The Turlock City Council remained split on Tuesday evening in regards to the ongoing audit the Convention and Visitors Bureau’s budgets from the last five years.
After much debate, Council ultimately approved on a 4-1 vote to accept the initial informal audit done by the City of Turlock and will now hire an outside firm to conduct a formal audit of CVB budgets from 2009 through the end of the contract, May 3, 2015.
In February, the Chamber of Commerce sent a letter to the City of Turlock initiating a 90-day termination of the contract between the City and Chamber for CVB services. The CVB, which acts as the tourism and marketing arm of the City of Turlock, had been managed by the Chamber since 1991.
Two weeks prior to the Chamber’s announcement, Mayor Gary Soiseth announced that City Council would review the contract and possibly put CVB services out to a competitive bid process, pending a majority vote.
As part of the winding down of the contract, the City of Turlock conducted an internal audit from 2009 through 2014 and determined the Chamber of Commerce owed $241,297.07 in potentially unallowable purchases.
The Chamber of Commerce has since provided additional documents to verify $55,281.27 in expenses, bringing the total of potentially unallowable expenses to $186,015.80, according to the City of Turlock.
A large portion of the money considered to be potentially unallowable is in regards to administration costs over the last five years. Beginning in 2009, the contract agreement changed and required administration costs be separate from other costs within the CVB. This is why the internal audit began in 2009.
In addition to detailing specific administration costs in the budget each year, there was also a cap placed on administration costs each year. According to Jacobs-Hunter, there were multiple years where the CVB budget was over the capped administration costs.
“The amendment in ’09 called for a cap of the admin,” said Administration Services Director Kellie Jacobs-Hunter. “So basically what they could charge to their administrative accounts for their salary and benefits was capped at that time."
City Attorney Phaedra Norton said that the City of Turlock was unable to find any amendments approved by Council to previous CVB budgets.
Despite the excess administration costs, Councilmember Bill DeHart believed the audit was punishing the Chamber of Commerce for being under budget for multiple years. At time in the budget the CVB budget was both under and over.
“I guess my concern is we’re holding them accountable for their own efficiencies,” said DeHart.
Councilmember Steven Nascimento, who casted the lone dissenting vote, echoed similar sentiment, stating that the Chamber may have believed that the money left over from one year could be used the next year, even if it was not included in the budget.
“I think it’s important to identify that…the majority were legitimate expenditures by the Convention and Visitors Bureau on efforts to actually promote the City of Turlock,” said Nascimento, adding that he knows it is not Jacobs-Hunter’s job to make those judgement calls on items, but thinks it’s important to take it into consideration.
Despite his dissenting vote, Nascimento made it clear that he did not disagree with the external audit, but simply did not believe that an ad hoc committee was needed to work with the outside firm on the audit. Council ultimately appointed councilmembers Amy Bublak and Matthew Jacob to that ad hoc committee.
The external audit will be able to dig a little deeper than the City’s audit did, as Jacobs-Hunter said they only looked at about 5 percent of the total general ledger and made very straightforward determinations on what was unallowable based on the contract. Bublak said the audit will be instrumental in getting a real number of what is owed without any personal beliefs that council may have.
“There was no biases involved in this, it was strictly looking at numbers, which are just factual numerical data,” said Bublak, who sat on the committee that oversaw the winding of the contract. “What we’re looking at now is just basically that conventional wisdom is that government cannot be effective in the absence of public trust. This is taxpayer money and we need to make sure that we’ve done the right thing."
Although there has been no decision on which firm will conduct the audit or what the cost will be, Jacobs-Hunter said it shouldn’t cost more than $10,000.