LITTLE ROCK — The commission governing the state’s largest airport has eliminated first-class travel for airport employees and will review other spending practices such as using public funds to pay for holiday gift baskets, catering retirement lunches and funding employee participation in the Susan B. Komen Race for the Cure.
The moves came Tuesday after a state legislative audit requested by the FBI failed to uncover, in the words of Sylvia Abrogio, the top finance official at Bill and Hillary Clinton National Airport/ Adams Field, any “instances of fraud.”
But the audit of spending practices dating back two years identified 19 expenditures totaling nearly $30,000 that appeared to violate the state’s “public purpose” doctrine.
The audit period was Jan. 1, 2009, to March 30, 2011, atime that included an imbroglio over the airport’s spending of $40,000 on a football field advertisement at a private school attended by a son of the airport’s top executive, Ron Mathieu.
The audit was requested by the FBI, a request that was approved by the executive committee of the Joint Legislative Auditing Committee. It was unclear Tuesday why the FBI made the request.
A spokesman for the FBI, Kim Brunell, didn’t return calls to her office or cell phone. Kim Williams, assistant legislative auditor over investigations, and state Sen. Bryan King, R-Green Forest, chairman of the committee, also didn’t return calls to their offices Tuesday afternoon.
The airport commission chairman, Kay Kelly Arnold, said she didn’t know why the FBI made the request.
The commission voted Tuesday to eliminate a policy that allowed airport employees to upgrade to the next level of airline seats on trips exceeding four hours in the air.
The vote came in the wake of questions surrounding a first-class ticket costing $3,123.60 that Mathieu used to attend an annual aviation conference in Hawaii in January. The ticket was allowable under commission policy butcity of Little Rock travel policies require its employees to fly coach or economy.
Attorneys for the city and the airport disagreed on whether the commission must follow city policies, and Arnold has requested that Mathieu conduct a wider comparison of commission and city policies to see where they differ.
As for the audit, the commission agreed to review a series of staff expenditures highlighted by the audit to determine whether they are in compliance with the state “public purpose” doctrine and whether they should be commission policy.
Arnold also asked the commission attorney, Carolyn Witherspoon, to report back on whether the proposed policies conform to the doctrine under Article 12 of the Arkansas Constitution, which states, in part, that “no county, city … or other municipal corporation, shall … obtain or appropriate money for, or loan its credit, to any corporation, association … or individual.”
Attorney general opinions “have said that using money for gifts, flowers, club dues, donations to charitable organizations, non-employee travel, parties, alcoholic beverages,excessive gratuities, chamber of commerce memberships or other uses inure primarily to the benefit of private individuals generally does not comply with the ‘public purpose’ doctrine,” the audit said.
Of the $29,396 that auditors said appear to violate the doctrine, about half are expenditures the commission no longer allows because the commission made changes in spending policies after the disclosure about the $40,000 the airport paid for an advertisement at the football field of Little Rock Christian Academy, which was first reported by the Arkansas Times website in 2010. The school repaid the money.
The other expenditures ranged from $5,000 to the Winthrop Rockefeller Cancer Center to purchase a table at a function honoring a commission member, which airport policy no longer permits, to $65 for annual dues to the FBI Citizens Academy Alumni Association, which the staff believes complies with the state’s “public purpose” doctrine.
It also included $1,221 in registration fees for employees to participate in the annual Susan G. Komen Race for the Cure, which the airport staff concluded will be among the practices the airport will cease.
The staff also recommended eliminating $50 gift cards for an employee-recognition program and instead recognize employees with additional compensation. The airport spent $6,659 on gift cards during the period covered by the audit. The airport has about 160 employees.
The audit faulted the commission for “significant deficiencies in internal controls relating to the disbursement process, as well as monitoring and oversight of these controls,” but noted the audit uncovered nothing that would “significantly impair airport operations.”
Legislative auditors also noted that the commission had already revised its reimbursement policies and based on a review of selected credit-card statements in the first three months of 2012, it “appears that the airport is adhering to the expense reimbursement policies in place.”
A staff review of the expenditures highlighted in the legislative audit recommended eliminating eight spending policies that accounted for $14,513 in expenditures. The audit identified another $13,421 in expenditures under airport policies that already have been eliminated.
The staff identified $1,462 in expenditures that it said met the “public purpose” doctrine or should be changed to meet the doctrine.
Much of the expenses cited in the report were disclosed in the wake of the $40,000 advertisement, such as a $5,000 membership in the University of Arkansas for Medical Sciences Chancellor’s Circle, which no longer is done, and gifts worth $1,495 to two retiring commission members. The gifts were returned.
The audit also cited routine expenses such as holiday gift baskets for airport executives and other “select” airport employees that were worth $1,661; two sympathy food platters worth $239; a cookout for construction workers that cost $878; and catering for a retirement luncheon that cost $434. None of those expenses would be borne by the airport under the staff recommendation.
But the commission wanted to gather more information and hold more discussions before acting on the recommendations.
Commission member Virgil Miller noted the commission should move carefully, given that the report has been forwarded to Prosecuting Attorney Larry Jegley, which is a common practice of audits that have findings and the report is scheduled to be reviewed at a Legislative Audit Committee meeting in May.
“We’re a little in the dark about what happens next,” Miller said.
But commission member Tom Schueck said he disagreed with the staff recommendations with respect to eliminating some of the spending and contributions to outside organizations.
“We run a business here and there are certain thingsin a business you have to do,” he said, arguing for more discussion. “Race for the Cure? That’s a civic duty.”
He also said the airport was different from the city in that “we’re kind of a self-funded institution here. I think it puts us in a different category.”
The airport accepts no general revenue from the city.
During the review, the auditors said three members of the airport finance staff had been “terminated” and signed separation agreements that included nondisparagement clauses indicating the employees would not “disclose, communicate, make public, or publicize in any manner any problems that they perceive they may have had with the airport or any information or statement that might impugn, disparage, defame, discredit, or detract from the airport.”
Carol Snay, the former finance director, signed the agreement after she left inSeptember 2011, leaving with a lump sum payment of $89,991, which the Arkansas Democrat-Gazette reported in November 2011. An administrative assistant and accountant also were terminated around that time, receiving lump-sum payments of $7,310 and $8,640, respectively, according to the audit.
Mathieu didn’t attend Tuesday’s meeting, having informed the commission earlier he wouldn’t be at work this week.
Front Section, Pages 1 on 03/20/2013