YELLOW SHEET Office of the State Auditor of Missouri Claire McCaskill

August 6, 2003

Report No. 2003-79

Due to much public attention and the numerous calls and complaints received from Randolph County citizens, the State Auditor’s Office has performed an audit of the Randolph County Justice Center construction project.  The following problems were discovered as a result of the audit. 

• The County Commission did not adequately relate costs and needs to funding sources or adequately document its considerations when determining the sales tax issue to be presented for voter approval.  Additionally, the county's project documentation is insufficient and the County Commission cannot demonstrate that it has been actively involved in the decision making process or has adequately monitored the financial aspects of the project.

The County Commission could not provide documentation showing how a ˝ cent, 18-year sales tax was determined to be adequate to fund the justice center project.  Even though the length of the proposed sales tax was shortened, it appears the conceptual drawings for the justice center at the time of the November 2001 election were brought forward to the April 2002 election. 

The April 2003 bond schedule calculations used lower operating costs and inflation rates than provided for in the county's project documentation.  The County Commission could not explain the reason for this discrepancy in amounts. If the county's documented estimated costs are used, projected operating costs over the 17-year bond period are approximately $24.6 million or about $5 million more than the April 2003 bond issue estimate, and operating costs and projected bond principal and interest payments would exceed estimated resources by approximately $2.2 million. 

The Justice Center Fund has had a negative cash balance since its inception and by the end of May 2003, the cash balance in this fund was ($267,307).  Monies from other county funds are being borrowed to cover the costs of the justice center project until other financing is secured. 

The January 2003 project budget reflects a total project cost of approximately $7.1 million, whereas the April 2003 project budget reflects a total project cost of approximately $7.6 million.  The April 2003 bond issue information indicates the project funds available from the bond issue proceeds is approximately $7.7 million (proceeds less other fund deposits and underwriter discounts).  A comparison of these amounts shows that the anticipated project cost is very close

to estimated funds available for the project from the bond proceeds.  Should bond issue proceeds not be sufficient to cover the total project costs, other county funds will need to be used.  Given the county's overall poor financial condition, this may not even be a potential option. 

The County Commission has delegated much of its authority on the project.  To answer many of our questions, the County Commission referred us to the owner's representative.  Additionally, many records associated with the project were not on file at the county courthouse, and had to be obtained from the owner's representative or others involved with the project. 

• In May 2002, the county contracted with a professional engineer to provide consulting services for the justice center project.  The contract provides for the consultant to serve as the owner’s representative and provide consultation and advice in connection with the justice center project. 

The County Commission did not negotiate with or solicit requests for proposals from any other company or individual for owner’s representative services.

The county entered into this contract without adequately evaluating the potential time and cost involved and did not ensure it documented clear expectations of the owner's representative.  The contract did not provide for a maximum amount.  According to the initial project budget dated June 2002, the owner’s representative fee was estimated at $100,000.  However, this was doubled five months later to $200,000 on the January 2003 project budget. 

The owner’s representative's billings did not include adequate supporting documentation for services rendered, mileage incurred, and reimbursable expenses.

• Problems were also noted with other professional services arrangements.  Competitive proposals were not always solicited and documentation regarding the selection process was not adequate.  Some contracts were either incomplete or not on file at the county. 
  
   

• Project information provided in the County Commission meeting minutes was generally very limited and often included only a reference to those in attendance and the topics discussed.  The minutes lacked sufficient details regarding the commissioners' discussions and decisions.

Complete Audit Report