Once again, a Shawnee resident and former city commissioner addressed the city commission Monday night to air his concerns to the board, alleging the city has misused funds. The vice-mayor said the board is waiting for results of a state audit.

Once again, a Shawnee resident and former city commissioner addressed the city commission Monday night to air his concerns to the board, alleging the city has misused funds. The vice-mayor said the board is waiting for results of a state audit.

Shawnee resident Tom Claybrook, a former Shawnee city commissioner, has been voicing concerns regularly to the current board since November, stating he believes the city has been mishandling funds.

At Monday's city commission meeting, Claybrook, during citizen participation, told commissioners The News-Star refused to run a letter to the editor he recently submitted.

In actuality, the newspaper said it would run his letter as soon as it checked and verified information for a story so readers would have adequate context in the situation.

Claybrook then read his letter to the commission during his allotted three-minute time for public comments.

“At the Feb. 4, 2019 meeting of the Shawnee City Commission I revealed that Shawnee city management

during the budget years of 2016 and 2017 had illegally diverted $7 million from the Street Fund to

other funds to hide the fact that those funds were overspent,” Claybrook said. “The mayor, after admonishing me for not displaying enough reverence to the city commission, stated that this action was totally legal and appropriate.”

Claybrook said he wanted to bring to the attention of the citizens of Shawnee the following information that is a part of the yearly financial statements and audit. “Under the section Revenues, Expenditures and Expenses is stated: The City levies a three-cent sales tax on taxable sales within the city,” he said. “The sales tax is collected by the Oklahoma Tax Commission and remitted to the city in the month following receipt by the tax commission.”

He said one cent is legally restricted by the voters.

Sales tax is recorded as follows: Two cents to the General Fund for operations, .3875 recorded in the Capital Improvement Fund and restricted for capital improvements; .4375 recorded in the Street Improvement Fund and restricted to street improvements; .0500 recorded in the

Economic Development Fund and restricted for economic development; .0625 is recorded in the Police Sales Tax Fund and restricted for police operations; and .0625 recorded in the Fire Sales Tax fund and restricted for fire operations, he said.

“This language is very direct and leaves no room for interpretation,” Claybrook said. “It explicitly states that when the voters approved the third-cent of sales tax they did so in a manner dictating how it was to be spent.”

They did not authorize it to be used as a slush fund to cover up profligate spending in other areas, he said. “There is no caveat allowing for those funds to be borrowed and sticking an IOU in the books,” he said to the board. “I was on the City Commission when this occurred and know exactly what the intent was and what the voters were told.”

Commissioners are not allowed to comment while a citizen is giving public comment.

Later, during Commissioners comments, Shawnee City Commissioner (and vice-mayor) James Harrod said the board is waiting to get results of an audit from the state before making comment on Claybrook's concerns.

Mayor Richard Finley wasn't at Monday's meeting.

The issue

The question is whether a city borrowing from itself — especially regarding restricted funds — is inappropriate.

For several weeks, The News-Star has been working to obtain information that would validate or disprove Claybrook's claims. To date, there is still no clear answer as to what is being considered legitimate handling of the funds in question.

City Attorney Joe Vorndran, though he said he couldn't speak to the specific funds to which Claybrook refers, said the (general) shuffling of funds during day-to-day operations are within the authority of the municipality, and appear to be common practice.

“It happens all the time,” he said.

Jim Denton, of Certified Public Accountants Arledge and Associates — the independent auditors who annually prepare a report on the city's financial activities and practices — chose not to weigh in on the matter when asked if an annual audit would be able reveal a misuse of restricted funds. The firm has given the City of Shawnee clean audits for the past several years — the latest report being Fiscal Year 2017-2018, which ended June 30, 2018.

“In our opinion, based on our audit and the report of the other auditors, the financial statements referred to (in the 2018 report) present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the City, as of June 30, 2018, and the respective changes in financial position, and, where applicable, cash flows thereof, for the year then ended in accordance with accounting principles generally accepted in the United States of America,” states the firm's official opinion in the 2018 report, signed Jan. 14, 2019.

Arledge's report also states its responsibility includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

“We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions,” the report reads.

Interim City Manager Eric Benson, who wasn't with the city during the timeframe of Claybrook's allegation, confirmed at one time the city did have close to $10 million in surplus.

Since then he said the city has completed some desired and approved projects that were all community supported.

Benson said using existing surplus to invest in itself is what a vibrant city like Shawnee should do.

He said now is the time for reining in spending and getting back to saving.

“We had come to a place where we were spending at a rate we could no longer continue,” Benson said. “It was time to slow down and re-evaluate our priorities; we are still in the black.”

He said he has an open-door policy.

“If any resident has questions or concerns, I am happy to meet with them and walk them through the books,” Benson said.

Finance Director Chance Allison, who is fairly new to that position, said the city for several months did not appear to meet projected revenue estimates, which also had to be rectified — draining a portion of the city's existing funds.

With the exception of October 2017, which was reportedly above budgeted estimates — between September 2017 to April 2018 — then-City Treasurer Cindy Arnold wrote in her reports each of those months that revenues had fallen below what was budgeted. There was no sales tax report for May 2018 (or June), at which time Arnold had left the position. Allison was hired in June 2018.

He said future streets projects, such as the Kickapoo South widening project coming up, will be paid for through funds designated for streets — money that will be coming in from another self-imposed half-cent city sales tax increase barely voted in by residents in June 2018. The new 10-year tax is tagged to cover several capital improvements like public safety, streets and roads, and parks and public facilities. At this time it is unclear if the new tax will be paid back (as an IOU), as Allison has not yet responded to that specific question.

Recent investments

Keeping in mind the city also has shelled out a large portion of funds (at least $6.4 million) for some sizable projects over the past few years that do fall under streets funding; they include:

• Kickapoo Street widening project (near $2.2M)

“The north project, Kickapoo Street, between Kickapoo Spur and MacArthur, was a city street project with roughly 80 percent federal funding and 20 percent city funding, “ Cody Boyd of the Media and Public Relations Division of the Oklahoma Department of Transportation, said. “The City of Shawnee’s total cost was nearly $2.2 million (of the total project cost of $10.9 million).”

• Sidewalks/Master Trails project ($850K)

Avedis Foundation Program Officer Audrey Seeliger confirmed the City of Shawnee Master Trail/Sidewalk 5-year grant — initiated in February of 2017 — was a matching grant for $1,750,000.

“To date $850,000 has been paid (by Avedis) to the City of Shawnee and we are very pleased with the progress the City has made on walkability in our community,” she said.

There is still a balance remaining of $900,000 toward sidewalks/trails projects not yet completed.

• Downtown Main Street Streetscape (close to $3.2M in construction only)

In October 2015, city officials accepted a bid of $3,156,371.60 from CGC Inc. for the Main Street project — which turned out to be right at $1 million more than first estimated in August 2015 by then-City Engineer John Krywicki when he indicated the project would likely fall in the $2.2 million to $2.4 million range.

To fund the nearly $3.2 million bid, Krywicki said the city had $1.8 million in the street fund; just under $619,000 from the Tax Increment Finance Fund (TIFF); and $430,000 from the Shawnee Municipal Authority –– that would pay for waterline improvements.

That’s $2.8 million –– about $300,000 shy of the accepted bid.

Krywicki said the extra funds came from the 302 Street Fund, from allocated funds that had been accumulated from rollovers from previous year’s projects.

What now?

In the mayor's absence, Vice-Mayor Harrod said he is waiting to get results of an audit from the state before making comment on Claybrook's concerns.

“We should be getting results the first of April,” Harrod said during the comment portion of Monday's meeting, though Claybrook had already left.

Watch for updates as more information becomes available.