Editorial -- Alarming Report Shows Financial Benefits of Data Centers Overstated

There was an alarming report that crossed our emails recently from the Missouri State Auditor’s Office. It stated that Missouri is on track for painful emergency budget cuts and that the General Revenue Fund will be completely exhausted by Fiscal Year 2028.

"The numbers are right there in black and white, and unfortunately lots of red, and they show a trend of deficit spending that cannot be sustained and that continues to jeopardize our state's financial health," said State Auditor Scott Fitzpatrick in his news release, issued Wednesday. "As someone who has served as chairman of the House Budget Committee, I know making spending cuts can be difficult and even painful, but if we can make a responsible, proactive course correction for our budget today these cuts will be far less painful than the ones that will be necessary in the near future. That's why it's disappointing that the situation has gotten worse, rather than better, since we released our first report in December 2025."

At the same time, we are being told that data centers are a lifeline for rural communities. The one proposed for Nodaway County is supposed to bring in $1 billion over the lifetime of the project to Nodaway County and millions to the South Nodaway school district. A few weeks ago, the Governor’s office sent a news release celebrating a center two and a half times the size of this one that will be built in Montgomery County.

But the fact that we are being told by the State Auditor that Missouri is headed down a fiscal cliff while we are being told that data centers are worth billions to the state tells us something does not add up. Either the tax revenue figures being quoted to us are too high, or the harm that opponents say should be enough to stop these projects means that Missouri stands to lose more money than the tax benefits these facilities would bring.

The Nodaway County Commission is considering a moratorium on data centers in the county until commissioners can study the effects, both good and bad, on the county. We would go further. We think there should be a statewide moratorium until we can study the impacts, both good and bad. And we should reject the proposed elimination of the income tax and reject the blank check it would give our legislature to rewrite our sales taxes, since they led us to this cliff to begin with.

 

Two Local Entities File Late Financial Reports

On Friday, the Missouri State Auditor's office released a list of communities and political subdivisions that were required to file annual financial reports to its office by April 30th. Missouri law requires all communities and political subdivisions except for counties and schools to file these reports six months after their fiscal year ended or face fines. The Auditor's Office says that the Grand River Regional Ambulance District in Gentry County failed to file their financial report. In Nodaway County, the Auditor's Office says the Mary Mart Community Improvement District filed their financial report two days late. It was due on March 31st and was filed on April 2nd.

 

Maryville Fails to File Financial Report With State Auditor

On Friday, the Missouri State Auditor's Office released reports on cities and subdivisions which were required to file financial reports by March 31st of this year. By law, all political subdivisions in the state are required to file a financial report with the State Auditor's Office within six months of the end of that entity's fiscal year. Counties and school districts are exempt.

According to a list provided by the Auditor's Office, Maryville had not filed its annual financial report with the Missouri State Auditor's Office. The City of Arkoe was late but filed its annual financial report on March 19th.

Opinion -- Continued Deficit Spending Will Jeopardize State Finances

By State Auditor Scott Fitzpatrick

As lawmakers prepare to return to Jefferson City for the 2026 legislative session, Missouri State Auditor Scott Fitzpatrick is urging them to take immediate action to curb the trend of deficit spending before the state's General Revenue Fund is drained to critically low levels and drastic, emergency budget cuts become necessary. Fitzpatrick released a new report of the state's spending trends that shows Missouri's General Revenue Fund balance, which had climbed to nearly $6 billion at the end of Fiscal Year 2023, has been rapidly depleted by deficit spending over the last two years which, if continued, will fully consume the fund's balance by Fiscal Year 2028 based on the current Consensus Revenue Estimate (CRE) projections, or by Fiscal Year 2027 based on recession level projections.

"Missouri has experienced an unprecedented run of strong revenue growth to the point that the last difficult budget year is a distant memory. Many current legislators have only been in office during these last few years during which strong economic growth and a huge influx of federal money have made hard budget decisions unnecessary, but they're about to face the challenge of crafting a budget in the face of slowing revenue growth and reduced federal funding. I applaud lawmakers for making decisions that caused the General Revenue Fund balance to soar to unprecedented levels, but state spending has also increased to an unsustainable level that will rapidly deplete the balance in the fund very soon if it is not brought under control," said Auditor Fitzpatrick. 

Fitzpatrick's report documents the unsustainable explosion of state spending over the last five years, which is due in large part to the significant amount of COVID funds that flowed into Missouri from the federal government, as well as increased tax collections resulting from strong economic growth. The state saw annual revenue increase 45.8 percent from fiscal years (FY) 2020 to FY 2025. However, this period of time also saw state expenditures increase by roughly 53.4 percent, which is more than twice the rate of the Consumer Price Index (CPI) increase over the same time period (24.5 percent).

The report notes even with the increase in expenditures, budget makers were able to bring the year-end General Revenue Fund balance to unprecedented levels with a highwater mark of $5.8 billion in FY 2023. However, FYs 2024 and 2025 saw significant deficit spending of close to $960 million and $480 million, respectively, resulting in a FY 2025 year-end balance of approximately $4.3 billion.

The report notes the state will deplete the General Revenue Fund balance in FY 2028 if FY 2026 expenditures remain unchanged and revenues grow at the rate of the latest CRE. Assuming (1) the FY 2026 and FY 2027 CRE agreed to by the Governor and the General Assembly is realized, (2) the average change in net General Revenue Fund collections (3.65%) is realized for FY 2028, and (3) the FY 2026 estimated expenditures remain constant for FY 2027 and FY 2028, the report projects deficit spending of over $2 billion, $1.5 billion and $1 billion for FY 2026, FY 2027 and FY 2028, respectively.

The report also projects an even more concerning condition for Missouri's General Revenue Fund if the economy enters a recessionary period by applying the worst 3 consecutive years of change in actual annual net collections from FY 2003 to FY 2025, which would essentially represent a recessionary period, to FY 2026 through FY 2028. Under these conditions, Missouri would run out of General Revenue in FY 2027, at which point the deficit would be over $3.8 billion.

Fitzpatrick said, "The time is now to make the tough decisions that will prevent drastic, emergency budget cuts from being necessary in the months and years ahead. The longer Missouri waits to take action, the harder this exercise will become. Economic trends are unpredictable and we need to make sure Missouri is ready to face any challenge. I have the utmost confidence in the ability of Governor Kehoe and the budget leaders in the House and Senate to work together to craft a budget that will protect and preserve Missouri's financial health."

The report also points out recent changes in tax law, including the increases in the standard deduction contained in the "One Big Beautiful Bill" (OBBB) Act, and the elimination of the state tax on capital gains,  will put downward pressure on revenue to the General Revenue Fund in the near term. The projected impact of such legislation is reflected in the latest CRE, and is therefore included in the projections contained in the report. However, these projections do not include, or assume, any future changes in federal or state tax law.

 

Missouri AG Announces MSHSAA Under Investigation

On Tuesday, November 18th, Missouri Attorney General Catherine Hanaway announced that the Missouri State High School Activities Association was under investigation from her office after what she said was reverse discrimination by that body.

The announcement followed an extended correspondence between State Auditor Scott Fitzpatrick and Natalie Hoernschemeyer, an attorney for MSHSAA.

The issue involves Article IV, Section 2(b)2 of the MSHSAA Constitution regarding the appointment of at-large board members, which states, “Each of two at-large positions shall be filled by a candidate representing the under-represented gender of the current board, or an under-represented ethnicity.”

Auditor Fitzpatrick, in his April 16th letter to MSHSAA, wrote, “Given that MSHSAA receives significant revenue from Missouri taxpayers through membership fees collected from member schools and event costs charged to students and parents, I am concerned board members tasked with oversight of the operations are being chosen, or excluded, based on their gender and/or ethnicity, rather than their qualifications.”

The MSHSAA board consists of eight elected members from each of its districts along with two elected at-large members. Members must be active school superintendents, principals, or activities directors of member schools in good standing. The section in question states that at-large members who represent the under-represented gender or ethnicity of the current board must still meet the qualifications.

In one of his letters to MSHSAA, Mr. Fitzpatrick attached a letter from a MSHSAA employee to an administrator who had been nominated for one of the at-large positions and who subsequently contacted Mr. Fitzpatrick’s office. The letter from the MSHSAA employee to the prospective board member read in part, “The current Board of Directors, after taking out members whose terms are us, has a majority of males, Since you are a male, you do not meet this requirement. The ethnicity of the board has a majority of white, non-Hispanic members. Without knowing your identity or race, we ask for you to respond with the minority ethnicity or race group in which you identify, if applicable.”

Ms. Hoernschemeyer, representing MSHSAA, wrote to Mr. Fitzpatrick that MSHSAA’s selection policies for at-large board members was in compliance with state and federal law. She wrote, “The Association, with the possible exception of one individual, has never had a minority or female board member initially join the Board through the standard nomination and election process prior to the addition of the at-large provision.” She continued, “The enduring underrepresentation highlights the presence of systemic barriers to participation, and the at-large provision aims to address this imbalance — not through exclusion or preference, but by ensuring that voices historically absent from the table have a meaningful opportunity to be heard.”

She wrote in another letter that the individual in question was not precluded from serving on the Board of Directors. “He was unable to run for a particular at-large seat because he did not meet the current qualifications pursuant to the MSHSAA Constitution.”

Auditor Says Vernon County Misused Dollars, Overtaxed Residents

 

The former Vernon County Clerk misused taxpayer dollars to buy himself a retirement gift, and to make other questionable purchases of items such as a heated vest according to a report released today by State Auditor Scott Fitzpatrick. The regularly-scheduled audit, which gives the county the lowest possible rating of "poor," also found Vernon County residents were overtaxed by approximately $123,000 in property tax revenue by not properly rolling back the property tax levy for all sales tax collected.

"Taxpayers in Vernon County deserve better and should be able to trust that their government officials aren't using their tax dollars irresponsibly while also overtaxing them. This audit report provides substantive recommendations that will allow the county to correct the mistakes of the past and ensure they don't happen again," said Auditor Fitzpatrick. He added, "I'm glad to see the current clerk and other county officials are taking our recommendations seriously and working in good faith to put them into place."

The audit documents nearly $5,300 in purchases by the former clerk that were either inappropriate or inessential to the administration and operation of the office. The list of items includes $311 for retirement gifts the former clerk purchased for himself and the former presiding commissioner, as well as $160 for a heated vest. The report also notes $611 used to purchase headphones as gifts for his employees, $530 for a cell phone signal booster for the home of the former clerk, and $3,125 in gift card purchases that were given to county employees as Christmas gifts. The audit report notes that public funds should be spent only on items necessary and beneficial to the county.

Another finding in the report highlights the former clerk failed to accurately calculate the property tax reduction in 2020 and 2021. The miscalculation resulted in Vernon County residents being overtaxed by $71,000 in 2020 and $97,000 in 2021. While the current clerk made the adjustment correctly in 2022 and 2023 and decreased the accumulated excess property tax revenue by approximately $45,000, the county still has approximately $123,000 in excess collections. The report recommends the county work to properly calculate property tax reductions and correct the accumulation of excess property tax revenue.

The audit also highlights the lacking controls and procedures in the County Collector-Treasurer's Office that led to more than $13.5 million in uncorrected errors that were a result of numerous unrecorded or incorrectly recorded deposits, bad checks, and other errors identified in the accounting system. The report found the collector-treasurer does not adequately perform bank reconciliations and that supporting documentation for the book balance used in the reconciliation for the general account is not maintained and the adjusted bank balance calculated in the reconciliation does not represent the available cash balance of the account. In addition, a liabilities list is not prepared and reconciled to the available cash balance in the general account.

Other findings in the report include lacking procedures to ensure all tax money received is transferred to the treasurer's account prior to distribution, nearly $200,000 in improper withholdings made by the collector-treasurer, failure to comply with the Missouri Sunshine Law, lacking controls and procedures in the County Clerk's Office, a failure to develop a records management and retention policy that includes electronic communications, and a mid-term salary increase of $25,434 to the sheriff in September 2022, retroactive to January 1, 2022, in violation of constitutional provisions and state law.

 

State Auditor Says Secretary of State Withheld Information on Implementation of Cybersecurity Law

By the Missouri State Auditor's Office

An audit report released Monday by State Auditor Scott Fitzpatrick gives the Missouri Secretary of State's Office a rating of "fair," which is a downgrade from the office's last audit that had a rating of "good."

The report details how the Secretary of State's Office (SOS) refused to provide information on the office's implementation of a new statutory requirement to perform cyber security reviews of Missouri's 116 local election authorities (LEAs). Despite the fact that Missouri law requires the disclosure of the information to the State Auditor's Office (SAO), the SOS refused to provide the names of LEAs receiving cyber security reviews, LEAs planned to receive future reviews, or the results of the reviews that have been conducted.

In 2022, the Missouri Legislature passed House Bill 1878. Among the numerous election related provisions contained in the legislation was a new requirement that the SOS and LEAs receive a cybersecurity review once every two years. Because the SOS refused to cooperate, audit staff were unable to obtain sufficient evidence to evaluate the steps taken by the SOS to comply with the new state law. While the SAO did not pursue legal remedies to obtain the information, it did determine through other means that, at a minimum, most of the cyber security reviews appear to have been completed. The audit recommends the SOS provide information requested by the State Auditor as required by state law.

"Public trust in the electoral process is the cornerstone of our democratic institutions. The legislature passed HB 1878 with the goal of providing Missourians confidence that their voices are being accurately and securely recorded at the ballot box. With a major election cycle right around the corner, verifying the implementation of the new cyber security reviews was a vital part of our audit. The law clearly provides our audit staff with the authority to receive and review this information, and it's disappointing the Secretary of State's Office stood in the way of our efforts to perform a thorough analysis of how the new cyber security reviews have been implemented," said Auditor Fitzpatrick. "Going forward I hope the office, and all governmental entities, will follow the law and respect the duty we have to provide taxpayers with a better understanding of how government is operating and that their tax dollars are being used efficiently."

The audit also found a decision made by the Secretary of State's Office to leave the Electronic Registration Information Center (ERIC) will cause local election authorities (LEAs) to have less information to identify and correct inaccurate voter records because the SOS did not have a plan to replace the benefits received from membership with ERIC.

In September 2017, the Missouri Association of County Clerks and Election Authorities (MACCEA) unanimously passed a resolution urging Missouri to join ERIC to "improve the efficiency and quality of voter registration list maintenance."  Shortly after the MACCEA adopted the resolution at their 111th Annual Conference, the SOS became a member of ERIC in January 2018. According to Secretary Ashcroft, the state joined ERIC to make elections better, make voter rolls more accurate, and bring greater trust to the election process.

As the SAO attempted to evaluate the efficacy of ERIC membership, SOS officials refused to provide reports from ERIC or details of how many deceased voters, cross-state movers, or duplicate voter registrations were identified by ERIC data reports. This refusal necessitated that audit staff obtain this information directly from ERIC. The data shows during the five years the state was a member of ERIC, the SOS and local election authorities (LEAs) were provided information on over 770,000 potentially duplicate voter registration records and over 21,000 deceased voter registration records. Election administrators in Missouri's largest election jurisdiction, St. Louis County, used ERIC reports to remove thousands of deceased voters from their voter rolls alone.

According to the audit, the SOS did not fully evaluate the benefits received from ERIC prior to terminating the membership. The SOS did not track and analyze the summary data received from the ERIC reports or the results of the LEAs' investigations of the potentially inaccurate records identified by ERIC. Prior to making the decision to terminate ERIC membership, SOS officials did not consult the LEAs even though they are the primary users of the reports generated by ERIC. Since the departure, county clerks have publicly stated their list maintenance efforts will be less efficient and more tedious as they will have to rely on pre-ERIC methods to ensure the accuracy of their voter rolls. The audit concludes that while the SOS has recently undertaken efforts to replace the benefits received from ERIC, those efforts have not been fully implemented and it is unlikely those procedures will fully offset the value received from the ERIC membership. The report recommends the SOS take action to make sure the LEAs have the most appropriate data available to ensure the completeness and reliability of the state's voter registration data.

Fitzpatrick said, "I can respect why Secretary Ashcroft felt it was necessary to end the relationship with ERIC, but that doesn't negate the responsibility to have a plan to replace that data so the office has a reliable way to ensure we don't have dead voters registered in Missouri as we enter a major election year."

The audit report also includes a finding from the 2023 Annual Comprehensive Financial Report - Report on Internal Control, Compliance, and Other Matters, which found the SOS did not have adequate controls and procedures over financial reporting of accounts receivable. As a result, civil penalty accounts receivable data submitted to the Office of Administration for inclusion in the financial statements for the year ended June 30, 2022, was misstated. If the resulting misstatements had not been identified during the audit, Government Wide - Governmental Activities and Public Education Fund net accounts receivable and related liability balances would have been overstated by at least $9.7 million in the financial statements.

Audit Report for Worth County Released

On Tuesday, the Missouri State Auditor released its report for the County of Worth. The overall rating for the county was “Good.” The following findings were issued by the auditor’s office:

–The Prosecuting Attorney does not issue receipt slips for all money received. The Prosecuting Attorney’s spreadsheets sent to victims and defendants showing current restitution accounts receivable balances are not always accurate.

–The Recorder of Deeds has not established proper procedures for receipting and recording money received, and does not perform adequate bank reconciliations and does not prepare a monthly list of liabilities.

–A complete and accurate seized property evidence log has not been maintained and a physical inventory of seized property has not been performed since the Sheriff took office in January 2021.

–The County Collector, Recorder of Deeds, and Sheriff have not established adequate password controls to reduce the risk of unauthorized access to computers and data. The County Collector, County Clerk, County Treasurer, Recorder of Deeds, and Sheriff do not have security controls in place to lock computers after a specified number of incorrect login attempts.

–The county has not developed a records management and retention policy in compliance with the Missouri Secretary of State Records Services Division guidance, as approved by the Missouri Local Records Commission.

The following recommendations were made:

–The Auditor’s Office recommended the Prosecutor issue receipt slips for all money immediately on receipt and establish procedures to record account receivables accurately;

–The Recorder of Deeds issue receipt slips for all money received on receipt, maintain a log of copy money and reconcile it to the money transmitted to the County Treasurer, prepare adequate monthly bank reconciliations and lists of liabilities, and investigate and resolve any discrepancies.

–The Sheriff maintain a complete and accurate seized property evidence log, ensure a periodic inventory is conducted and reconciled, and investigate any differences;

–The Commission work with other county officials to require passwords for all computers and employees and require passwords to be periodically changed and require computers to have security controls in place to lock each computer after a specified number of incorrect login attempts;

–The County Commission work with other county officials to develop a written records management and retention policy.

Because counties are managed by several separately elected individuals, an audit finding made with respect to one office does not necessarily apply to another office. The overall rating of the county does not necessarily indicate the performance of any one elected official or county office.

Opinion -- Stopping Government Corruption is a Team Effort

Nicole Galloway, CPA

Missouri State Auditor

Two years ago, I launched a renewed effort to fight fraud and abuse in government by creating the Public Corruption and Fraud Division in my office. In every corner of the state, we've shown that exposing wrongdoing by public officials not only helps recover tax dollars for citizens, it puts others on notice that corruption will not be tolerated. As a CPA and certified fraud examiner, I remain committed to being your independent watchdog as we work to root out fraud and abuse.

Since 2015, audits by my office have led to 77 criminal charges against public officials. That work has been amplified by the Public Corruption and Fraud Division, which includes a team of dedicated attorneys, auditors and investigators. They have a demonstrated history of working with local, state and federal law enforcement to pursue justice for taxpayers.

The results are significant. An audit of the city of Center in northeast Missouri found the city clerk misappropriated more than $300,000 in public funds and used them to pay credit card bills and other personal expenses. That's a lot of taxpayer dollars in a town of only 500 people. She now faces federal criminal charges of wire fraud and theft, and my office is working with prosecutors on the case.

In the Bootheel town of Parma, an audit found a pattern of blatant corruption and cover-ups that resulted in more than $115,000 fraudulently taken from the city. Three former city officials now face criminal charges that include stealing and forgery.

And after our audit of Putnam County Memorial Hospital found $90 million in illegal billings, the Public Corruption and Fraud Division worked with federal law enforcement agencies in Missouri, Florida and Washington, D.C. to share information and support a national investigation involving rural hospitals throughout the country.

The former CEO of the hospital has pleaded guilty to federal health care fraud charges, and others have been charged in a federal indictment to operate a multi-state $1.4 billion billing scheme that used rural hospitals to submit fraudulent claims. The work by my office played a key role in bringing down this scheme.

From charter schools in Kansas City and St. Louis to fire districts in small Missouri towns, I'm proud of all this anti-corruption team has accomplished to expose wrongdoing. Our forensic auditing expertise has resulted in dozens of criminal charges being filed in the past two years. Government officials have been kicked out of office, received felony convictions, and made to repay the money stolen from taxpayers.

I never lose sight of the fact that our success in exposing public corruption depends to a large degree on the information we receive from citizens. Whistleblowers see wrongdoing and take action to do what is right.

As we mark the successes of the Public Corruption and Fraud Division, I'm asking for your help. The Whistleblower Hotline in the State Auditor's Office allows individuals to report suspected fraud and abuse, and you can reach us through phone calls, emails or our website.

In some cases, the information from whistleblowers results in audits that uncover wrongdoing and lead to filing of criminal charges and the convictions of public officials. In other situations, we work with public officials to make them aware of problems that can be resolved quickly or go directly to the proper authorities with allegations.

The bottom line is that I want to hear from you. If you have concerns about abuse and mismanagement in government, you can call 800-347-8597 or visit auditor.mo.gov/hotline. Under the law, whistleblowers have the option to remain anonymous.

I remain dedicated to our mission to expose fraud and protect taxpayer dollars. Involved citizens are important allies in this fight. Together, we can spotlight public corruption and help put a stop to it.

Opinion -- State Auditor’s Public Corruption, Fraud Division Secure Results

By the Missouri State Auditor’s Office

Auditor Galloway Friday outlined the successes of her Public Corruption and Fraud Division, which has contributed significantly to her office's fight against public corruption. Auditor Galloway launched the division and announced efforts to direct increased resources towards investigations of fraud and abuse at the start of 2019.

"I am proud of the work of my team and all we have accomplished over the past two years to expose wrongdoing. This division has an impressive record of exposing fraud and working with law enforcement to hold those responsible accountable," Auditor Galloway said. "Each time we uncover fraud and abuse, it puts others on notice that public corruption will not be tolerated."  

The members of the Public Corruption and Fraud Division have a demonstrated history of working with local, state and federal law enforcement to pursue justice for taxpayers. Since 2015, audits have resulted in 77 criminal charges against public officials. That count has doubled since Auditor Galloway launched her team, which is made up of a dedicated group of attorneys, auditors and investigators.

Most recently, an audit of the City of Center, located in northeast Missouri, found the city clerk misappropriated more than $300,000 in taxpayer funds and used them to pay personal credit cards and other personal expenses. The clerk was indicted in federal court in November and now faces criminal charges of wire fraud and theft. Also, in November, criminal charges were filed against three former Parma city officials in southeast Missouri. An audit found more than $115,000 was taken fraudulently from the city.

The division has also worked with law enforcement agencies to build on past successes and support ongoing investigations. In 2017, an audit of Putnam County Memorial Hospital found $90 million in illegal billings were passed through the 15-bed hospital in northern Missouri. The Public Corruption and Fraud Division worked with federal law enforcement agencies in Missouri, Florida and Washington, D.C. to share information and support a national investigation involving rural hospitals throughout the country. In 2019, the former CEO of the Putnam County Memorial Hospital pleaded guilty to federal health care fraud charges. In 2020, the head of a hospital management company and nine other people were charged in a federal indictment of conspiring to operate a multi-state $1.4 billion billing scheme that used rural hospitals to submit fraudulent claims.

The State Auditor's Office continues to utilize the Whistleblower Hotline, which allows individuals to report suspected fraud and abuse through calls, emails and web submissions.

In some cases, whistleblower contacts result in audits which have led to the filing of criminal charges and the convictions of public officials. Investigations that don't lead to audits also have brought about changes beneficial to taxpayers after Auditor Galloway's office has worked with  public officials to make them aware of problems that can be resolved quickly.

In other cases, credible allegations have been referred to the appropriate enforcement authority, such as a situation this fall when the Missouri Ethics Commission (MEC) issued an order against an official of the Ozark Fire Protection District in southwest Missouri. The order was issued after the State Auditor's Office investigated and found credible a whistleblower complaint that the district made purchases without proper bidding or public notice.   

Even as the office transitioned to telework in 2020 for the health and safety of employees, the State Auditor's Office Whistleblower Hotline has remained active. Citizens with concerns about abuse and mismanagement in government can call 800-347-8597 or visit auditor.mo.gov/hotline to submit a complaint. Under the law, whistleblowers have the option to remain anonymous.

Eagleville, Worth, Denver Fail to File Reports

On Friday, Missouri State Auditor Nicole Galloway released reports on cities required to file financial reports by June 30th, 2019 with her office. This is a requirement for cities whose fiscal years ended December 31st, 2018.

In Harrison County, Blythedale filed their financial report. Eagleville did not.

In Nodaway County, the cities of Hopkins, Parnell, and Pickering all filed their reports by the June 30th, 2019 deadline.

In Worth County, Grant City, Sheridan, and Allendale filed their financial reports by the June 30th deadline. The cities of Worth and Denver did not.

In addition, the Auditor’s Office released a list of subdivisions required to file financial reports by the June 30th deadline. In Gentry County, the 911 Board, which handles Worth County’s 911 dispatching services, filed their report.

In Harrison County, the North Harrison Ambulance District filed their report by the June 30th deadline. The North Harrison Fire Protection District did not.

In Nodaway County, the Hopkins Fire Protection District did not file their financial report by the June 30th deadline. The Parnell Fire Protection District did. The Union Township Fire Protection District did not. The Jackson Township Fire Protection District did.

In Worth County, the Worth County 911 Board, the Ambulance District, and the Fire Protection District all filed their financial reports by the June 30th deadline.

3 Gentry County Towns, 1 Worth County Subdivision Fail to File Financials

Three Gentry County towns which were required to file financial reports by December 31st did not do so, the Missouri State Auditor’s Office reported. The Cities of Albany, King City, and Darlington were required to file financial reports for their fiscal years ending June 30th, 2018, but did not do so. In Harrison County, the Village of Mount Moriah did.

Several political subdivisions did not file financial reports which were due on December 31st. In Gentry County, the Albany Community Fire Protection District and the Albany Public Library District did not. The Stanberry Rural Fire Protection District did.

In Harrison County, the East Fork of Big Creek Subdistrict, the Panther Creek Watershed Subdistrict, and the West Fork of Big Creek Subdistrict did not file financial reports.

In Nodaway County, the 102 River Tributaries Subdistrict, the Barnard Fire Protection District, the Mill Creek Watershed Subdistrict, and the Mozingo Creek Watershed Subdistrict did file timely financial reports. The West Nodaway Fire Protection District did not.

In Worth County, the East Fork of the Grand River Watershed District and the Sheridan Fire Protection District filed timely financial reports. The Public Water Supply District #1 did not.

Village of Gentry Late in Filing Financial Report

Missouri State Auditor Nicole Galloway’s office reported that the Village of Gentry failed to file required financial reports by the October 31st deadline. All cities, towns, villages, and political subdivisions such as fire, water, and other taxing districts must file reports with the Missouri State Auditor’s Office within six months of the end of their fiscal year. Because Gentry’s fiscal year ended on April 30th, they were required to file their report by October 31st.

A total of 94 local governments and taxing districts were required to file reports by October 31st. Out of those, 72 filed financial reports timely. 22 other cities, 7 villages, and 8 taxing districts filed their reports late during the month of October.

Law Enforcement Can’t Locate 1,200 Sex Offenders, Audit Shows

Local law enforcement officials in the state of Missouri don't know the whereabouts of more than 1,200 registered sex offenders -- including almost 800 offenders that would be classified as the most dangerous -- a new report from State Auditor Nicole Galloway finds.

Galloway today released her audit of Missouri's sexual offender registration (SOR) program. State law requires those convicted or found guilty of sexual offenses to register their name, address and other information with the chief local law enforcement official, who is most often the sheriff. That information is made public through a database and website maintained by the Missouri State Highway Patrol. Offenders must verify the information at regular intervals and notify the appropriate law enforcement officials if they move.

Due to inadequate enforcement of the registration requirements at the local level, 1,259 registered sex offenders failed to follow the law. That number represents 7.9 percent of the almost 16,000 offenders required to register. Auditor Galloway said in several counties and the city of St. Louis, the locations of over 10 percent of registered sex offenders were unknown to law enforcement. The report also highlighted a need to improve management of the SOR database and weaknesses in current state laws.

This area bucked the trend when tracking registered sex offenders. In Gentry County, there are 13 sex offenders registered, all of whom are compliant. In Harrison County, there are 25 sex offenders registered, all of whom are compliant. In Nodaway County, there are 38 registered sex offenders, 37 of whom are compliant. In Worth County, there are five registered sex offenders, all of whom are compliant. These figures of non-compliance are much lower than the state average.

"The law requiring sex offenders to register has been on the books for more than 20 years to help keep our communities, and especially our children, safe," Auditor Galloway said. "But if the law isn't enforced, it's not effective and public safety is compromised."

Although failure to comply with registration requirements is a felony, the audit found that less than 10 percent of offenders identified as noncompliant had an active arrest warrant for noncompliance. The failure to obtain arrest warrants prevents other law enforcement agencies from taking noncompliant offenders into custody on that charge during traffic stops and other interactions. It also means sex offenders can live indefinitely in locations unknown to law enforcement and the public with little risk of apprehension or prosecution for noncompliance.

Missouri's sex offender registration law took effect in 1995, and the law was updated this year to classify sex offenders into three tiers based on the severity of the offense. Those who commit Tier III offenses -- including rape, sodomy or child molestation in the first or second degree -- must register with local law enforcement every 90 days for their lifetime. The audit found that at least 794 of the 1,259 non-compliant offenders met the criteria for Tier III classification.

"Law enforcement can't track the location of registered sex offenders if sex offender laws are not enforced," the Auditor said. "This also takes away the ability of Missourians to effectively use the sex offender registry when making decisions to protect themselves and their families."

The audit also pointed to the need for the Missouri State Highway Patrol to improve its procedures for maintaining the SOR database and supporting local law enforcement efforts to enforce registration requirements. Those include updating the compliance status of offenders in accordance with internal policy, and establishing agreements with other state agencies to perform batch data matches to locate absconders or determine if sex offenders were actually deceased.

Finally, Auditor Galloway said the Legislature should make revisions to strengthen state law, both on allowing the State Auditor's Office to access necessary court records when auditing the sexual offender registration program, and on requiring background checks for school volunteers.

Three Area Towns Miss June 30th Filing Deadline

Three area towns which were required to file annual financial reports with the Missouri State Auditor’s Office missed deadlines to do so by June 30th, the Auditor’s Office says. The Village of Blythedale in Harrison County and the Villages of Allendale and Denver in Worth County failed to meet the deadline.

Several other towns did meet the June 30th deadline. In Harrison County, the Village of Eagleville filed their report on June 8th. In Nodaway County, the City of Hopkins filed their report on January 25th. Parnell filed its report on April 9th, while Pickering filed its report on February 27th.

In Worth County, the City of Grant City filed its financial report on June 26th. The City of Sheridan filed its report on April 23rd, while the Village of Worth filed its report on February 15th.

Missouri law requires each city, town, or village to submit a copy of its annual financial report to the Missouri State Auditor’s Office. Should one fail to do so, the Auditor’s Office notifies the Missouri Department of Revenue. Out of 406 cities, towns, and villages in Missouri required to file financial reports by June 30th of this year, 258 did so, two submitted partially filed reports, and 146 did not file reports.

The Auditor’s Office also released a list of political subdivisions required to file reports with the office by June 30th. In the area, the North Harrison Ambulance District filed their report on March 7th. The North Harrison Fire Protection District did not file their report by June 30th.

In Nodaway County, the Hopkins Fire Protection District and Parnell Fire Protection District did not file their reports with the Auditor’s Office by June 30th. The Jackson Township Fire Protection District (February 9th), Public Water Supply District #1 (June 28th), and Union Township Fire Protection District (January 19th) did.

All three Worth County subdivisions listed in the report filed their reports by June 30th. Listed were the Worth County 911 Board (January 29th), the Worth County Ambulance District (January 22nd), and the Worth County Fire Protection District (March 14th).

Throughout the state, there were 1,005 political subdivisions  that were required to file financial reports by June 30th which had filed reports with the Auditor’s Office. There were 461 which had not.

Auditor Galloway Finds Coffey Missing $60,000+

An audit of the city of Coffey released Thursday by State Auditor Nicole Galloway shows more than $60,000 missing from the small northwest Missouri town. According to the audit, over a period of almost two years the former city clerk failed to make deposits, received improper payroll payments, and falsified board minutes and various financial reports. Coffey, located in Daviess County, has a population of 166 (2010 census).

“My audit found a pattern of missing deposits, suspicious checks, and falsified minutes and financial reports, along with what can only be described as a shell game of moving money between various city accounts in order to avoid detection,” Auditor Galloway said. “All of this was compounded by minimal, and often non-existent, oversight by city officials.”

As Coffey city clerk from September 2015 to August 2017, Mary L. Browning was solely responsible for the financial accounting functions and records of the city. She was terminated on August 2 of last year. The audit found that during her employment, Browning did not deposit almost $34,000 in utility payments, including $2,645 she credited to her own utility account.

In addition to the missing deposits, improper payroll checks totaling $24,634 were written to Browning from the city’s water and sewer bank accounts; payroll records also indicate she was overpaid an additional $1,556 because she entered in a different number of hours on the payroll report than what was recorded on her timesheets. Although city payroll checks require the signatures of both the mayor and the city clerk, members of the city’s Board of Aldermen indicated to the Auditor’s Office that the former mayor often signed blank checks in advance.

As part of the scheme, Browning created false meeting minutes to make it appear the Board of Aldermen authorized her making a withdrawal and deposit between accounts. Over the course of her employment, Browning made numerous transactions between the city’s nine checking accounts and a savings account. She also prepared false financial statements for the city that significantly over-stated the balances in the city’s accounts.

The audit cites lax oversight by both the Mayor and the Board of Aldermen, which at the time included Browning’s husband. Alderman Browning voted to approve a pay raise to his wife, a violation of Missouri law, and also approved paying bills at many meetings that included improper payroll checks and regular payroll checks to his wife. In addition, there was a lack of safeguards through basic accounting controls and procedures, including the city’s failure to obtain annual audits as required.

A bank official contacted a Board member last August regarding suspicious activity on city bank accounts. After terminating the city clerk once this information came to light, the Board asked local law enforcement for assistance.

The Daviess County Prosecuting Attorney subsequently requested an investigation by the State Auditor’s Office. After an initial investigation by her office, Auditor Galloway determined further investigation through an audit was warranted. The Board of Aldermen then passed an ordinance formally requesting and authorizing the audit, the results of which were announced today.

“Particularly for a town this size, the amount of missing money we discovered can have a direct impact on the services available to residents,” the Auditor said. “This is a serious breach of public trust at the expense of citizens. In addition to the recommendations the audit gives to city officials to help them work to restore that trust, I’ve provided information from the audit to appropriate law enforcement agencies to determine further action.”

Auditor Galloway has turned the report results over to local, state and federal law enforcement authorities and says her staff stands ready to assist prosecutors in any way possible. The full report on the city of Coffey, which received an overall rating of poor, can be found online.

State Auditor Visits GHS Paper Tube Factory in Albany

Missouri State Auditor Nicole Galloway met with community leaders in counties across north Missouri to discuss issues related to small business development and growth, including an ongoing follow-up audit of the Missouri Small Business Regulatory Fairness Board.

Auditor Galloway's small business tour included a stop in a Gentry County, where she toured GHS Paper Tube and Core Manufacturing Company in Albany. The company manufactures paper tubes and cores for industrial packaging, shipping and other specialty or custom business needs, and is currently rebuilding after a fire devastated the facility earlier this year.

"We know small businesses across the state are committed to their customers and their communities, and I've seen firsthand the dedication of many of these small business owners and operators, including the hard working folks at GHS Paper Tube and Core Manufacturing," Auditor Galloway said. "Even after a fire destroyed much of the facility just eight months ago, they're back up and operating and providing products and service to their customers. Small businesses across the state take pride in what they do, and they demonstrate a resilience that benefits our communities and our state."

In Sullivan County, Auditor Galloway participated in a small business roundtable discussion hosted by Milan Area Chamber of Commerce, where she met with representatives of the chamber and local business leaders in Milan.

The tour is part of an effort to gather input from small business owners and entrepreneurs across the state to assist in a collaborative effort to make recommendations and improve operations and service of the Small Business Regulatory Fairness Board.

"No one knows small businesses better than the people who run them, and that's why I've made it a priority to visit with business owners to get input on the issues that matter most to them," Auditor Galloway said. "It's critical to the health of our economy that we promote an environment where small businesses can thrive, and that starts by making the regulatory process less burdensome, and getting input as we move forward with recommendations to improve the board's operations."

The Small Business Regulatory Fairness Board was created to serve as an advocate for small businesses across Missouri but has not fulfilled its obligations under the law, and has been plagued with issues that have undermined its effectiveness. In May, Auditor Galloway shared the results of an audit of the board, which found sub-par operations due to inadequate staffing, board vacancies and lapsed terms, and a general lack of support for the board's statutorily required duties. Because the board received a rating of poor, the lowest available, a follow-up audit will be conducted to determine whether recommendations have been implemented. To provide input or information for consideration during the course of the follow-up audit, contact the State Auditor's Office at moaudit@auditor.mo.gov or by calling 800-347-8597.

The trip also included a visit to the Carrollton County courthouse where Auditor Galloway congratulated county officials and employees on receiving an excellent rating, the highest available, on their recent county audit. This was a first for any county in the state since the ratings system was implemented in 2011. Auditor Galloway also met with county officials and leaders in Mercer, Schuyler and Scotland counties.

McDonald County Grand Jury Charges Lanagan Police Chief, Officer with Felony Forgery

A McDonald County Grand Jury has indicted the Lanagan chief of police and one of his officers for felony forgery.

Lanagan Chief of Police Larry D. Marsh was charged with five counts of felony forgery for writing citations with a "non-existent" Missouri statute and altering a racial profiling report.  Lanagan Police Officer Michael Gallhue was also charged with two counts of felony forgery for similar offenses.  All are Class C felonies.

State Auditor Tom Schweich issued an audit of the McDonald County town in November 2011.  Among the key audit findings were missing funds and evidence that the city routinely violated Section 302.341.2, RSMo, popularly known as the "Macks Creek Law," by failing to relinquish  excess revenues received from speeding tickets to the state for distribution to local schools.  Schweich's auditors discovered the police department filed incorrect Missouri Vehicle Stops Annual Reports with the Missouri attorney general, which helped hide the excess revenues.

Schweich's office shared the information with McDonald County Prosecuting Attorney Jonathan Pierce, who then convened a grand jury investigation.  Last week, Pierce asked the Missouri Highway Patrol to arrest Marsh and charge him with falsifying reports.

"This is a great example of what teamwork between state and local government can do to uphold accountability,"  Schweich said.  "We have an outstanding staff of experienced auditors and an exceptional legal team that reviews every audit and takes action when misdeeds like this are identified."

McDonald County Prosecuting Attorney Pierce added:

"I appreciate the work done by Auditor Schweich's team," Pierce said.  "The action we took last week shows no one is above the law, and this office will not hesitate to vigorously pursue those who violate the public trust."

Schweich's audits were instrumental in the arrest of another local official last year.  The Schuyler County Collector resigned after a state audit showed she had embezzled more than $500,000 for her own personal use.  She pled guilty to felony mail fraud and has been sentenced to 33 months in federal prison.

House Budget chair blisters the governor's budget director over disaster funds

The House Budget Committee grilled State Budget Director Linda Luebbering about the $150 million being withheld by the governor for disaster relief. The governor has set aside the money in anticipation of payments to Joplin and other areas affected by natural disasters without knowing exactly how much money is needed.

Committee chairman Ryan Silvey, R-Kansas City, charged Gov. Jay Nixon's action was unconstitutional because the state's constitution does not give him power to withhold funds from the budget to use the money for other purposes.

Article 4, Section 27 of the Missouri Constitution empowers the governor to withhold funds if revenue collections are running below the estimate upon which the budget was based. Silvey charges that provision does not empower the governor to cut agency allotments to reserve funds for other purposes the governor wants to finance.

Luebbering said money is needed to cover the expected costs for disaster relief in Joplin and the flooding in southeast Missouri. State obligations could include debris removal or rebuilding schools but as of now there is no breakdown of the specific costs, she said.

"We think setting aside $150 million for all these efforts is a perfectly reasonable amount of money," Luebbering said.

Silvey and other members of the committee questioned why the governor was withholding money from the 2012 fiscal year instead of using the money available in the state's Rainy Day Fund. Created in 2000 as the Budget Reserve Fund, the Rainy Day Fund contains roughly $500 million, half of which can be used for disaster relief payments.

"The Rainy Day Fund is an option," Luebbering said. "I don't know if we will use the Rainy Day Fund."

The constitution requires a two-thirds vote by the General Assembly to use the Rainy Day Fund for emergency relief. In July, Nixon said he would include disaster relief funding as part of the legislature's special session that begins Sept. 6, but in the official call issued Aug. 22, Nixon left out the issue. A special session can take up only the specific issues included in the governor's call.

Silvey questioned why the governor decided to exclude the legislature from discussing the disaster funding in the special session.

Directly facing Nixon's top budget official, Silvey repeatedly voiced frustration about the administration's approach, saying, "The governor does not want to deal with the legislature."

Luebbering said the governor made the decision to restrict expenditures to allow for more flexibility later in the year. She said the governor's office was looking at the broader constitutionality of the issue and previous court cases that established precedence for the decision to withhold funds. She could not name the cases she was referring to.

"The executive branch has the authority to balance the budget," Luebbering said.

Silvey said he did not feel a solution was reached at the meeting but was glad the committee served its purpose in questioning the decision.

"It's clear that the governor does not like dealing with the legislature," said Silvey. "It's clear that he'd rather have flexibility than go along with the constitution."

Rep. Chris Kelly, D-Columbia, told the committee the issues with the governor's budget is due to the legislature's own action in crafting a budget that left the door open for the governor to use funds for disaster relief without clear legislative authorization. He called on the Budget Committee to close the administrative flexibility in executive spending.

"It is easy to drive a truck through that little flexibility hole without seeing the damage," Kelly said.

Silvey said these issues will likely affect bills in the next legislative session.

"Our problem isn't where's the money's going but the process that it's getting there," Silvey said. "We want to see the money going where we appropriated it."

Earlier this month, State Auditor Tom Schweich sent the governor a letter questioning the constitutionality of the governor's budget withholding actions. Schweich charged that Luebbering's budget official failed to provide any information substantiating that revenue collections were falling below the original estimates upon which the budget was based.