The item to consider a resolution requesting the Texas Legislature to pass legislation, or, if required, prepare and submit to the voters a Constitutional Amendment abolishing the office of Karnes County Treasurer was placed on the agenda by Karnes County Judge Richard Butler for the Aug. 29 meeting.
Butler discussed the recent difficulties the county has encountered with completing the annual independent audit.
The problem, he said, was that the treasurer’s office has been unable to provide an acceptable reconciliation between the amounts shown in the county’s bank accounts, and the amounts recorded in the county’s financial records.
Butler said he recently spoke with the independent auditors who said that the issue had still not been resolved after months of efforts to do so.
“They told me the records were extremely hard to interpret,” Butler said. “There are deposits and receipts that are made out of order, they are not well documented as to what they are. There are numerous instances of deposits of funds that were given to the county months ago and not deposited for a long period of time.”
“All of this has caused us to not be able to complete this audit, as yet, without negative treatment on that audit,” he said. “Negative treatment on the audit will cost this county in the long run. It is going to make it tougher to sell our bonds. We will have to pay higher interest on our bonds. There are some other negatives that could come about that are all going to be negative financially to this county.”
Butler said he is not pre-judging that the fault lies with any one particular person.
“It is a symptom,” he said, “of an outdated position.”
With a budget that has grown dramatically in recent years, to annual receipts and expenditures in the tens of millions of dollars, it is becoming more and more important that the county’s financial records be managed by someone with professional education, certification and expertise, he noted.
“There is not a company in this world, that would hire someone to handle that kind of a job, without some pretty high qualifications,” he said. “An accounting degree, at the bare minimum, probably a CPA, and probably years of experience dealing with these kinds of financial issues.”
“The county treasurer position, under the Texas Constitution, requires that you simply be 18 years of age, a resident of the State of Texas for one year, and a resident of the county for six months,” he added. “That is not enough to qualify anybody to handle business this complex and to handle a position this complex.”
Butler said this is not the first time that the county has encountered difficulties with the office of county treasurer, regardless of who held the office.
“It is time to move forward,” he said. “This is a key moment in time. Where we can move this county forward – govern it forward – and try to move ourselves from what the county was to what the county can be. For that to happen we have to have control of our financial records of our county. There is no doubt about that.”
The position itself, has outlived its qualifications, Butler said.
“We are going to continue to have a door open for more problems,” he concluded, arguing in favor of abolishing the office.
Butler said he would recommend creating a new position to manage the county’s finances, but he also thinks that the new Commissioners Court, after two new members are sworn in Jan. 1, should decide how that will be done.
Commissioner Pete Jauer said the issue came up 20 years ago, and at that time he was in favor of abolishing the office. He said he agreed with Butler’s idea of creating a professional position to manage the county’s finances, independent and separate from the office of county auditor, which is an office appointed and overseen by state district judges.
“I would like assurance that we can have an independent, qualified accounting firm or CPA to handle our finances,” Jauer said. “I don’t know whether that is possible or not.”
Butler said he didn’t think hiring an outside firm was a viable solution, but rather create a professional position for an individual, with a county office, under the supervision and direction of one or more elected county officials.
“I think almost any solution would be better than what we have,” Butler said, assuring Jauer that the county should be able to find a viable alternative to having an elected county treasurer.
Commissioner Tracey Schendel argued in favor of researching the issue further before moving forward toward abolishing the office.
Charlene Blaschke, who was seated in the audience at the meeting, asked Butler about the qualifications for a county judge, which are not unlike those of a county treasurer.
“Perhaps they should abolish my position too,” Butler responded. “I have long thought, and this would amount to an amendment to the Constitution, as long as we have judicial roles, we ought to have a law degree. As long as they are going to have us hearing cases, I think we ought to all have law degrees. Because we make rulings on evidence and things like that and you are shooting in the dark if you haven’t been to law school.”
Blaschke said that a complete full audit of county finances was needed before moving to abolish the office.
“You are pointing the finger at one person,” Blaschke said. “There is another department that does the books, also.”
Brenda Hansler, also in the audience, asked what the timeline would be toward abolishing the office.
Butler responded by saying that nothing could change any sooner than November of 2015, due to the time required by the process. A two thirds vote by both houses of the Legislature in favor of abolishing the office is required, and then if that happens, it will go on the ballot for a vote of the people of the State of Texas. If a majority of voters approve abolishment of the office, it will then happen.
Blashke asked County Auditor Lajuana Kasprzyk why she hasn’t been on top of the situation that has developed.
“I can’t control what is receipted into the system, Charlene,” Kasprzyk responded. “That is up to the treasurer.”
“You are supposed to work with her,” Blaschke said in response.
“I do,” Kasprzyk replied. “In fact, Monday, Tuesday, Wednesday of this week I gave her six receipts that were erroneously entered, to correct. I do audit everything in this county.”
Reconciling county records with bank account balances is a statutory duty of the office of county treasurer, not the county auditor, Kasprzyk explained.
Commissioner Shelby Dupnik said that there have been problems with the treasurer’s office for many years, but in regard to a full audit, he asked how far should the county go back. He said he had been told that the Texas Association of Counties (TAC) would oppose the abolishment of the office because it is a statutory duty.
“We have to do something here in Karnes County to correct this issue,” Dupnik said.
Responding to Blashcke’s question regarding the responsibility of the county auditor in regard to the current situation, Butler reminded her that the county auditor reports to the district judges.
“The district judges are the ones who decide what kind of job she is doing and they can remove her,” Butler said. “If you have any complaints about the auditor, you should address that to the district judges, not to this county. We can’t do anything about it.”
County Treasurer Vi Malone read from some prepared comments to the court about the issue.
“I just want you to be aware the county treasurers association has already been informed as well as members of TAC concerning this matter,” Malone said. “The County Treasurers Association of Texas (CTAT) has a full time lobbyist as well as a legislative task force and they will be in Austin in full force fighting this.”
“Are the three of you, that are on Commissioners Court now, willing to take this all the way?” Malone asked. “Are you willing to go to Austin to the committee hearings to say why it needs to be done, because come January, the judge and Commissioner Schendel will be gone and if you pass this, you three will be the ones on the court supporting it.”
Malone said the process will be long and expensive, and that similar efforts in the past had been stopped due to the efforts of CTAT.
Malone said that she would not be opposed to hiring an accounting professional to work in her office.
Darrel Blashcke, who was seated in the audience, spoke to the court.
“I think you are looking at the wrong fox in the wrong henhouse,” Blaschke said.
Commissioner James Rosales said that he is not ready to move toward abolishing the office.
Commissioner Schendel said that he believes a complete audit is needed before taking action on abolishment, one way or the other.
Butler talked further about the current state of the county’s financial records.
“I can assure you,” Butler said. “I have seen the books. I have reviewed them with the CPAs. It’s a shambles. You wouldn’t keep your personal checkbook that way. If you want to wait and see them, go ahead, but what difference does that make as to whether we should abolish this antiquated position or not, and replace with a position that requires qualifications?”
“I’m not trying to go get Vi,” Butler emphasized. “I am trying to stop the situation that keeps coming up.”
“As far as the Treasurers Association coming out, they are kind of like the NFL Players Association, it doesn’t matter what one of those guys does, they go out there and defend them. That’s their constituency. I expected that. I expect it fully and they may be able to beat that legislative effort down and we can’t get anywhere with it. Is that a reason not to try? Because the union is going to war with us over this action we are trying to get done for the benefit of our county? I don’t think so.”
After much discussion with comments made by several residents in the audience, Butler made a motion to pass the resolution requesting the abolition of the office.
Commissioner Jauer seconded the motion which carried on a 3-2 split vote.
Butler, Jauer and Dupnik voted in favor while Rosales and Schendel voted against the motion.