Missouri State Auditor, Scott Fitzpatrick, released Management Advisory Report No. 2025-003 on January 22, 2025, with findings from his performance audit of Benton County government operations.
A press release by media@auditor.mo.gov on the same date announced that Benton County had received a rating of “poor”, the lowest possible. The press release aroused community ire by highlighting and describing certain county officials as having acted with intentional disregard and violation of state laws to overtax the people, and the public administrator as having made questionable payments to family members. Not surprisingly, local radio, television and other Missouri cities’ online news coverage focused on the same. Comments on social media called for resignations if not jail-time for some county officers.
“We got roasted,” said Presiding Commissioner Steve Daleske.
In any case, Benton County’s taxpaying citizens, including the relatively small percentage who vote in local elections, trust that county officials perform their duties properly. In response to the implications of such negative audits, they need assurance that their trust is not misplaced. To that end, Daleske asked the Benton County Enterprise to join the meeting he called of county department heads for Friday morning, January 24, to ask questions about the findings and report the answers to the public.
Following are county officials’ comments on the findings in the order presented in the official report. [Notes in brackets are based on information obtained in further review of the Auditor’s official sources.]
Finding 1.1. Bank reconciliations reviewed for the months of December 2022, January 2023, November 2023 and December 2023 were not adequately and accurately prepared to ensure they agree with book balances at each month’s end. The auditor cited discrepancies in amounts as high as $7.4 million, and noted that the issue was raised in prior year audits performed since 2018 but remains unresolved.
Response: County Treasurer Rick Renno explained that the $7.4 million difference did not result from funds missing or unrecorded at any time, nor did the Auditor claim that any funds were missing. Interest on all funds accrued daily as it should. Rather, transfer of that amount from one bank account on the 31st of January, 2023 to another account was not posted until the 1st of February, 2023. This “sweep account” activity keeps the accounts at the correct balance to ensure their entire balances have federal deposit insurance coverage (FDIC). Future reconciliations will address these type of occurrences.
Finding 1.2. Neither the County Clerk nor the County Commission adequately review the financial activities of the County Treasurer.
Response: Treasurer Renno stated the parties meet weekly to review financial activities. [Note: Minutes of Commissioner’s meetings confirm that the Treasurer presents weekly financial reports but without specific mention of a review.]
Finding 2. The county did not reduce the property tax levy sufficiently in its rollback calculations to offset 50 percent of sales tax money received in 2020 through 2022 by approximately $200,000; did not report the reduction to the Auditor’s Office in 2022, did not reduce the tax levy for in 2023, or calculate accurately the reduction required for 2024.
Response: In 2020, the nation and the county were experiencing the effects of the COVID-19 pandemic. Commissioners declared a state of emergency because of the widespread impact of the pandemic. Businesses closed, employees were laid off and prices for products soared out of sight. The Commissioners, with the counsel of the Treasurer and County Clerk, determined that it would be prudent to delay income rollbacks to ensure the county could maintain services during those trying times. The Auditor stated that the reductions should have been made despite economic conditions. The commissioners, however, found it necessary to make a judgment call because of uncertainty about the scope and duration of the pandemic’s impact. After the crisis ended, tax levies were rolled back in accordance with RSMo §67.505, and will continue to rollback as required by law. Tax levies will be lowered over time to account for the $200,000.
Note the tax rates since 2010: 2010 and 2011 - 0.1615; 2012 thru 2014 - 0.1400; 2015 thru 2021 - 0.1350; 2022 and 2023 - 0.1300; 2024 - 0.1119.
Finding 3.1. The Public Administrator appears to have conflicts of interest based on payments totaling $4,075 in 2022 and 2023 to her family’s accounting and tax business for tax preparation services for wards. There is no documentation to support her claim that the business has the lowest rates for such services, and she has not submitted requests for compensation for services provided forms for judge’s approval since 2017.
Response: Public Administrator Lori Schroder clarified that the business is a sole proprietorship, not a family-owned business.
Asked whether she considers payments to the business to be appropriate, she stated, “Yes,” based on the judge’s prior approval to perform such services and the fees charged. She does not believe there is a need for a new letter of approval each year “as if the judge were going to change his mind.” The goal is to preserve the ward’s assets, and with one exception she charges only $50 per return so “each Ward could get a return of $750 for the Missouri rental rebate.”
Finding 3.2. The Public Administrator does not always file annual settlements timely. Nine of 25 cases reviewed had been filed at least 30 days late but up to 291 days late. Also, the court did not have procedures to notify the Public Administrator of annual settlements due. Regardless of notice, the Public Administrator is required to file the settlements.
Response: The Probate Court’s recorded due dates for annual settlements do not match the dates on prior settlements, and the court does not always send notices of settlements due. The audit noted 36% annual settlements were filed late, meaning most settlements are filed timely.
Schroder said, “I will absolutely try to check and double check annual filing dates in my spare time.”
[Note: RSMo §473.737(3) authorizes counties to provide clerical support for the Public Administrator’s office “when the governing body is of the opinion that the business in charge of the public administrator is such as to reasonably require such personnel for the welfare of the public.”]
Finding 4. The Commission authorized mid-term salary increases totaling $15,945 to the Sheriff in violation of constitutional provisions, specifically referring to Article VII, Section 13.
Response: The County Commission respectfully disagrees with the State Auditor’s finding and notes that no court decision has addressed the constitutional issue raised in the finding regarding the application and interpretation of Section 57.317(2). This section states that the sheriff of a third class county shall receive an annual salary calculated on the salary of an Associate Circuit Judge of the County. Associate Judges receive salary adjustments. Benton County’s assessed valuation indicates that the Sheriff shall be paid 55% of the salary of an Associate Circuit Judge. This legislation was passed by the Missouri House and Senate effective January 1, 2022. The Commissioners voted to begin approving this higher salary effective July 1, 2022. Per this guidance, the Sheriff has received salary increases in July 2023 and July 2024.
[Note: Benton County is one of nine counties with performance reviews completed in 2024. All nine counties implemented salary increases for their sheriffs based on RSMo Section 57.317, which actions the State Auditor claimed violates provisions for Public Officers in Article VII, Section 13. In effect since the Missouri Constitution of 1875, the section states “The compensation of state, county and municipal officers shall not be increased during the term of office; nor shall the term of any officer be extended.” This language did not account for the fact that after reelection, new terms begin.
Under Local Governments, Article VI, Section 11(1), states (except for charter counties) ..”the compensation of all county officers shall either be prescribed by law or be established by each county pursuant to law adopted by the general assembly.” (Section 57.317 of 1/22/2022 was adopted by the general assembly in 2021 and remains in effect).]
Finding 5. The County Commission did not always comply with the Sunshine Law for open and closed meetings, according to meetings held from January 1, 2023, through July 18, 2024.
Response: The County Commission will ensure the specific reasons for closing meetings are documented with specific section and subsections in the open meeting minutes, that only topics allowed by state law are discussed in closed meetings, and that discussions are limited to the specific reasons for closing the meeting.
[Note: See RSMo Section 610.021 (8/28/2024) for topics appropriate for closed meetings. They are listed under subsections 1 through 18, subsections 19(a)-19(d), subsection 20(a) – 20(c), and 21 - 26.]
Finding 6. The Road and Bridge department does not charge sales tax on dust control products sold to county residents for gravel roads, and the Sheriff’s office does not charge sales tax on e-cigarettes and nicotine pouches sold to inmates. Sheriff’s claim that collecting sales tax from people incarcerated is not required based on the office’s non-for-profit status as supported by other sheriffs and the Assistant Prosecuting Attorney were rejected.
Response: The Road and Bridge department will no longer sell dust control products to home owners so no tax liability will be incurred. The Sheriff agreed that the county should collect sales tax on products sold to the general public. However, as a tax-exempt, not-for-profit organization the monies collected are used to benefit those same incarcerated people saving our public their tax dollars.
Sheriff Eric Knox said, “I revisited the email I sent with the case the assistant prosecutor sent out for an example. The legal opinion is still attached to the previous email sent on July 8, 2024. I intend to follow up with a tax attorney for another legal opinion. The Benton County Sheriff’s Office has no intention of conducting business in an unlawful capacity and always intends to be an example of professionalism. At the same time, we do not want to add more cost to our detainees who often receive products at no cost due to being indigent.”
Finding 7.1. The county does not report personal commissions received by the County Collector for the collection of city taxes as employee compensation to the Internal Revenue Service (IRS). Written agreements with 4 cities for property tax collection services provide for him to withhold and personally retain a commission on all city tax collections. He paid himself $7,596 for commissions received during the fiscal year ending February 29, 2024, outside of the county payroll process.
Response: Commissions are not treated as part of County payroll because the funds come from the cities, not the county. Further, collection of the city taxes is not a regular duty of the County Collector. Rather, as the Auditor noted, the commissions are paid based on written agreements with the cities to personally withhold and retain the commissions. Thus, he reports the commission income on his tax returns as 1099-type income rather than as W-2 salary.
Finding 7.2. The County Collector does not prepare a monthly list of liabilities for the tax sale holding account thus liabilities are not agreed to the reconciled bank balance.
Response: The County Collector prepares a monthly list of liabilities but not in the format the Auditor preferred. The February 29, 2024, reconciled bank balance of $3,537 the auditor referred to was verified as agreeing with the reconciled balance based on the Collector’s list of liabilities and refunds from March 1 through July 1, 2024. Future reconciliations will be prepared timely.
Finding 8. The Sheriff’s Deputy Clerk does not prepare a monthly list of liabilities for the general account, and consequently, liabilities ae not agreed to the reconciled bank balance. Similar issues arose in prior audits.
Response: [Excerpted from the Sheriff’s response in the Advisory Report]. “We maintain a monthly spreadsheet listing all incoming receipts and any third-party payments paid out. We cannot predict when a refund or bond may come in. For example, we close our month by making a deposit on the last working day of that month. After the deposit is made, there may still be civil papers serviced in the late afternoon or evening which results in a refund to the attorney or private citizen, which technically would be a liability; however, we would not receive the return paperwork until the new month. The same can happen with a detainee being brought in and then bonding out after the end of month deposit was made. All other money received is forwarded to the County Treasurer each month. To sum it up, every dollar brought in is receipted and logged; every payment going out is accounted for as well. It all boils down to the timing.
Finding 9. The Senior Citizens’ Services Board (SCSB) did not enter into written agreements with the not-for-profit (NFP) entitles to whom funding was provided.
Response: The board agreed to comply with the Auditor’s recommendation to enter into written agreements as required by state law.
Finding 10.1. The Assessor, Collector, and Recorder have not established adequate password controls to reduce the risk of unauthorized access to computers and data. Employees are not required to change passwords regularly or to have a minimum number of characters for passwords.
Response: The Auditor advised that passwords should comprise at least 12 characters and be changed every 90 days. The Commission will work with officeholders to implement the recommendations.
Finding 10.2. The Assessor, Collector, and Recorder do not have security controls in place to lock computers after a specified number of incorrect login attempts.
Response: The computer system did not come with the incorrect login controls in place. It should be noted that each department’s or office’s data system is separate and not connected. The Commission will work with the vendors and officeholders to implement the recommendations.
Benton County officials will review further and take into consideration the Auditor’s findings and opinions with the goal to maintain and improve efficient and cost-effective performance of County operations. They emphasize that no funds were mishandled or properly accounted for during this period. The Missouri State Auditor’s report on the conduct of Benton County’s government is an opinion only, not a financial audit. The FY2023 financial audit report will be available later this spring.
