Utah State Auditor investigates Utah Local Governments Trust’s ‘questionable expenditures’
July 22, 2016
The Utah State Auditor's Office released a report on Wednesday highlighting a financial "culture of excess" in an organization that most taxpayers don't even know exists, but they pay for.
With more than 550 local government members, including Summit County, Kamas, Henefer, Coalville and Francis, the Utah Local Governments Trust acts as an insurance pool for those entities. According to the auditor's report, the trust, which was formed in 1974, has a "has a fiduciary responsibility to manage the resources for the benefit of the taxpayers of its member entities." It is comprised of nearly 20 staffers and a 10-member board of directors, including Summit County Councilor Chris Robinson. Robinson joined the board in 2015.
The auditor's office began receiving reports nearly two years ago that board members were appropriating funds for themselves and family members for questionable expenditures, including expensive dinners and social outings, according to John Dougall, Utah State Auditor. The tips sparked a 13-month investigation into the trust. The report covers 2014 and 2015.
"The role of the auditor's office is to shine a light where the public may not see what is going on," Dougall said. "We are drawing attention to what we thought were egregious practices. I would hope the member entities start to take a more proactive role in overseeing the trust where they are members and pay for."
Some of the "unnecessary and extravagant" expenses included $2,270 for five iPads for new board members and $430 for a golf retreat in Park City. Excessive per diem, or daily allowance expenditures, included a $1,664 dinner for 14 board members at Ruth's Chris Steak House, in Park City. The report noted that additional questionable expenditures were not included.
Dougall said the investigation revealed a "tradition of this type of culture" within the organization, adding that "expensive steak dinners shouldn't be on the government and taxpayers' dime."
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The report also cites concerns about Chief Executive Officer Steven Hansen's salary. Hansen reportedly earned $432,231 in 2015. Dougall said Hansen's salary was well-above what similar positions pay. He said there were also concerns about the board members' compensation and whether they are also being paid by other government entities. However, the report failed to state whether the transactions violated any specific laws.
In a letter signed by Price City Mayor Joe Piccola, chairman of the Board of Directors, the trust stated that "We agree with the Audit's finding and recommendation that there have been some board expenses that can and should be minimized or avoided."
"The trust recognizes that it has an obligation to avoid even the appearance of impropriety and that it should rigorously seek transparency," the letter stated. "The board has adopted an appropriate policy for the issuance and return or purchase of electronic reading devices to board members. Expenses for meals and lodging will be limited to the newly enacted per diem rates. Furthermore, the trust will no longer pay any expenses of board member spouses."
The letter went on to clarify the practices of the board and dismiss the claims that there were any illegal activities. It said several policies will be clarified in the future to prevent any further confusion.
Summit County's representation on the board refutes several aspects of the report. Robinson said it unfairly portrays the trust as a "gravy train," adding that the organization has been an "excellent partner in providing insurance for us."
"I've generally been very impressed with the trust, as a board member, and how the business is run," Robinson said. "And it has been growing and generating a surplus for its members. It's very healthy and growing, due largely to Steve's (Hansen) leadership."
Robinson said he has not personally participated in any of the social events hosted by the trust. He further added that he has not invited his wife with him to any of the dinner events.
"There are many things in the report that are points well-made and will be corrected," Robinson said. "But in the big picture, the organization is very solvent and very well run. But a little sunshine like this never hurts anything. But in general this is a very good organization."
"Those are legitimate concerns and the board is going to correct that," Robinson said.
To view the full report, go to http://financialreports.utah.gov/saoreports/2016/15-ULGT-8LUtLocalGovtTrustUtahLocalGovernmentsTrust.pdf.
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