The Palm Beach County Commission approved its staff recommendation Tuesday to continue its present method of financing the Office of the Inspector General (OIG) and also pursue its defense of a lawsuit by 14 cities protesting the method of funding.
The county employs the widely used Local Government Electronic Reporting (LOGER) program to calculate the amount allocated the OIG, which is the subject of the lawsuit. The cities assert that the county cannot bill them for the service, although they would be willing to collect the fees and deliver them to the county.
County Administrator Bob Weisman said county staff recommended continuing to use the LOGER system, at least until the end of the lawsuit. “There’s a history of why we use LOGER,” Weisman said.
He explained that the Inspector General Drafting Committee had created a subcommittee with representatives from the county, the OIG, municipalities and the public to identify a method to retain the original 0.25 percent financing in the ordinance that created the office, which was to be collected from the county and the cities. Other goals were to reduce the administrative effort and cost of monitoring the collection of revenue and to recognize the intent of the cost-share proportion between the cities and the county.
“The subcommittee ended up recommending and the full committee accepted the use of the LOGER system,” Weisman said, adding that the LOGER system is recognized in the Florida Statutes as a financing record that keeps track of all city and county spending at the state level. “It meets all audit requirements, so we’re always sure that those numbers are good. It’s a uniform and consistent method to record actual expenditures and revenue activities, and it can therefore be used to proportionally allocate inspector general costs between the counties and the municipalities.”
Weisman said it was recognized that the 0.25 percent fee that was to be assessed on contracts does not generate sufficient revenue to cover the annual expenses of the Office of Inspector General and said there was much dispute about which contracts should be exempted.
“For example, contracts that were based on federal or state grant funding, you could not assess those contracts for the inspector general,” he said. “In the Miami-Dade County experience, there is a considerable list of exemptions by going to this method that was eliminated.”
The total proposed budget for the OIG in 2014 is $3.7 million, he said. An analysis shows that the 0.25 percent fee would cover only about two-thirds of the budget, he said.
Also, while auditing might not have been actively talked about in setting up the OIG, those services were included for cities and counties as part of the ordinance. “You cannot use a contract fee to pay for the services of the audit on general audit issues,” he said. “The contract fee can only be used for contract-type auditing.”
Weisman said using the LOGER system makes the most sense.
“From numerous perspectives, it makes sense to go with the LOGER fee method because it generously provides more funding to the IG,” he said. “It eliminated the issue of auditing and arguing and what they would pay for. It provided funding for audit services… and all the parties agreed to it.”
Weisman said he was shocked when the cities sued because city staffers had been part of the approval process. “That was not raised as a question,” he said. “This has been going around for quite a bit of time. Staff has always defended the county’s position to the board and the public. We have defended the lawsuit, successfully so far.”
In a recent meeting with attorneys for both sides, Weisman asked what would be necessary to settle the lawsuit and was told the cities object to LOGER and the auditing aspect.
After that meeting, Weisman said he had been delivered a document from West Palm Beach’s attorney that was not intended as a proposed settlement, but rather as a set of talking points.
“I concluded it did not provide any basis for a settlement agreement,” Weisman said, explaining that one of the points disavowed the need for auditing services.
Weisman reiterated that the county is continuing to support the LOGER system of financing and to defend the lawsuit.
Claudia McKenna, city attorney for West Palm Beach and counsel for the plaintiff cities, said she wanted to explore what she thought would be common ground regarding the OIG’s financing.
“Mr. Weisman gave you an accurate presentation with the exception of a few things that are really not fruitful for us to talk about,” she said. “I really just want to focus on the funding, the LOGER system. Under the LOGER system, you expect a contribution of about $1.5 million from the cities. Under the LOGER system, you send the cities a bill, and that’s what the lawsuit is about. The cities say it is not lawful to send us a bill.”
McKenna said the cities want an alternative to get the county its $1.5 million. She said it would be to provide that all contracts in the county and the cities be subject to an inspector general fee of 0.25 percent. Each time a city makes a payment to a vendor, it would withhold that much. “Every quarter, we would send the county all of that money,” she said.
Although some say that would not generate sufficient revenue, McKenna countered: “We do not know that. We all know that there are hundreds of millions of dollars spent by the 38 municipalities.”
Should it not raise enough money, McKenna said there is an easy fix. “If we put the quarter-percent charge on all contracts that are eligible, and it doesn’t generate the $1.5 million, you can amend the ordinance and say next year we have to charge 0.3 percent,” she said. “You are not locked into the quarter-percent. Secondly, if you think there are too many exemptions, you can delete them. You don’t have to make them exempt. The only required exemption is where the county or cities receive federal funding, because they don’t allow you to pass on the charge to the vendor.”
Commissioner Jess Santamaria said he liked McKenna’s proposal. “What I heard Ms. McKenna state seems to be pretty simple,” he said. “If what I understood is in fact what it meant, I actually see the solution. Let’s follow with where it began. It all began with the grand jury report. The grand jury report was very simple. It said collect one-fourth of a percent of the vendor contracts.”
He added that the objective of the grand jury report was to not collect the fee directly from taxpayers.
David Baker, representing the Palm Beach County Ethics Initiative, said he supported staff’s recommendation to continue litigation and to pursue a settlement.
“I will support litigation with the understanding there can be discussions to make it work better,” Baker said.
Commissioner Hal Valeche made a motion to follow staff’s recommendation to continue to defend the lawsuit, which carried 7-0.