those decisions include the hiring of a new finance director, an assistant finance director, and an internal auditor and an information technology employee (in progress).
"Our initial instincts were the correct ones," Commissioner Frank said.
With still more action to take place, Judge Stephens expressed a concern that it may take more than a few people to accomplish the full list.
"The concern I have is, I look at this list and for someone not skilled in finance, it looks like a complicated list," Stephens said. "If it's the desire of the city to address these problems and resolve these problems expeditiously, is it reasonable to expect the brand new finance director to be able to juggle all these responsibilities or is it such that there would be value to employing temporary or part-time someone to assist in the implementation of all these things?"
Stephens suggested that the city could bring Ivan Frye back into the fold. Frye, the former Kenton County Treasurer, filled in as interim finance director at City Hall after Due was arrested and fired.
Chapman said that it took Florence approximately three years before its entire transition was complete following the embezzlement there. She said getting people trained on the new software will take time, but it will eventually create new efficiencies. Payroll may be outsourced and revenue collection will change. "Seventy-five percent of the things on this list can be completed in short order," Chapman said.
"It's going to take years," Goetz said. "Software plays a big role in all of this. We have to make the transition." The new finance director said that she will have to train city employees in all the departments and on all the sites on how to use it.
"It's not an overnight fix," she said.
The City also now has a handle on its credit cards, even after discovering a sixth one was not included in the recent report. That one was used in the legal department, something Assistant City Manager and City Solicitor Frank Warnock said is necessary for the filing of federal pleas. The federal system requires that a credit card be on file.
Edelen's report indicated that the city did not know how many credit cards it had issued. The city clerk is in possession of one as are an administrative assistant, the Department of Public Improvements, and the finance department.
Goetz said she is working with US Bank on a better credit card system for City Hall.
Klein will present a preview of the correction action plan at Tuesday night's city commission meeting.
"The corrective action plan is the immediate order of business," he said.
Story & photo by Michael Monks, editor & publisher of The River City News