YELLOW SHEET
Office of the State Auditor of Missouri
Claire McCaskill
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YELLOW SHEET Office of the State Auditor of Missouri |
Report No. 2006-10
February 2006
The following problems were included in our audit report on the Department of Natural Resources, Solid Waste Management Program.
The Solid Waste Management Program (SWMP) is under the supervision of the Division of Environmental Quality within the Department of Natural Resources (DNR). The main goal of the program is to reduce the amount of solid waste generated in the state of Missouri. There are 20 Solid Waste Management Districts (districts) statewide. Our audit included onsite reviews of four of the 20 districts.
During the year ended June 30, 2005, nearly $11 million in tonnage fees paid by solid waste haulers was transmitted to the DNR, which represented 99 percent of the revenues of the DNR's Solid Waste Management Fund. The SWMP should review its procedures to monitor the tonnage fees received from each landfill and transfer station to better ensure that the proper fee amounts are remitted to the DNR. In addition, the SWMP does not track the total costs incurred to issue landfill and transfer station permits, and the amount of permit fees does not appear to cover the costs of issuing the permits. The maximum fees of $8,000 for landfills and $4,000 for transfer stations, are usually charged. These amounts were set approximately ten years ago and may not be an accurate reflection of the current costs incurred by the program.
The DNR provides funding through the Solid Waste Management Fund to assist districts in the development of an adequate infrastructure for solid waste reduction, recycling, and resource recovery. The districts administer grant funds provided to subgrantees for projects within the districts' boundaries. During the year ended June 30, 2005, over 50 percent of the tonnage fees collected, or approximately $5.9 million, was allocated for district grant funding.
Quarterly reports for the districts were not submitted to the DNR within the required timeframe, with seven of the 20 districts submitting reports after the required 30 day period and three districts not submitting a quarterly report for at least one of the quarters reviewed. Also, districts receiving $200,000 or more of financial assistance in any fiscal year are required to provide a copy of an independent auditor's report. Only three district audit reports had been submitted to the SWMP since fiscal year 2002. In fiscal year 2005 alone, there were at least eight districts that received over $200,000 from the Solid Waste Management Fund. In addition, onsite inspections were performed by the SWMP for only two of the 20 districts during the three years ended June 30, 2005.
District L incurred some administrative expenditures which appear to be unnecessary and inappropriate uses of public funds, including:
· The district spent $41,523 for the services of a lobbyist during the three years ended June 30, 2005. District records indicate cities and counties contributed approximately $20,001 during this time period, so it appears approximately $21,522 in state funds (which includes interest earned on state funds) were used for the lobbyist expenses, contrary to program regulations.
· The district received approval from its board to spend up to $6,000 for a mural and made purchases totaling $4,125 during 2003 through 2005 for other art work, both of which appear to be unnecessary expenditures of public funds. Additionally, the district spent $1,871 on books during fiscal years 2004 and 2005. Documentation did not indicate that the books were clearly related to solid waste and recycling.
Some districts are accumulating large fund balances and are not spending grant funds on a timely basis. District L had a fund balance of $4.5 million as of April 30, 2005. Of this amount, approximately $2 million was encumbered for grants which had not yet been spent by the subgrantees with some of the grants awarded as far back as 1999. The remaining $2.5 million is comprised of unspent administrative funds and interest earned on both grant and administrative funds. During the year ended June 30, 2004, this district expended a total of approximately $2 million for grants and operations. Additionally, District T has funds encumbered for grants awarded as far back as 1996. This district has also approved new grants for education and dump clean-up programs, while grant monies awarded in previous years for the same purposes have not yet been spent.
A standard Financial Assistance Agreement (FAA) is required for all grant agreements and is applicable for 12 months after its execution. A new FAA can be prepared to extend the initial grant period. Districts L and M did not have a current FAA for some subgrantees with open grant awards and District L made payments to subgrantees after the expiration of the period identified in the FAA. Also, state regulations require districts to retain fifteen percent of financial assistance until fund approval is given for a project. Three of the four districts reviewed did not always comply with this regulation.
Two of the four districts paid vendors directly for items purchased by subgrantees rather than reimbursing the subgrantees. Three of the four districts reimbursed subgrantees for grant expenses even though quarterly reports were not submitted on a timely basis. Of grants reviewed, 80 percent for District L, 80 percent for District T, and 33 percent for District M included reimbursements to sub-grantees prior to or without receiving quarterly reports.
In 2005, District M's board awarded $15,000 in grants to each of the four counties within the district prior to reviewing and evaluating the grant applications received from private individuals and businesses. Some grant applications received from other individuals and businesses were turned down due to lack of available grant funds.
Physical inventories of capital assets were not performed by three of the four districts reviewed, Districts F, M, and T. In District M, a subgrantee went out of business and sold its equipment purchased with grant funds. Since no physical inventories were performed, district personnel were unaware that the assets were sold until auditors asked to see the equipment.