Mayor Mike Cunningham put the City of Lakeland under a cloud of suspicion when he announced last month there are financial anomalies in the City and the Lakeland School System and there should be a forensic audit. Link to story: https://lakelandcurrents.com/boc-meeting-tonight-a-slew-of-resolutions-minutes-controversy-and-a-call-for-forensic-audit-of-city-school-system/
Is his statement impacting economic growth in the City? Will it affect funding a high school for the City through a CON? Do home buyers look elsewhere because of the controversy in Lakeland? What is the scope of the Mayor’s accusation of financial anomalies?
It is difficult to know since the Mayor and the Tennessee Comptroller of the Treasury have little to say on the matter.
From the Tennessee Comptroller of the Treasury
The director of communications for the TN Comptroller’s Office, John Dunn, said, “The mayor has met with members of the Comptroller’s Office, however, I can’t comment on what information was shared.
“With regard to your question about the status of any possible investigation, I can only provide our standard statement:
“The Comptroller’s Office has broad authority to review government entities including the City of Lakeland. It is our policy not to comment further.
“The City of Lakeland has not applied for a new capital outlay note at this time. When or if, they should, it will be up to the Comptroller to decide if that loan obligation is financially feasible for the local government.”
Mr. Dunn said there would be a public report and press release issued for any activity involving Lakeland. He said if the Comptroller’s office is asked to do an investigation, it would likely take months.
In an online search performed nearly a month after the Mayor’s announcement (search performed on May 9, 2019), there is no mention of the City Lakeland on the Comptroller’s site listing investigations. Link: https://www.comptroller.tn.gov/office-functions/investigations/find.html
Annual audits required by state law are completed yearly by Watkins Uiberall, PLLC on the City and School System’s records without any significant findings. Those audits are designed to verify standard accounting principles are followed and that the financial records are in order. By contrast, a forensic audit is more thorough and is designed to document illegal activities that can be prosecuted in a criminal court.
From Mayor Cunningham
Mayor Cunningham said he hand delivered his documents to the State Comptroller and was told not to talk about the allegations to anyone. The Mayor declined to provide any specifics on the financial anomalies other than to say they numbered in the double digits. He said:
“I have been advised to not make any additional comments regarding my statement last night (4.11.19). Thank you for understanding.”
Records review
Some insight to the call for an investigation might be possible by reviewing the records requests over the last 15 months.
Via FOI (Freedom of Information) forms, Lakeland Currents obtained copies of document requests, seeking to learn which records were requested, who searched archives of City and School System and for what period of time.
The search yielded requests for thousands of documents which show eight citizens have come to City Hall to inspect records or request hard or electronic copies of the City records since January 2018. The Mayor began his request of records Dec. 8, 2018, two days after he was sworn into office.
Despite the many months of records requests and the reviewing of documents at City Hall or with copies, there was a distinct element of surprise at the April 11, 2019 BOC (Board of Commissioners) meeting when the Mayor announced he had uncovered multiple financial anomalies in Lakeland records and asked the Comptroller to investigate his findings. He said he had done extensive research for the past three months into Lakeland’s records.
Note: More details on the records request can be found at the end of the story.
Who asked for records?
Coincidentally perhaps, among those searching records were some of the same people who sued the City to stop funding for a high school in Lakeland. The lawsuit was filed in December 2017 by Cary and Lillie Melton of Lakeland who were later joined by James D. Abbott, William T. Mallard, Brian and Deborah Tipler, Christopher and Melissa Smith, Heather Long and James L. Murray Jr.
Those petitioning City Hall to review records include the Meltons, Stephanie Lefler (who sold her Lakeland home in March 2018 and moved to Tipton County), Deborah Tipler, Melissa Smith, Judy Payne, Martha Higdon, Susan Richardson and Mica Partain, according to records received from City Hall.
Contributors to financial campaigns of Commissioner Gonzales or Mayor Cunningham included the Tiplers, Mr. Mallard, Mrs. Higdon, Ms. Richardson and the Meltons, as per the Shelby County Election Commission webpage.
Mrs. Melton did not respond to a request for comment on her records search and the severity of the problems which may be impacting City and School finances.
Types of records and impact on City staff
The variety of records reviewed by citizens and the Mayor included financial, legal, Parks and Recreation, sewers, fire department creation and school consultants plus queries about LLCs (Limited Liability Corporations) which might involve former Lakeland elected officials, and a permit for a damaged roof at a former Mayor’s house.
Significant man hours were spent by City employees for reviewing, formatting, editing, compiling or redacting information, according to Shane Horn, city manager, in order to comply with the many records requested.
When asked about the impact of the records search on City staff, Mr. Horn said,
“The time required to complete each record varies with the complexity of the request. It is difficult to estimate the number of hours spent on these record requests due to the scope of the requests and the involvement of multiple departments.” Since most of the records were financial in nature, the finance departments of the City and the School System were likely responsible for the bulk of the time spent, according to Mr. Horn. “The City Manager also spent a significant portion of time researching and responding to the requests,” he said.
“Oversight of the physical records by the finance director was unnecessary since the Mayor was provided copies. However, the finance department would be expected to provide oversight of the physical records if the records were simply being inspected during a records request.”
Depending on the records requested, the following employees were present during the review: Kyle Wright, Jessica Millspaugh and Jessie Rosales, according to City records. The in-person visits to City Hall averaged once a month for a few hours, said Mr. Horn.
With City and School staff broadly implicated in the financial anomalies allegations, Mr. Horn was asked the impact on employees and their ability to perform their daily duties. “I am blessed to work along-side an outstanding group of Lakeland employees who are dedicated and professional in carrying out the responsibilities of their respective jobs, we will remain consistent and focused on providing essential services to the residents of Lakeland.”
A reference to a large volume of records searches was made by then City Manager Jim Atkinson at the March 1, 2018 BOC meeting. He was asking for a resolution to adopt a revised public records policy. He said the staff had been inundated with requests for public records. Since January, he said, there have been 27 forms filed, asking for information. One asked for almost 15,000 documents. For all of last year (2017), there were only 10 requests.
He said the revision is to keep the public records request within reason since it impacts the staff. “The big request take a big block of time,” he said. So far, 41 hours of staff time have been allotted to researching and providing the records. In addition, a staff member must stay with those viewing the records and it is Jessica Millspaugh, the City recorder and finance director.
Link to the story: https://lakelandcurrents.com/boc-meeting-some-happy-moments-some-not-so-happy/
One City employee’s perspective
A staff member who wished to remain anonymous for fear of job security is concerned that the possible investigation will impact personnel retention and ultimately the City budget.
“Because of the action of Mayor Cunningham and Commissioner Gonzales, some staff members are looking for jobs in Germantown or Bartlett. Implying something unethical has occurred is very concerning when we work so hard for the citizens.”
This staff member is lobbying for them to stay in Lakeland. However, this staff member is concerned if large amounts of money are spent on an investigation, that money has to come from somewhere and cuts to the budget could impact services to City residents.
Some kept in the dark about anomalies and audit
Three BOC members: Vice Mayor Josh Roman and Commissioners Michele Dial and Wesley Wright, along with City Manager Shane Horn (hired in October 2018) said they were unaware of the announced anomalies before the April 11 meeting.
Four weeks later, these BOC members still have no information about the alleged anomalies. City Attorney Mike Marshall cited attorney-client privilege and would not say if he had information on the allegations or a forensic audit requested by the Mayor.
Asked the status of Mayor Cunningham’s request for a forensic audit, Mr. Horn said the BOC needs to collectively provide this guidance (request for a forensic audit) to City staff. Mr. Horn could not estimate the cost of a forensic audit but said annual audits between the City and School System cost about $48,000.
Commissioner Richard Gonzales Jr. did not respond when asked for comment about the status of the request to the Tennessee Comptroller, the severity of the problems presented and an anticipated response time.
Was there a Tennessee sunshine law violation?
At the Board of Commissioners business meeting last night (5.9.19) Geoff Hicks addressed this issue during public comments. In a statement directed at Mayor Cunningham and Commissioner Gonzales, Mr. Hicks expressed frustration that the two members ran on a platform of transparency yet they have held secret meetings. He said, “Why did the two of you travel to conduct a meeting with the Comptroller, a secret meeting, for which there was no notice, you didn’t have a quorum, there were no minutes…that falls into the category of a secret meeting.”
Link to Thursday night BOC meeting: https://lakelandcurrents.com/boc-last-night-split-votes-tax-rate-recommended-school-board-member-asks-about-mayors-charges/
In a statement to Lakeland Currents Commissioner Dial expressed the same concern saying:
“I have great concerns regarding the shocking secret meeting between Mayor Cunningham, Commissioner Gonzales and the Comptroller in Nashville where city business was shared. The Mayor selectively provided information to only one commissioner and didn’t inform the City Manager or Attorney either.
Dial continued, “These actions purport an appearance of collusion on the part of the Mayor to deliberately deceive the rest of the BOC, flagrantly imply wrongdoing on the part of employees of the city, BOC and LSB (Lakeland School Board), as well as asserting suspicion and mistrust in the minds of citizens in a malicious and inflammatory effort to harm the City’s reputation and integrity! He has gone to great lengths to stop or stall the building of the high school.”
Whether the meeting between Mayor Cunningham, Commissioner Gonzales and a representative of the Comptroller’s office or any prior discussions between them on the matter prior to meeting with the Comptroller was in conflict with state law is subject to legal interpretation.
State law says “… The statute declares that a meeting occurs whenever a public body convenes for one of two purposes: to make a decision or to deliberate toward a decision. T.C.A. § 8-44-102(b)(2). Therefore, it is not necessary that a decision be reached before the Sunshine Law applies. The statute does state that a chance meeting between two or more members of a public body should not be considered a public meeting subject to the terms of the act. However, the same statute goes on to warn that chance meetings shall not be used to deliberate public business in circumvention of the spirit of the act. T.C.A. § 8-44-102. In the past, courts have held that informal assemblages of a governing body at which public business is discussed and deliberated, including informal telephone discussions between members of a governing body, fall under the Sunshine Law.”
Political ploy to stop a high school?
Are the records searches and allegations to the State a ruse to stop funding and building for a high school in Lakeland? Vice Mayor Roman believes it is, saying,
“This is just a disgraceful attempt to stop progress towards a complete Lakeland School System. Just like previous years, they want to kick the high school can down the road yet again.
“Lakeland School System is unique and diverse representing over 16 countries of origin. All of our kids deserve a chance to stay with their friends throughout their educational years. The fact is adolescence is hard and we need to be an advocate for these kids. If Mayor Cunningham’s actions jeopardized this, he needs to resign.”
Lakeland School Board Member Geoff Hicks said in a March School Board meeting, “The costs (to build the high school) are running away from our City’s ability to finance them. Every year that goes by that number gets larger and larger.”
From Kevin Floyd, chairman of the Lakeland School Board,
“Obviously, we would have preferred to move forward with construction in 2018. The delay has certainly increased the cost of the project.”
From Dr. Ted Horrell, superintendent of the Lakeland School System, “Our approach to the delays in funding the high school is to continue to do the best job we can educating kids, and to continue to advocate for what we believe is in the best interest of Lakeland students. There were certainly numerous financial advantages to have completed the high school wing previously, but we stand ready to move forward once funding is secured.”
Have procedures been properly followed?
Former Mayor Wyatt Bunker (who served from 2013-18) believes there could be issues with the lack of city procedures being followed. Mr. Bunker stated, “Mike Cunningham is engaging in political theater for the sole purpose of blocking a Lakeland high school. First, Lakeland elected officials have no access to City funds whatsoever. Second, the Lakeland Mayor has no executive authority and he’s recklessly acting outside the bounds of our City charter. It’s apparent by his actions and unbridled tongue he has no regard for the welfare of our City.”
From the Lakeland City Charter: 6-20-206. Exercise of board’s powers. The board shall exercise its powers in session duly assembled, and no member or group of members thereof shall exercise or attempt to exercise the powers conferred upon the board, except through proceedings adopted at some regular or special session. [Acts 1921, ch. 173, art. 4, § 5; Shan. Supp., § 1997a138; Code 1932, § 3535; T.C.A. (orig. ed.), § 6-2017.]\
Link to City Charter: https://www.lakelandtn.gov/documentcenter/view/65
The City’s anti-fraud procedures outline how an investigation should be handled. Page 13 of that document (linked below) states, “As a matter of principle, once an alleged fraud is reported to the City Manager, reports will be made to the City Attorney or Tennessee Comptroller as required. If the City Manager is thought to be involved, then the report should bypass the person at issue, and be sent directly to the City Attorney, who will take appropriate action in the spirit of this Policy and under State law.” Vice Mayor Roman said neither the City Manager nor the City Attorney was notified of any financial anomalies when the Mayor made his public announcement on April 11, 2019.
Link to the City Anti-Fraud Policy: https://www.lakelandtn.gov/DocumentCenter/View/2035 . Vice Mayor Roman said,
“This is a very odd situation. From my inquiry neither the City Manager or the City Attorney had any knowledge of the accusations the day of the Mayor’s announcement. However, there is what appears to be a celebration dinner held after the announcement between the Mayor and several of the plaintiffs currently suing our city while the BOC and city staff were kept in the dark.”
Forensic audit effects on economic growth, new residents to the City
Commissioner Wright said, “I have weekly discussions with stakeholders and it is understood that developers and investors are interested in towns where leadership is willing to make investments in their schools and infrastructure. The Mayor’s actions do not instill confidence in investors or citizens, instead it creates a volatile environment. This deters interest from builders and families wanting to move here.”
In Depth Records Review Story – Click Here
