During a Finance Committee meeting earlier this week to explain Mayor Sandy Stimpson’s proposed budget revisions to the City Council, Finance Director Paul Wesch revealed that the previous administration orchestrated an “unlawful” scheme to pay for $212,000 in annual utilities overhead for the Exploreum — an independent nonprofit organization.
Wesch explained how state law does not allow cities to give money to outside agencies except for the exemptions provided for under performance contracts, which were awarded to a total of 65 agencies in the adopted 2014 budget.
But the Exploreum’s utilities bill, along with entire allocations to the Boys & Girls Clubs, the Child Advocacy Center and Penelope House were not included as performance contract line items, but instead were “buried” in other budgets illegally, Wesch said.
While City Council had agreed to a more transparent $405,000 annual performance contract with the Exploreum for Fiscal Year 2013, sometime around October 2012 — without the approval of the City Council — former Mayor Sam Jones or a member of his administration authorized the payment of the Exploreum’s utilities out of the administration’s City Hall Overhead fund.
Those payments appear to have also been built into the current adopted budget, where Wesch said the City Hall Overhead fund was operating under a $350,562 deficit. Stimpson’s proposed amendments rectify that shortfall by including the Exploreum’s utilities bills in its performance contract and making other minor adjustments.
Wesch called the City Hall Overhead fund a “legitimate cost center” that is designed to be a funding source for “a lot of things that do not fit neatly within a department.” Examples include the utilities bills for City Hall itself, along with ancillary expenses that may be shared by some of the departments within it.
“There are no other allowable expenses,” Wesch said.
Performance contracts with the three other organizations, totaling $572,204, were also embedded in the police department’s budget, Wesch said.
“They did not appear as line item and their names were not mentioned in 2014 budget,” he said. “I think the (Stimpson) administration felt that wasn’t transparent. I don’t know what might have been discussed when it was done in 2013, but it clearly didn’t follow logic that things were visible. I talked to the (police) Chief and he said he didn’t know why they were there or how they got there or where it went, but we moved them to performance contracts.”
In the current budget, the Boys & Girls Clubs were allocated $339,754 from the police department’s budget, while the Child Advocacy Center was paid $101,250 and Penelope House was awarded $131,220.
Of the itemized recipients of performance contracts, the only others to receive more than six figures from the city include the Center for the Living Arts ($225,000), Ladd-Peebles Stadium ($249,816) and Senior Citizens Services ($169,290).
But at $617,467, the Exploreum’s amended performance contract under Stimpson’s revised budget is by far the largest. Wesch said it was too soon to determine if the city would continue supporting the Exploreum at the same level beyond 2014.
“We have not been able to get into all the contracts at this point,” he said. “We’re honoring the City Council’s approval from several months ago and it simply has not been something that is on my plate.”
Many performance contracts call for immediate funding, Wesch explained, so any money the city has sent to the agencies has likely been spent or transferred and would be difficult to recoup. But he indicated contracts would likely be more heavily scrutinized in 2015.
“There will be a review of all performance contracts proposed to the City Council,” Wesch said. “Somebody will review each one to determine whether its bonafide and performed as intended under previous contracts.”
Coincidentally, Exploreum Executive Director Gretchen Jaspering announced her resignation late last month. Jaspering is out of the office until March 24 and her last day is in May, but she indicated in other media she was leaving for personal reasons. She has held the position since October 2011.
George Talbot, the mayor’s communications director, said Stimpson did not have anything to do with Jaspering’s resignation and the administration “just learned about (her resignation) this week.”
According to documents filed with the Internal Revenue Service, the Exploreum operated at a $1,313,701 net loss in 2011, a year it relied upon $1.3 million in gifts, grants and government contributions.
At the Financial Committee meeting March 18, City Councilman Fred Richardson, who also sits on the Exploreum’s Board of Directors, said “we agreed to pay the utilities,” but did not elaborate and didn’t respond to a separate request for comment today. Former Mayor Sam Jones has also not responded to a request for comment.
Edited at 9:31 p.m. March 20 to clarify remarks from George Talbot.