Duarte Changes Rules for Council Expenses

An audit showing that no receipts were turned in for 40% of the expenses for which City Council members were reimbursed during the last fiscal year has led to the adoption of a tougher expense accounting system.

The council unanimously passed a resolution on Sept. 9 that requires prior council approval for reimbursable expenses at out-of-town conferences and sets limits on expenditures for meals and travel inside the city. Prior approval also will be necessary if council members are to be reimbursed for their spouses’ expenses.

“There was a perception by myself and others in the city that . . . there had been a lack of accountability and that citizens were not comfortable with some expenses councilmen were being reimbursed for,” said Councilman John Hitt, a newcomer to the council. He had expressed surprise after his election in April that the city had no formal policy on what constituted an allowable expenditure.

“So now, if in the future there is an expense that is questionable or not really legitimate, there will be a basis to challenge it,” added Hitt, who introduced the resolution tightening the city’s expense policy.

Under the new policy, council members should submit receipts with the expense account. If receipts cannot be obtained, council members must offer a complete explanation of the expenditure, including where and when it took place, and what benefit the city derived.

Previously, each council member had been limited only to total expenditures of $6,500 a year for out-of-town meetings and $3,000 a year for participation in local events, without limits on individual expenditures.

Incomplete Explanations

Members had submitted expense accounts, often without a complete explanation or receipts, after the expenses were incurred, and almost all were approved by fellow council members at open council meetings.

Although Mayor John Van Doren said that there is no evidence that council members had been abusing their privileges and that all had kept reimbursable expenses well below the ceiling, he said he called for the audit this summer after citizens had asked him about expenses.

“I requested the audit because citizens were inquiring about the legitimacy of the dollar amounts, asking if they were too high and did they relate to city business,” Van Doren said.

The audit, conducted by the accounting firm of Diehl, Evans & Co. of Santa Ana, showed that all of the councilmen had submitted expense accounts during fiscal 1985-86 with incomplete documentation.

Van Doren was reimbursed for expenses totaling $4,239 over the 12-month period, of which $2,553 was undocumented, meaning that the mayor reported to the council the nature of the function attended, but did not provide receipts for all expenses.

Hitt, a newcomer, was reimbursed for expenses totaling $259 for one month, of which $153 was not documented.

Undocumented Expenses

Councilman Mervin Money was reimbursed for expenses amounting to $3,760, of which $1,357 was not documented. And Terry Michaelis, elected with Hitt in April, was reimbursed for $161 in expenses for one month, of which $50 was not documented.

Councilman James Coughlin, the only member who expressed opposition to the resolution, was reimbursed for a total of $4,503 for the 12-month period, of which $2,995 was not documented.

“I feel the restrictions are not necessary because we have always had limited council expenses and we have always had our expenses approved by the council,” Coughlin said.

The resolution was hammered out after council members reached a compromise on expenses for spouses and alcohol.

Accessory to Image

Coughlin said he thought a wife was an essential part of a councilman’s image and therefore her meals constituted a legitimate expense.

Hitt said that although he did not think the expenses of wives should be excluded outright, he thought there were times when it had been inappropriate to include wives.

There also was some debate over expenses for alcohol.

“I wanted no reimbursement for alcoholic beverages,” Hitt said. “But we dropped that and instead put a limit on meal expenses which may include the cost of alcohol. Before we got separate food and drink bills.”

Under the resolution, meal expenses are limited to a maximum of $10 for breakfast, $15 for lunch and $25 for dinner per person. The policy states that meal or business meeting expenses may be incurred only during substantially city-related discussion.

Council members who fly must travel in tourist class and must take buses or share taxis or limousines to and from the airport. The city no longer will pay for mileage expenses for travel within the city under normal circumstances.

Prior approval must be obtained for lodging expenses for out-of-town conferences and for membership in organizations.

“Most expenses can be documented,” Van Doren said. “You can even get a receipt for a taxi. What is hard is when you contribute to a shared tab.”

But Hitt disagreed, saying, “You can’t have a receipt in every situation. And I am not so concerned with receipts but with the question of the benefit to the city and if the expense is reasonable.”

Van Doren said that most of the expenses he did not document were those for which he could not provide a receipt, mostly banquets that he explained to the council during the expense-account approval process.

Coughlin said he reported the type of function but did not always attach a receipt.

Hitt said his undocumented expenses were for meals during an out-of-town conference in which he was part of a group that split the bill, leaving him without receipts.

Van Doren, who has been on the council for eight years, said he supports the resolution.

“The policy is a step in the right direction to prevent abuse,” he said. “The policy was sought in order to avoid the public perception that there is abuse.”

Van Doren said he thinks the council has been lax in approving expenses.

“Two or three years ago a councilman put in for a dinner the city had already paid for,” he said. “When questioned, the councilman said he had had a second dinner and the inquiry stopped at that point. I have never said I won’t approve an expenditure because we have had to rely on good faith that the person spent the money for a legitimate purpose.

“Now the goal is to make the council more accountable to citizens whose money we are spending.”

Hitt said he believes that the resolution will prevent problems of the type that have occurred in the past.

“There had been expenditures that were not appropriate,” he said. “There were cases when expense accounts for meals were submitted when the meals had been provided. And some meal expenditures were excessive.”

The audit covered fiscal 1985-86, and auditors looked for duplication of reimbursement, the reasonableness of the amount spent and the business purpose.

“Most expenses appeared to have been incurred in connection with some city meeting or event or a conference of city officials,” the auditors reported.

“There was some description on almost every expense shown and we found no expenses reimbursed that had already been paid for by the city.

“But (this report) should not be relied upon to disclose fraud, should any exist.”