Auditor claims county hampers auditing efforts

Debby Hernandez

David Crisp/Last Best News

County Auditor Debby Hernandez says commissioners prevent her from doing her job properly.

An ongoing dispute has led to clashes between county commissioners and County Auditor Debby Hernandez, who says commissioners have stripped her office of funding needed to do her job properly.

The result, she said, is that large revenue accounts go unaudited, which could hurt taxpayers.

“How do I know that fees that go into the sheriff’s department don’t go into somebody’s purse?” she said.

Hernandez reported to commissioners that in the 2010 fiscal year, nearly $12 million in county revenues went unaudited. By 2014, she reported, the unaudited revenues had increased to more than $20 million.

“The current staffing level in the Auditor’s Office cannot support the need identified above,” she told commissioners in a memo at the time. But she has lost staff since those reports, she said, and in the newest county budget, which has not yet been finally adopted, a 26 percent cut in her office has been proposed.

County commissioners contacted Monday sharply disagreed with Hernandez’s assertions.

“I view that as completely bogus,” Commissioner John Ostlund said. He said the county has a finance director and a great accounting staff.

In addition, he pointed out, Yellowstone County is audited each year by an outside firm, Anderson ZurMuehlen, which consistently gives the county clean audits.

Commissioner Jim Reno, who proposed in the past combining the auditor’s office with the clerk and recorder’s office, reiterated his support for that position on Monday.

“It’s one of those antiquated functions of county government that goes back to the 1800s,” he said in a telephone interview. “It’s time to change.”

Ostlund said that he had considered that suggestion but would not make a judgment about it until a thorough analysis had been conducted.

Commissioner Bill Kennedy could not be reached. He is resigning his position at the end of July to become president and chief executive officer of the Montana State University Billings Foundation.

Hernandez maintained that the outside audit is inadequate. She said that Anderson ZurMuehlen examines only a sampling of transactions and could easily miss problems.

“AZ claims they do some oversight,” Hernandez said, “and I would have to disagree.” She added, “I would be shocked if they ever went out and talked to people.”

As an example, she points to a discrepancy raised by Auzie Blevins, a member of the Blue Creek Trails and Parks Association, which is now defunct.

Blevins said in a series of emails that his group in 2012 attempted to use $25,000 in park funds to build a pedestrian bridge across Blue Creek. Under state law, developers of new subdivisions must donate cash or land for parks in “reasonably close proximity” to the proposed subdivision.

But instead of setting that money aside for Blue Creek, Blevins said, it was simply lumped in with other park funds. He asked for an audit of the park fund, but Hernandez said she was not allowed to audit the fund.

Instead, the county and state entered into an agreement in 2013 under which the county searched subdivision records going back to 1996 and allocated park dedication funds into 10 park districts. That “semi-corrected” the problem, Blevins said, but both he and Hernandez questioned whether the agreement was legal or accurate.

“Do I think any of this is right?” Hernandez said. “I have no idea.”

Blevins has since attempted to get the state Local Government Services Bureau to conduct its own audit, but the bureau declined. In a February email, Acting Bureau Chief Kimberly Smith said the bureau no longer has audit staff. Under law, the bureau can contract for outside auditors, but Smith said that after weighing the allegations against the cost of the audit, she had to “respectfully decline” to order an audit.

Blevins has since contacted legislators, asking them to propose legislation that would “prohibit any substantive interference with elected County Auditors in the performance of their statutory duties.”

Disagreement about the role of the county auditor goes back to at least 1992, when then-Auditor Leo Hudetz questioned his legal duties. As written, state law appears to give auditors broad powers to examine the books and accounts of all county officers, including the power to compel witnesses to appear “on any matter they may deem necessary.”

But Yellowstone County has adopted a more limited view of the auditor’s powers, according to a 1992 memorandum from then-County Attorney Dennis Paxinos. His memo relied on Montana Supreme Court decisions that found the Legislature “clearly intended to limit the Auditor’s duties to bookkeeping and account balancing functions.” He noted that the law allows commissioners to direct county auditors to perform clerical and other duties, as long as they are left a reasonable amount of time to perform their statutory duties.

Paxinos said the Supreme Court based its opinions in part on its finding that the Legislature set no professional qualifications for the job. Reno noted that the only requirements are that the auditor must be of voting age and have lived in the county for two years.

In 1998, in response to a request from Paxinos, then-Attorney General Joe Mazurek said the county has no authority under state law to reduce the auditor’s position to half time. State law requires that all counties with a population of at least 15,000 have an auditor.

However, Mazurek said the county did have the authority to consolidate the auditor’s position with that of another elected official.

Hernandez, who has been in office since January 2003, said it soon became clear that lots of county departments were not being audited and some had never been audited at all. But she said that with her limited staff, she can audit only payroll and other expenditures, not revenues.

“If anything, nothing has changed except that it’s gotten worse,” Hernandez said. The county now processes about a thousand purchase orders a month and has a budget of more than $100 million.

“We continue to get bigger, and we don’t have the assets to do it,” Hernandez said. She blamed the short staffing in part on a desire by commissioners to exercise full authority.

“They almost view it as if it’s their private business,” she said. But Ostlund noted that as a single commissioner he has zero power. Only with other commissioners voting together can he exercise authority.

Ostlund and Reno agreed that budgets for county departments are tight this year as the county attempts to save money to pay for a jail expansion. Voters in June approved the county’s request to borrow up to $9.7 million for jail renovations and additions.

Travel and training funds were cut from Hernandez’s budget because they had not been used in recent years, Ostlund said. But Hernandez said that she hadn’t been able to use the funds because of turnover on her staff and now needed it for training.

Underlying the ongoing dispute over the office is a more personal dispute between Hernandez and commissioners.

“It is very personal and has been for years,” Hernandez said.

Hernandez filed a human rights complaint in 2008 against county commissioners, human resources Director Dwight Vigness and Chief Deputy County Attorney Dan Schwarz. She claimed that she faced discrimination because of her gender and because her husband, Pedro Hernandez, is a longtime justice of the peace in Yellowstone County.

The state Human Rights Bureau dismissed the complaint but found that she had been retaliated against for filing it. Both sides agreed to a settlement of the complaint.

Both Ostlund and Reno denied there was anything personal about their position.

“That’s b.s.,” Ostlund said. He said that Hernandez could bring any concerns she has to commissioners’ meetings at any time but has not “darkened our door.”

“I’m truly disappointed,” he said.

Hernandez said that with her limited staff, she has no time to attend commissioners’ meetings.

“They should know that,” she said. “I don’t have the staff to show up at those meetings.”

Hernandez also said that she has received no help while dealing in recent months with illness, including cancer treatment.

“It’s almost like being in an abusive household,” Hernandez said.

Reno said his only concern was running a cost-efficient government.

“I get angry when there’s fat in the budget,” he said, “and there’s fat in the budget.”

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