"Untouchable" Richie Farmer, Kentucky's Ex Agriculture Commissioner, Sentenced To 27 Months In Federal Prison, Fined $120,000.

Ex-ag chief Richie Farmer sentenced to prison

FRANKFORT — Former University of Kentucky basketball star Richie Farmer was sentenced Tuesday to 27 months in prison for misusing state resources during his tenure as Kentucky's agriculture commissioner.

U.S. District Judge Gregory Van Tatenhove ordered Farmer to pay $120,500 in restitution, with $105,500 going to the state and $15,000 going to the Kentucky Department of Agriculture.

Farmer, 44, a guard for the 1991-92 UK team dubbed "The Unforgettables" for their gutsy play, had pleaded guilty in September to two counts of misappropriating government resources while overseeing the Agriculture Department. Farmer, a Republican, was agriculture commissioner from 2004 to 2011.

"Certainly, I made some mistakes and I made some poor judgments, and for that I'm truly sorry," Farmer said in a brief statement in court. "I just want to say publicly I am sorry for all those things. ... I am truly, truly sorry for what I've done."

Farmer also is scheduled to be sentenced Friday before Franklin Circuit Court Phillip Shepherd to a one-year concurrent sentence. He pleaded guilty in a separate case to one count of violating state finance law, relating to 2008 campaign expenditures.

In April 2013, Farmer was charged by a federal grand jury with four counts of misappropriating money and property and one count of soliciting property in exchange for a state grant. Each charge carried a maximum penalty of 10 years in prison and a $250,000 fine. He initially pleaded not guilty to all charges.

Prosecutors alleged that Farmer had created political jobs for close friends who performed little or no work. Those employees allegedly ran personal errands for Farmer, including building a basketball court at his home in Frankfort and chauffeuring his dog, while being paid by the state.

The indictment alleged that Farmer took a variety of state property, including electronic equipment, guns, knives, refrigerators and filing cabinets. Farmer's extended family stayed in hotel rooms that were paid for by the state during the Kentucky State Fair in 2009 and 2010, the indictment alleged.

Farmer also faced a 42-count charge brought by the Executive Branch Ethics Commission. Those charges included misuse of state employees, misuse of state resources, improper use of grants and improper use of Kentucky Proud marketing funds.

Much of the information in the indictment and in the ethics charges stemmed from state Auditor Adam Edelen's review of the agriculture department after Farmer left office in 2012. The audit found that a "toxic culture of entitlement" permeated the department under Farmer.

Van Tatenhove said he would recommend that Farmer serve his sentence at a federal camp at Manchester in Clay County, Farmer's home county. The decision of where he serves the sentence will be made by the U.S. Bureau of Prisons.

Farmer will be free until March 18, when he must report to prison.

Defense attorney J. Guthrie True had argued that a 21-month sentence would be sufficient, but Van Tatenhove chose to go with the greater sentence sought by prosecutors.

"Breach of the public trust is a really serious crime," Van Tatenhove said. "Part of my job is to hold you accountable for that."

The judge took note of Farmer's basketball triumphs and said: "Nothing I'm saying today should take away from those accomplishments."

Van Tatenhove then added his two cents' worth on whether Farmer's retired jersey should still hang from the Rupp Arena rafters. Some people have questioned whether a uniform honoring a soon-to-be federal prison inmate should still hang there.

Van Tatenhove left no doubt about his opinion, saying it "should remain hanging from now until eternity."

Senate President Robert Stivers, R-Manchester, said reaction in Clay County about Farmer is "one of quite mixed emotions."

"We're very sad that this occurred, but we hope that this is a chapter in his life that he can get behind him and move forward.

"He has three small children, parents and relatives who have all been affected by this. We hope this brings to a conclusion this matter."

Few athletes in the state's history were as beloved as Farmer. He became a folk hero in Clay County in the 1980s, leading the school in the Eastern Kentucky mountains to three state title games and the 1987 Sweet Sixteen championship.

By the time Farmer ended his high school career with 51 points in the 1988 state finals, his popularity was so great that then-Kentucky coach Eddie Sutton offered him a Wildcats scholarship.

Farmer and his fellow UK classmates Deron Feldhaus, John Pelphrey and Sean Woods stuck with Kentucky through the Sutton-era NCAA probation. The quartet helped Rick Pitino rebuild Kentucky basketball. In 1998, Farmer was inducted into the Dawahares/Kentucky High School Athletic Association Hall of Fame. The Kentucky Athletic Hall of Fame in Louisville — the statewide sports hall — inducted Farmer in 2002.

In 2011, his last year as agriculture commissioner, Farmer ran unsuccessfully for lieutenant governor on a ticket with former state Senate President David Williams of Burkesville. They lost to incumbent Gov. Steve Beshear and his running mate, Louisville Mayor Jerry Abramson.

Assistant U.S. Attorney Kenneth Taylor said "no one takes pleasure in seeing one of Kentucky's favorite sons take a fall like this."

Nevertheless, Taylor said Farmer's sentence should send a message to others who would abuse the public trust, who want to know "where the edge of the road is."

"A message has to be sent," Taylor said.

True, Farmer's defense attorney, said that for someone like Farmer, who climbed higher in life, "the risk is the higher fall when you make a mistake."

"I am one bad decision from being in that same spot," True said.

True then argued that a 21-month sentence would send the same message and would be the same deterrent to others as a 27-month sentence.

"I would submit that 21 months is sufficient," True said.

But Judge Van Tatenhove, citing French historian Alexis de Tocqueville, said, "Liberty cannot endure without morality." (The judge took liberties with the quote; what de Tocqueville actually said is "Liberty cannot be established without morality, nor morality without faith.")

In any case, the judge said the punishment must be about "upholding the public trust," and chose the greater sentence for Farmer.

Read more here: http://www.kentucky.com/2014/01/14/3033479/farmer-sentenced-to-more-than.html#storylink=cpy

Feds Aim To Make Richie Farmer A Poor Man, Seek 27 Months Prison Sentence Plus Fines

Feds want 27 months in prison for Farmer

LOUISVILLE, KY. — Former Kentucky Agriculture Commissioner Richie Farmer abused the trust and goodwill he earned as a basketball star at the University of Kentucky and should spend 27 months in federal prison along with having to pay $120,500 in restitution to the state and the agency he led for eight years, federal prosecutors said Friday.

Assistant U.S. Attorney Kenneth Taylor wrote in a sentencing memorandum that Farmer's star treatment and public adoration of him engendered "what appears to have been a profound sense of entitlement."

"The defendant's athletic success provided the platform from which he could obtain the very office he abused," Taylor wrote. "Seen from that perspective, the goodwill was squandered and the public betrayed."

Farmer pleaded guilty in September to two counts of misappropriating government resources while overseeing the Agriculture Department. Before becoming the two-term commissioner, Farmer was a sweet-shooting guard for the 1991-92 University of Kentucky basketball team dubbed "The Unforgettables" for their gutsy play.

Prosecutors moved to dismiss two charges against Farmer in exchange for his guilty plea. U.S. District Judge Gregory Van Tatenhove is scheduled to sentence Farmer on Jan. 14 in federal court in Frankfort. The restitution would be split, with $105,500 going to the state and $15,000 going to the Agriculture Department.

Farmer's attorney, J. Guthrie True, had not filed a sentencing memorandum as of Friday afternoon. True said a memorandum will be filed in the coming week and declined to comment on Taylor's memo.

Taylor outlined a wide-ranging series of alleged abuses by Farmer during his eight years in office, including hiring friends and expecting little or no work from them; using state employees for personal business, including to build a basketball court at his home in Manchester; and taking items such as laptops, personal refrigerators and filing cabinets home with him, as well as keeping some of them after leaving office in 2012.

"This course of conduct permeated Farmer's entire administration," Taylor wrote. "Unfortunately, those around him were too fearful of losing their jobs, income or position to report the abuses until he left office."

Failure to punish Farmer would allow his conduct to become "part of the culture of government," Taylor said.

Farmer, 44, ran for Lt. Gov. on the Republican ticket with then-state Sen. President David Williams in the 2011 gubernatorial election. The pair lost to incumbent Gov. Steve Beshear, a Democrat, and his running mate, former Louisville Mayor Jerry Abramson.

Farmer was named Mr. Basketball in the state of Kentucky in 1988. He played shooting guard for the University of Kentucky from 1988 to 1992, where he posted career averages of 7.6 points, 1.6 rebounds, and 1.6 assists per game. Farmer and fellow classmen Deron Feldhaus, Sean Woods, and John Pelphrey, became known as "The Unforgettables." Farmer's No. 32 and the jerseys of the other three players were retired.

The Wildcats' run in the NCAA Tournament would end in a regional final against Duke that is often cited as the greatest college game ever played. The heavily favored Blue Devils survived an overtime thriller on Duke forward Christian Laettner's last-second shot at the buzzer.

The team was Kentucky's first to play in the post-season after a two-year ban for NCAA infractions.

Read more here: http://www.kentucky.com/2014/01/03/3016547/feds-want-27-months-in-prison.html#storylink=cpy

U. S. Senate Joins House In Passing Bill To Extend The Debt Limit, And POTUS Barack Obama Has Signed Bill Into Law, Thereby Ensuring That The American Ideals -- And God Given Right - Of Borrowing To Live Beyond Our Means, Continues UNABATED. Watch Videos.

Update: The President has now signed the bill into law. As David Gary would say: blow the feast trumpet! Watch video:

Leonard Lawson Rears His UGLY Head -- Again!

Supreme Court ruling impacts Pike County race
By Joseph Gerth

While the top players in the U.S. Senate race are lobbing dirt clods in a good old-fashioned mud fight, folks in Eastern Kentucky may be getting a glimpse of the future of politics in this country.

The race is a magistrate's election in the rough and tumble world of Pike County Democratic politics and involves a company with ties to political king-maker Leonard Lawson, fresh off his acquittal on federal bid-rigging charges.

And it could forever change the way politics are played in this state and the country.

The stage was set in January, when the U.S. Supreme Court, on a 5-4 vote, struck down federal prohibitions on corporate and union expenditures to promote the election or defeat of political candidates.

In the past, corporations were limited in their roles in elections, having to funnel money through political action committees.

The ruling also, in effect, struck down a 119-year-old provision in the Kentucky Constitution that prohibited corporations from spending money to affect elections. The provision was put into the constitution in an era when the old L & N Railroad held a monopoly and controlled much of the state.

In his State of the Union address three weeks later, President Barack Obama took on the court, saying the decision would "open the floodgates for special interests, including foreign corporations, to spend without limit in our elections."

That left Justice Samuel Alito mouthing the words, "simply not true."

While it hasn't opened any floodgates, it has breeched the dam in Pike County, where at least $15,000 worth of corporate money has been spent to beat Pike County Magistrate Chris Harris' re-election efforts, according to the Lexington Herald-Leader.

The newspaper said Harris had the audacity to criticize cozy ties between the company, which operates the county's largest water system, and public officials.

So, funded by $15,000 from the Utility Management Group, which Lawson bankrolled and co-owns, and another $2,500 from the law firm of Democratic State Sen. Ray Jones, which does legal work for the company, a front group calling itself Citizens for Eastern Kentucky Government began airing television ads making spurious claims.

One television station pulled the ads off the air because the group couldn't prove its claims about Harris.

You've got to wonder if this is just the first of many elections in Kentucky in which corporations will become involved.

Will Churchill Downs and Keeneland and other horse racing companies start airing ads directly endorsing candidates who want to allow slot machines at racetracks?

Was this just a dry run for Lawson and does he intend to spend thousands — if not hundreds of thousands — of dollars from his various businesses to campaign against the re-election of Gov. Steve Beshear, whose administration turned him into the feds?

Will attorneys general who fight rate hikes by utilities in the future suddenly find themselves facing not only a Democratic or Republican opponent — but a well-funded corporate entity willing to spend millions to stop them from a second term?

And will Kentucky elections forever be changed?

Alito seemed to say at the State of the Union that that wouldn't be the case. We'll see.

Joseph Gerth's column appears on Mondays. He can be reached at (502) 582-4702 or at jgerth@courier-journal.com. His mailing address is 525 W. Broadway, P.O. Box 740031, Louisville, KY 40201-7431.

Kentucky Attorney General Jack Conway Grows A Backbone, Will Investigate Kentucky League Of Cities.

Attorney general investigating KLC
By Linda B. Blackford

The state Attorney General's office has confirmed that it is investigating the Kentucky League of Cities for possible illegal activity.

"My official policy is not to comment on active investigations, that is an active investigation," Conway said Tuesday. "There is some activity that is potentially criminal."

Conway would not say what activity might be illegal. In a report in December, State Auditor Crit Luallen detailed a host of problems at the League, including high expenses, questionable bonus practices and conflicts of interest. She forwarded the audit to Conway's office.

In 2009, Luallen audited the Blue Grass Airport, the Kentucky Association of Counties and the League, spurred by stories in the Herald-Leader about hundreds of thousands of dollars in expenses by those groups' officials.

Both KACo and the League sit on multi-million dollar finance and insurance operations that provide services to counties and cities, which also pay them dues for membership.

Luallen's airport audit was forwarded to the Attorney General's office, which resulted in four former airport officials being indicted on charges of theft by deception.

John Coon and John Slone, two former deputy directors, pleaded guilty to amended charges of conspiracy to commit theft by deception. The charges are misdemeanors, which could mean up to 12 months of jail time. The plea deals require them to testify against former airport executive director Mike Gobb and deputy director John Rhodes.

Conway's office declined to investigate KACo.

The difference, Conway explained to the Herald-Leader in November, was that the KACo Board of Directors had given its officials wide latitude in their spending. At the airport, state auditors found instances where officials misrepresented the purpose for purchases to the board.

Luallen's audit found numerous problems in the League's insurance arm, including gifts to League employees from insurance vendors hired by the League, ranging from greens fees to trips to the Caribbean.

The League has changed numerous policies in the wake of the audit, including limiting credit card use and stopping spousal travel. Newly passed legislation will also require KACo and KLC to be more transparent.

Jackson Mayor Mike Miller, who chairs the League's executive board of directors, declined to comment in detail.

"I'll let the Attorney General do what he thinks needs to be done," he said.

... .

Read more: http://www.kentucky.com/2010/04/13/1222627/attorney-general-investigating.html#ixzz0l25yIL9f

Louisville Courier Journal Notices That In Kentucky, You "Pay (A Lot) To Play". And We Wonder Why Kentucky Is Full Of UNBRIDLED CORRUPTION. *SIGH*.

Pay (a lot) to play

That's what state government needs — another reminder that big money buys primo access.

Latest case in point: this summer's National Conference of State Legislatures, to be held in Louisville.

Some background: In March, Senate President David Williams and House Speaker Greg Stumbo sent letters to lobbyists, employers of lobbyists and members of the Kentucky Chamber of Commerce, as well as others, asking for conference sponsorship contributions of up to $75,000. Compliance with the state ethics law — lobbyists can't contribute to state legislative candidates; lawmakers can't target only lobbyists when asking for money for causes other than their campaigns — was checked out before they sent the letter. The verdict on asking money from lobbyists and others to help fund the big confab: legal.

A story in Saturday's Courier-Journal quoted Robert Sherman, director of the Legislative Research Commission, as saying, “I think that those that contribute do so for the purpose of having their name associated with a fairly substantial and substantive civic event.”

Well, that's one interpretation.

But there also is this one, as voiced by Richard Beliles, chairman of Common Cause of Kentucky, in the same news article: “Sponsorships sell access; the more you pay the more access you get. That access, I believe, will cost the general public in Kentucky.”

There are benefit packages for big contributors, starting with $5,000 and topping out at $75K.

The top-end kind of money buys prominent display of company logos and banners at conference events. It buys invitations to events with conference leaders, a complimentary booth at the exhibit hall and other goodies.

Who has that kind of money? Who can afford such price tags to “underwrite” the conference?

Not sick kids and poor old people.

Maybe they ought to show up on the sidewalks outside the conference for their shot at access.

Bills To "Open The Window" And Air Out KACO And KLC STENCHES, And To Bring Accountabilities There Become Law. Thank God!

Governor signs KACo, KLC accountability bills
Herald-Leader Staff Report

Gov. Steve Beshear signed into law Wednesday two bills to strengthen public accountability for the embattled Kentucky Association of Counties and Kentucky League of Cities.

Senate Bill 88 requires both groups to hold open meetings, provide documents under the state's Open Records Act and create Web sites that show their expenditures. The bill also requires the adoption of procurement, ethics, personnel and compensation policies, and it requires training for local officials who oversee the agencies.

KACo and the League provide lobbying, legal advice, insurance and project financing for local governments, and they receive taxpayer funds in the form of dues and payments for insurance and financing services.

Senate Bill 77 strengthens the Kentucky Department of Insurance's oversight of liability self-insured groups, such as KACo and the League, and places these entities under a statute that prohibits inducements in any insurance transaction. The law allows for closer scrutiny of self-insurance groups, requires a formal conflict-of-interest policy and provides for more transparency in insurance matters.

The legislation follows reports by the Herald-Leader and state audits last year that showed the two organizations spent hundreds of thousands of dollars on travel, meals and entertainment, including expenses at strip clubs. The executive directors of both groups eventually stepped down.

"It is a positive step for taxpayers that lawmakers showed unanimous support for a measure that will ensure greater accountability and transparency for two organizations that provide important services to local governments," state Auditor Crit Luallen said. "We thank those legislators who worked closely with this office to make the legislation a reality."

Lexington Herald Leader Editorial Sees "KLC [Kentucky League Of Cities] Ignoring Its Reform Promises". I AGREE!

KLC ignoring its reform promises

Lawmakers, take note: Promises by the Kentucky League of Cities to clean up its act are ringing hollow.

As staff writer Linda Blackford reported, the League has renewed a lucrative contract without competitive bidding, which conflicts with the state auditor's recommendations.

Also, the $156,646 a month contract is going to a company with whom one of the League's top executives has conflicts of interest.

Does this sound like an organization that's turning over a new leaf?

Lawmakers should pay attention because legislation aimed at improving scrutiny of the League's operations may be at risk of running aground, on political egos.

The legislation, which also applies to the Kentucky Association of Counties, would subject both organizations to open meetings and records laws, give their boards a code of ethics, require them to adopt procurement polices in compliance with state law and authorize the state auditor to review their books.

We won't attempt to dissect the pride-of-authorship conflicts that are threatening these reforms, which are not controversial and have already been approved by both chambers.

Suffice it to say that most taxpayers don't care in which chamber a bill originates or who sponsors it, they just want the legislature to look out for their interests.

And it's definitely in taxpayers' interests to avoid a repeat of the outlandish spending and lax accountability uncovered by the Herald-Leader and state Auditor Crit Luallen.

But there was no competitive bidding before extending an insurance claims company's contract for well over $5,000. Why? The League has recently taken over the Kentucky School Boards Insurance Trust. Officials said it would be unwise to change claims carriers while taking on a large new line of business.

That's not unreasonable. But the decision would be much more credible had it been made after considering competing bids.

KACo was the subject of scathing audits in 1992 and 2009.

If the legislature fails to strengthen the laws governing these organizations, more scathing audits and taxpayer abuse will be inevitable.

Kentucky Transportation Cabinet Claims It Learned Lessons From Bid Rigging Trial. I Suppose It Learned How To BETTER Cover Its Tracks. I'm LMAO.

Cabinet learns lessons from trial
TRANSPORTATION ACTING CHIEF SAYS LAWSON CASE SPOTLIGHTED AREAS THAT NEED REFORM
By John Cheves

FRANKFORT — Last month's bid-rigging trial of road contractor Leonard Lawson and former Transportation Secretary Bill Nighbert was another in a long line of public relations disasters for the Kentucky Transportation Cabinet.

The jury acquitted Lawson and Nighbert. But cabinet officials said they were embarrassed by testimony about cozy relations between the cabinet and politically influential road contractors, expensive single-bid contract awards and change orders that needlessly inflate project costs.

The cabinet is trying to address some of the problems raised in the trial, acting Transportation Secretary Mike Hancock said this month.

Hancock, an engineer, served as Nighbert's chief of staff under Republican Gov. Ernie Fletcher and remains at the cabinet under Democratic Gov. Steve Beshear. Hancock declined to criticize Nighbert directly, but he said the cabinet clearly needed reform.

"There are many things we learned throughout the course of the trial, and many opportunities for improvements," Hancock said.

Since the criminal case began in 2008, the cabinet has enacted formal and informal ethics rules to create a professional distance between its officials and the contractors who want a piece of the multi-billion-dollar Road Fund, Hancock said.

The cabinet is adding more controls on change orders and experimenting with different approaches to encourage competitive bidding, he said.

On 15 projects, for instance, the cabinet asked concrete companies to challenge asphalt companies, which tend to hold monopolies in specific regions. One of those projects ultimately went to a concrete company that offered lower prices.

The decision to invite concrete companies to bid against asphalt companies resulted in part from a 2008 analysis done by software that analyzes bidding patterns and can detect possible signs of collusion or bid-rigging, such as a constant lack of competition or unusually high or low material prices being quoted, said Alice Wilson of the cabinet's Office of Audits.

The analysis determined that in most of Kentucky — everywhere except Louisville and Northern Kentucky — asphalt companies do not compete against each other, she said.

On 16 other projects, the cabinet has tried something else, said Ryan Griffith, director of contract procurement.

It packaged several pieces of work together across the traditional territorial lines of various contractors to lure them into competing against each other, Griffith said. In most cases, this resulted in competitive bids, as the cabinet wanted, he said.

A Herald-Leader review of bids on about 150 road projects that were awarded in May 2009 and last month found that competition noticeably was more aggressive when projects crossed county lines.

On average, the projects reviewed by the newspaper drew 2.8 bids each. But multi-county projects drew 3.4 bids on average. All of the multi-county projects drew more than one bid.

The bad economy has helped, cabinet officials acknowledge. Contractors are hungry for work, and with road spending down from $1.6 billion in 2007 to $780 million last year, they are more willing to battle for every job they can get, Griffith said.

"We're seeing some really good prices right now," he said.

Last year, 38 percent of all projects were awarded on single bids, which is down about 3 percent from recent years, Griffith said. The number of single-bid awards is far higher — 63 percent — for asphalt resurfacing projects, the least competitive type of project, and that hasn't changed much.

The winning bids for many road projects over the last year often were lower than the cabinet's own engineers estimated they should cost, potentially saving the state millions of dollars, according to the Herald-Leader's review.

Before the cabinet opened the roughly 150 bids examined by the newspaper, the cabinet estimated the projects would cost a total of $167 million, including a profit for the contractors. Instead, because the bids so often came in below the cabinet's estimates, they cost a total of $142 million, or 15 percent less.

Single bids on average came in 1 percent above the cabinet's estimates. In most cases, the cabinet rejected single bids if they were greater than 6 percent above its estimates. With competitive bids, the winning bids on average were 17 percent lower than the cabinet's estimates.

Keeping distance

On a more basic level, Hancock said, his policy as transportation secretary is not to socialize with road contractors or meet alone with them at work. If a contractor asks to see him, he arranges for other cabinet employees to be present, Hancock said.

During the bid-rigging trial, defense lawyers explained frequent phone calls between Lawson and Nighbert by saying that the millionaire contractor and the cabinet secretary became close friends who chatted day and night and whose families socialized at home and on foreign trips. Nighbert was hired by a company Lawson co-owned after he left the cabinet.

Cabinet engineers should communicate with contractors about projects they're working on, Hancock said, but cabinet leaders ought to keep contractors at arm's length to avoid the appearance of favoritism.

"It's best to maintain some modicum of distance," Hancock said.

In August, a year after Lawson and Nighbert were indicted, the cabinet issued a memo prohibiting its employees from asking contractors for donations, including for the cabinet's United Way drive.

Lawyers did not discuss it during the trial, but in a March 26, 2008, phone call the FBI recorded, Lawson acknowledged giving money to key prosecution witness Jim Rummage, a former deputy state highway engineer who testified that Lawson bribed him with $20,000.

In the call, which was played for the jury, Lawson described the money as "for charity and some stuff like that."

However worthy the cause might be, money should not pass between road contractors and cabinet employees, Hancock said.

Revolving door

Hancock said a thornier problem is the revolving door between the cabinet and road contractors, especially for highly sought engineers.

During the trial, the jury heard about engineers who moved back and forth, sometimes using their cabinet posts to help road builders who had employed them or might employ them again.

Defense lawyers repeatedly invoked former state Highway Commissioner Sam Beverage, whom the Fletcher administration hired after he worked for Lawson. Beverage later lost his state job over ethics violations related to bid-fixing. He then joined Hinkle Contracting Corp., one of Kentucky's dominant road builders.

Beverage did not return a call seeking comment last week.

State ethics laws don't address the revolving door as fully as they should, said John Steffen, executive director of the Executive Branch Ethics Commission.

People are entitled to join a state agency from a company the agency does business with, Steffen said. After they leave, they may return to their previous professions, but for six months they must avoid projects they directly handled in their last three years of state employment, Steffen said.

"This is an area we've looked at," Steffen said. "You shouldn't do favors for someone you used to work for. But at the same time, there is no rule saying you can't have contact with your former employer once you're in state government and in a position to help them."

Pushing competition

During the trial, cabinet engineers testified that the state sometimes pays too much for road projects because of the lack of competition in parts of Kentucky, and because unnecessary change orders add work, material and costs after projects start.

In particular, they complained that political appointees running the cabinet overrule rank-and-file engineers when influential contractors call Frankfort.

"I have some coziness concerns about a few contractors out of the 600 we deal with," Deputy State Highway Engineer Chuck Knowles testified.

The cabinet is trying to address these complaints, officials said.

Early in the Beshear administration, the cabinet strengthened the change-order process by requiring approval signatures from the local project engineer, the chief district engineer and the state highway engineer in Frankfort, said cabinet spokesman Chuck Wolfe.

"There were instances in the past of contractors doing an end run around field staff to get change orders OK'd directly from Frankfort," Wolfe acknowledged.

A Herald-Leader review of all 883 change orders from January 2009 to last month showed that, overall, they resulted in the cabinet spending $12.3 million less than planned, because many changes removed costs rather than adding them. The average change order in this group lowered costs by $14,055.

By contrast, a 2003 legislative study of the Transportation Cabinet criticized it for authorizing some change orders without proper explanation. The cabinet spent nearly $57 million on change orders in 2002 and 2003, or 3 percent of all project costs, according to the study.

Kentucky Association Of County Officials (KACO) Gives It's Own Search Committee The Middle Finger, Hires Danny Nunnelley Instead Of Ed Hatchett.

New director comes from KACo's ranks
BOARD VOTES TO PROMOTE NUNNELLEY
By Ryan Alessi

FRANKFORT — After seven months of turbulence over internal spending problems, the board of directors of the Kentucky Association of Counties ignored its own search committee's recommendation and plucked a new leader from within the organization's ranks.

The board unanimously voted to promote longtime deputy director Denny Nunnelley after interviewing four finalists during the day. The 31 of the 34 board members who were present narrowed the field to two and ultimately selected Nunnelley over former state Auditor Ed Hatchett after about 45 minutes behind closed doors.

Last month, a KACo search committee had recommended Hatchett for the executive director job, but the full board opted to interview the finalists before making a decision.

"There is no perfect candidate out there no matter how long you conducted a search," said Christian County Attorney J. Michael Foster, a KACo board member and past president who had led the search committee. "I think there was a consensus that KACo has an excellent staff from top to bottom. And it would appear the board had no reason to disrupt that staffing pattern of people who were doing a good job."

Nunnelley, a former state senator from Woodford County who has worked at KACo since 1994, has served as interim executive director since his former boss, Bob Arnold, was forced to resign in September amid public criticism over KACo's spending.

The Herald-Leader first reported in June that the organization's top five executives, including Arnold and Nunnelley, spent $600,000 over two years in travel, entertainment and meals. Charges to a Lexington escort service were billed to the KACo credit cards of Arnold and Spencer County Judge-Executive David Jenkins, who was the group's president in 2008.

State Auditor Crit Luallen then investigated the organization, which receives public money through counties' dues and payments for insurance coverage and project financing. Her report in October found $3 million in undocumented, excessive or improper spending.

Nunnelley signed off on $70,486 of those expenses, according to the audit report.

Luallen declined to comment Friday on Nunnelley's hiring.

"The board recognizes the weaknesses after the report of Auditor Luallen, and we're making the adjustments so that I won't be able to do the things that have been done in the past," Nunnelley told the Herald-Leader on Friday. "And I'm committed to that."

Nunnelley's selection comes a day after lawmakers from both parties said they planned to push legislation that would mandate that KACo and the Kentucky League of Cities' boards bolster oversight of the respective organizations.

Republican Sen. Damon Thayer of Georgetown, the Senate State and Local Government Committee chairman, called Nunnelley's hire a "surprising move, considering his affiliation with the previous administration of KACo."

"I like Denny. He's a nice guy, and he has a lot of friends in the legislature," Thayer said. "But Denny has a lot to prove, as does the board at KACo, that they're committed to the reforms to regain the trust of the public — and the legislature."

Nunnelley was greeted with hugs and handshakes from many staff members after his hiring was announced Friday.

He said he relishes the chance to implement the board's new policies and repair any damage to KACo's reputation.

"Now I have the opportunity to be at the helm," he told the Herald-Leader.

As a result, the organization will be "efficient and proper," he said.

For example, KACo has spent just 8 percent of its promotions and marketing budget through the first half of its fiscal year and 15 percent of the money allotted for staff travel, Nunnelley said. Both were key spending areas targeted by auditors.

Under Foster's leadership, the board curtailed staff credit card use and approved tighter oversight policies and a code of ethics. New President Rick Smith, a Clark County magistrate, has pledged more reforms once a management review is completed this spring.

"Since we've adopted the policies and procedures, we haven't had any problems," said Smith, when explaining Nunnelley's hire.

The board's executive committee is scheduled to meet Thursday to ratify Nunnelley's one-year contract, which will call for him to earn $170,000 — slightly less than Arnold's $178,000 salary.

In addition to his service at KACo and one term in the state Senate, Nunnelley brings local government experience to the job after spending more than a decade as a local official in Woodford County, both as sheriff and judge-executive. A lack of local government experience was one of the knocks against Hatchett for some board members.

The other two finalists were Bill Patrick, executive director of the Kentucky County Attorney's Association, and Tony Wilder, the state department for local government commissioner.

LaRue County Judge-Executive Tommy Turner, KACo's vice president, said he told Nunnelley that even though he supported Hatchett for the job, he was committed to helping Nunnelley improve KACo.

Board member Carolyn Belcher, the Bath County judge-executive, said Hatchett gave "an awesome interview," but Nunnelley's long experience with KACo's programs and operations won the day.

"And for those of us who know Denny well and know his character, we know we will see many changes here at KACo and in the right direction," Belcher said.

KACO Board Decides To Shelve Committee Recommendation Of Ed Hatchet, Interview More Candidates. Is The Fix in?

KACo board to interview 4 finalists but could still hire Hatchett
By Beth Musgrave and Ryan Alessi

FRANKFORT — In a surprise move, the board of directors for the Kentucky Association of Counties decided Monday to interview four finalists for the organization's top position rather than go with the candidate selected by an 11-member committee earlier this month.

After meeting for nearly three hours behind closed doors, board members of the organization that has been criticized for its rampant spending were mum on the reason the board decided to interview four finalists selected from the more than 60 who applied for the job.

The selection committee had recommended former state auditor and attorney Ed Hatchett for the executive director's position on Dec. 21.

In a written statement, Rick Smith, president of KACo and a Clark County magistrate, said the full board wanted the opportunity to interview the four finalists: Hatchett; Denny Nunnelley, a long-time KACO deputy director; Bill Patrick, executive director of the Kentucky County Attorneys Association and a former county official; and Tony Wilder, commissioner for local government, a former county official and a past president of the KACo board.

"In light of our fiduciary duties, the full board would like the opportunity to interview the final candidates prior to voting on a new chief executive officer," Smith said.

He said the board would like to have the interviews as quickly as possible, but he said it is unlikely the board will make a final decision by Jan. 5, when the legislative session begins.

The group discussed the candidates in executive session, which is closed to the public. Personnel matters can be discussed in private under the state's open meetings law.

Bob Arnold, the former executive director, resigned in September in wake of repeated questions about the organization's spending. The Herald-Leader reported the organization spent more than $600,000 in two years on travel, meals and entertainment. State Auditor Crit Luallen later found more than $3 million in undocumented or excessive spending. Luallen had supported the search committtee's recommendation of Hatchett for the job.

Many on the search committee said Hatchett's reputation would restore credibility to the organization, which provides services and insurance to local governments and helps finance capital projects. But many members of the board of directors have expressed concern about oversight of the organization, saying they wanted to be move involved in the day-to-day operations in light of the organizations' recent spending scandals.

Marshall County Judge-Executive Mike Miller, a member of the board of directors, said before Monday's meeting there was some concern the process to replace Arnold was moving too quickly.

"We thought (the search committee) was going to bring two or three names to the full board to interview," Miller said. "In early December, we learned that they were going to provide just one name to the full board."

Quick Update: Caught And Embarassed, Kentucky League Of Cities (KLC) Officials Have Been SHAMED Into Cancelling "Shindig". Tsk, Tsk!

Kentucky League of Cities cancels Christmas party

The Kentucky League of Cities has canceled the Christmas party that was planned for Friday night at the Mansion at the Marriott Griffin Gate and, instead, will make a $4,000 donation to the Lexington Salvation Army.

KLC had budgeted $9,600 for the party, to which between 200 and 250 people were invited. Based on RSVPs, the League was preparing to spend about $6,000 on the evening party that promised food, dancing and karaoke, KLC spokeswoman Terri Johnson said.

League officials were negotiating the cancellation fee with the Marriott early Friday afternoon but were planning to have at least $4,000 left to donate to the Salvation Army, Johnson said.

The party would have been paid for with donations from vendor companies, which donate between $1,500 and $25,000 to be considered Cornerstone Partners with the League.

KLC employees made the decision to cancel the party Friday morning at a staff meeting with deputy executive director Neil Hackworth, just one day after a scathing state audit criticized the League and its officials for their spending and giving themselves extra perks.

"Given the circumstances of the last few days, we felt better doing something to help those in need," Hackworth said in a statement. He has overseen the League's operations since its executive director, Sylvia Lovely, stepped down in August.

Johnson said the staff will celebrate the holiday season next week with a potluck lunch.

Please NO Laughing At This One: A Day After State Auditor Blasted KLC For Unbridled Arrogance And Spending, League Plans A "Shinding". *SIGH*

Audit done, KLC parties
By Linda B. Blackford

On Thursday, a devastating state audit detailed a culture of excessive and wasteful spending at the Kentucky League of Cities.

On Friday, the group is holding its annual Christmas party at the Mansion at Griffin Gate, complete with a reception, dancing and karaoke. The party's budget is almost $10,000.

For critics of the League, the timing is, well, ironic.

Lexington Mayor Jim Newberry, a member of the executive board, said he thinks the party is a symbol of how little KLC is willing to change.

"That just shows there is no indication that the staff has come to grips with the levels of excess at KLC that need to change," he said.

Executive board president Mike Miller, the mayor of Jackson, said in October the finance committee approved $9,600 to pay for it — not with taxpayer money, but with funds from the Cornerstone Partners program.

The Cornerstone program also got a mention in the audit. The League solicited donations of $1,500 to $25,000 to list businesses as Cornerstone Partners. KLC then marketed those companies to cities as preferred businesses. As the Web site says: "As a KLC Cornerstone Partner, your business receives a number of benefits including a direct link to the customers you want to reach. Whether it be face-to-face events or customized KLC mailing lists, no other opportunity gives you the kind of year-round, targeted access you receive as a KLC Cornerstone Partner."

On Nov. 18, the League held a retirement party for executive director Sylvia Lovely, who will step down in January. That event also was paid for with Cornerstone donations. It had a cash bar.

Lovely has set up a new business, Sylvia Lovely and Associates. According to her Web site, she offers consulting services that specialize in training for board members and executives.

Breaking News: Auditor's Report BLASTS Freewheeling Kentucky League Of Cities' Officials For UNBRIDLED Greed. Read More Below.

Auditor's report blisters League of Cities
By Tom Loftus

FRANKFORT, Ky. — With little oversight from its executive board, the top staff of the Kentucky League of Cities lavished itself with excessive salaries and retirement bonuses in recent years, State Auditor Crit Luallen reported Thursday.

Several top staff members tangled themselves in conflicts of interest and approved hundreds of thousands of dollars in “excessive or questionable” expenses, a report from the auditor’s office said.

At the center of the hard-hitting, 228-page exam by Luallen is the league’s executive director, Sylvia Lovely. The report found that Lovely's salary soared from $170,248 in 2002 to $331,186 in 2009.

The organization paid $218,000 over five years in a retirement bonus for Lovely and bought a $64,000 vehicle for her use. The report noted the league even bought 500 copies of a book authored by Lovely — “The Little Red Book of Everyday Heroes” — for $3,300.

But the report goes beyond Lovely to question the conduct and compensation of other executives in the organization.

“If KLC is to continue providing valuable services to our cities, many of which are struggling, its board must strengthen its financial oversight,” Luallen said in a statement released with the audit.

The audit makes 30 findings about the spending, ethical conduct and lack of board oversight. And it makes 140 recommendations to improve management.

Because of the “nature and complexity of the exam's findings,” Luallen said the report has been turned over to state and federal law enforcement agencies as well as the IRS and Kentucky Department of Revenue for possible investigation.

Luallen launched the examination last summer after reports in the Lexington Herald-Leader revealed questionable spending and generous salaries at the league during a time when a national recession is forcing cities to cut spending.

Luallen's report examined spending and policies back to July 1, 2006. On some issues, the report examined prior years.

The organization was formed in 1927 when 12 Kentucky cities assembled to address common legislative issues and save money through cooperative purchasing. Today it is a non-stock, non-profit corporation with 382 member cities.

It provides training, financial and legal advice and lobbying services for its members. Its affiliated companies also provide insurance coverage and issue tax-exempt bonds for member cities.

The audit reports that in the 2008 fiscal year 87 percent of its revenue came from administrative fees and commissions paid by the insurance and financial programs it administers. The rest came from membership dues paid by cities, interest income and other sources.

Lovely, executive director since 1990, said in August that she accepted responsibility for problems in management and that she would resign effective Jan. 1.

Luallen's report includes a three-page response to the findings from league President Michael D. Miller, the mayor of Jackson.

Miller acknowledged that the organization had “become complacent” in some respects and has already addressed many issues raised in the audit. But he also defended the league against some findings.

“Some issues raised in the report are necessary business actions in the competitive insurance marketplace,” he said

But some city officials submitted letters offering a stronger commitment to reform or disputing Miller's response.

“We do not see where having questionable associations with third-party insurance vendors and staff taking trips paid by such vendors as a necessary business activity,” Lexington Mayor Jim Newberry and Frankfort city manager Tony Massey said in one letter.

Among its findings about questionable spending, the report found that the organization:

*Paid more than $7 million over eight years to an organization founded to educate communities about “civic engagement” called the NewCities Institute. This spending produced “few quantifiable results.”

*Paid high salaries. Lovely is just one of 19 employees paid more than $100,000.

*Paid what Luallen called “exorbitant retirement bonuses” to six officials at a cost of $533,998. The report said this money was primarily used by the officials to buy five years of service in the County Employees Retirement System.

*Sold a vehicle worth at least $14,623 to its deputy executive director for $9,000.

*Paid $212,871 in questionable credit card expenses and $74,463 in expenses that lacked supporting documentation.

*Spent $430,000 on 162 out-of-state trips that often included spouses.

*Spent $50,000 for tickets to various sporting events and shows with questionable benefit to the league.

*Spent more than $314,000 for vehicles over a two-year period.

The report raised questions of the ethical conduct of some top staff:

*The league spent $1.4 million for legal services at a firm where Lovely's husband is a partner, and it spent $28,600 at a Lexington restaurant partly owned by Lovely's husband.

*The organization’s chief insurance services officer, administrator of product development, general counsel and their spouses annually accepted housing and other expenses at a vendor president's home on a Caribbean island.

*A vendor paid the league for a cover charge for admission to a strip club in Las Vegas for three staff members.

*The chief insurance services officer and his spouse took two free trips to Naples, Fla., from a reinsurance vendor.

*Lodging in Munich, Germany, was provided by a reinsurance vendor to the deputy executive director and the chief insurance services officer.

The report also criticized the staff for not informing the board of a harassment investigation that raised concerns involving an executive staff member.

Reporter Tom Loftus can be reached at (502) 875-5136.

Editor's note: Read the report here, or a summary here.

You Have Been Forewarned: Grab Your Handkerchiefs To Cover Your Noses; KLC Audit Report Is Coming Out Today At 10 A. M. .

Kentucky League of Cities audit to be released this morning
Herald-Leader Staff Report

State Auditor Crit Luallen will release findings from a financial review of the Kentucky League of Cities at 10 this morning.

Kentucky.Legislature Spent $2.4 Million On Travel In 3 Years.

Ky. legislature spent $2.4m on travel in 3 years
By John Cheves and Linda J. Johnson

The Kentucky legislature spent about $2.4 million on out-of-state travel over the last three years, sending lawmakers, aides and state police escorts around the globe, according to a Herald-Leader review of spending data.

Senate President David Williams and House Speaker Greg Stumbo last week said that educational conferences and fact-finding trips are essential for lawmakers tackling Kentucky's problems.

"There are a lot of benefits as far as broadening the minds of our legislators," said Williams, R-Burkesville, who spent 101 days outside the state over the past three years on trips that cost taxpayers $42,351. "I think it's very valuable."

Still, Williams and Stumbo said they agreed with critics who want the legislature to be thriftier. For the first time, they are drafting a formal travel policy that could limit how many trips lawmakers take, for how long, to which events and for what purposes.

"You have some people who push the limits," said Williams, who outspent all but two lawmakers on out-of-state travel to destinations such as Ireland, Turkey and Bonita Springs, Fla.

He said some legislators like to stretch their trips out, which extends the number of days they get paid.

"The guidelines say you get paid a per diem on your travel days," he said. "Let's say there's an opening reception on a Tuesday. They'll want to travel in on Monday and get paid for the day before the conference starts and then go to a reception the next day. That's the sort of stuff that hopefully is going to be addressed."

The move to change legislative travel policies came as the Herald-Leader reported last week that the General Assembly spent more than $135,000 in July sending 63 lawmakers, staffers and state police to a National Conference of State Legislatures meeting in Philadelphia. That total is expected to grow dramatically in coming weeks as dozens more lawmakers and staffers file expense reports.

Williams and Stumbo approve the travel costs for their respective chambers. Lawmakers outside of leadership get a daily salary of about $186 while on state business, plus reimbursements for airfare, hotel, food and other expenses.

About half of the $2.4 million in out-of-state travel expenses since July 1, 2006, was incurred by 117 of the 138 lawmakers. Employees of the Legislative Research Commission — the bureaucracy that serves the legislature — accounted for most of the remaining costs, although because the staffers' expenses are listed separately and by calendar year, they were incurred from January 2006 to present. The LRC employs 439 full- and part-time workers.

Lawmakers took 742 trips with an average cost of $1,697.45, including $755.38 in salary payments and $942.06 for travel expenses. Seventeen lawmakers were paid more than $20,000 each for all of their out-of-state trips, and LRC data shows no such expenses for more than 20 legislators.

Stumbo said lawmakers will appreciate having clear guidelines and rules in the future. LRC data for the previous three fiscal years shows no out-of-state travel charges for Stumbo, who was attorney general through 2007, although his office last week said Stumbo is charging $4,381 for trips to Philadelphia and Winston-Salem, N.C., since the new fiscal year began July 1.

"Legislators have been trusted to conduct their travels responsibly," Stumbo said. "There may be a variety of mitigating factors unknown to me that explains why one legislator's travel reimbursement is different from someone else's."

Ideological meetings

Travel records show that many events attended by lawmakers are sponsored by nonpartisan educational groups, such as the National Conference of State Legislatures, which studies issues affecting the 50 states and hosts meetings for legislators to discuss their different approaches.

Williams said he brings borrowed ideas back to Kentucky from these conferences. He cited the example of a public authority that could use tolls to fund bridge mega-projects over the Ohio River, something proposed in this summer's legislative session.

But legislators also travel on the taxpayer's dime to like-minded ideological gatherings.

Groups that draw Kentucky lawmakers include Catholics for Choice — liberal Catholics who oppose the Vatican on controversial issues such as abortion and birth control — and conservative organizations promoting pro-business legislation, such as the Heartland Institute and the American Legislative Exchange Council.

The legislature's new travel policy should establish which "primary groups" are educational and a proper use of funds and which "ancillary groups" might require more explanation before approval is given, Williams said.

"I approved a travel voucher the other day for Robin Webb, our newest senator, to attend a women's legislators forum that I normally would not have approved per diem and expenses for," Williams said. "But she informed me that the (House) speaker had already approved that when she was in the House, and she had already made arrangements."

Webb did not return a call seeking comment.

Top spenders

The top two spenders were Democratic Rep. Bob Damron and Republican Sen. Tom Buford, both of Nicholasville, at $45,482 and $43,477, respectively.

Damron made 27 trips to destinations ranging from Seattle to Puerto Rico. More than 20 of those trips were to events held by the Lexington-based Council of State Governments and the National Conference of Insurance Legislators. Damron said he holds key positions in both organizations that require him to attend their meetings.

"You've got to really follow each of these guys and see who's working and attending their meetings before you can make a judgment call," Damron said. "If you look at what I'm doing, you can tell that I'm actually working at these conventions."

Buford, who did not return calls seeking comment, made 29 trips to destinations including San Francisco, New Orleans, Hilton Head, S.C., and Duck Key, Fla. On eleven of his trips, Buford attended events held by the American Legislative Exchange Council, a conservative group that promotes limited government, free markets and federalism.

Another top spender, with $33,738 in travel costs, was Richard Roeding of Fort Mitchell.

Although Roeding, a Republican, retired from the Senate last year, he made trips in the final months of his term to Chicago for a meeting of the American Legislative Exchange Council, to New Orleans for the National Conference of State Legislatures conference and to Oklahoma City for a meeting of the Southern Legislative Conference.

Those trips, which came after the legislature adjourned and he cast his final Senate vote, cost a total of $8,712.

Last week, Roeding said that as long as he legally remained a senator, he had an obligation to his district to continue attending conferences and educating himself about public issues.

"I always thought it was worthwhile," Roeding said. "Kentucky is not an island, you know. We have to go and see what the other states are doing about the same issues that we're facing."

At the other end of the spectrum, some lawmakers choose not to travel outside Kentucky at taxpayer expense more than once every few years. In interviews, they said their full-time jobs and families might not allow them time to travel or they simply prefer their own communities when they are not in Frankfort.

"I represent Barren County so, for me personally, I try to concentrate on what's going on in my little piece of the state," said Rep. Johnny Bell, D-Glasgow, whose travel history consists of one trip to New York in 2008 for the National Conference of Insurance Legislators. The cost to taxpayers — $1,654 in salary and expenses — was reduced because Bell paid for his own airfare, he said.

"I'm not going to criticize anyone who travels," Bell said. "But these are the people who elected me. Really, it takes most of my time just to get around my district and meet with constituents and see what they need. I don't have the time to fly to other places.

KACO And KLC: Lessons In Kentucky's Unbridled Corruption.

Atmosphere changing for boards, executives?
By: lblackford@herald-leader.com ralessi@herald-leader.com
Published: Sun, 09/06 @ 6:13AM

When Bob Arnold was forced to resign Friday as chief of the Kentucky Association of Counties, he became the fourth executive of a quasi-governmental organization in nine months to lose his job amid a controversy over spending.

Arnold joined Michael Gobb, director of Blue Grass Airport; Kathleen Imhoff, director of the Lexington Public Library; and Sylvia Lovely, director of the Kentucky League of Cities — all of whom were either fired or pressured to resign.

Expenses at those organizations for travel, meals and other perks created such a public outcry that the groups' boards were forced to take action.

Players in and observers of these recent dramas say the current economic atmosphere has made the public a lot less forgiving when tax dollars are involved.

"When you're trying to put food on the table and you've got people spending tax dollars outrageously, well, it smells worse during an economic downturn than if everyone is flying high," said Jim Waters, director of the Bluegrass Institute, a free-market think tank.

State Auditor Crit Luallen, whose office audited the airport and is auditing the League and KACo, says she thinks the stories of Wall Street moguls getting perks and bonuses at the same time their companies are getting federal bailouts have enraged Kentuckians who have lost income or jobs.

"I think people are more sensitive to any instances of abuse of the public trust because they are feeling such pressure," she said.

Urban County Council member Diane Lawless agrees that the economy has made people less forgiving. But she says the salacious nature of much of the spending — every group but the library had expenses at strip clubs, for example, and some meals and trips cost thousands of dollars — got people's attention in a way that bigger but more complex examples of self-dealing don't.

"Maybe people don't read stories about conflicts of interest," she said. "I think these stories caught the public's eye because there were these specific behaviors and specific money spent. That's different from 'Oh, his cousin is the contractor that got the job.'"

Lawless said people she talked to seemed particularly upset by $20,000 spent by the Kentucky League of Cities at a restaurant co-owned by Sylvia Lovely's husband, Bernard, or $2.3 million paid to law firms where he was a partner.

League officials repeatedly said they considered the organization a private business, not one that mostly ran on taxpayer dollars or was accountable to the public.

KACo and KLC are funded through dues, insurance payments and finance payments from counties and cities. The two groups' employees are also part of the County Employees Retirement System.

"That was a really bogus argument, and it was frankly offensive to taxpayers and the General Assembly," said state Sen. Damon Thayer, R-Georgetown, one of the lawmakers who called KLC and KACo officials to appear before a legislative hearing.

"I hope the message was sent at the hearing that we consider those agencies to be funded by taxpayers," he said.

Both Blue Grass Airport and the Lexington Public Library receive taxpayer funds either directly or indirectly.

Lasting reform?

While the public outrage has burned hot toward these spending sagas, will it be enough to cause systemic, far-reaching reform? As Rep. Adam Koenig, R-Erlanger says: "If people resign and nothing changes, then we've gained nothing."

Even though the boards share responsibility for failing in their oversight, Koenig said those board members must be given the chance to implement reforms and stick to them. And it should be the local officials who rely on these organizations who keep those board members accountable, he said.

"Hopefully, the county leaders and the city leaders will make sure that their elected board members take care of it," Koenig said. "The people who elected those board members need to keep a better eye on them."

Some board members are elected by their organizations' members, others are appointed by elected officials.

Not everyone agrees that boards need to do a better job.

Trimble County Judge-Executive Randy K. Stevens, who is on several of KACo's program boards, said the forced resignations are signals that board members were doing their due diligence in making corrective actions once they had all the information "of what was happening around them."

"I don't think it's the sign of the times. I think it's a sign of how serious the boards take their job," Stevens said.

He said prospective members of other boards are likely to be more conscious of the expectations that they will keep a closer watch on an organization — responsibilities that will "obviously take away from other work endeavors."

While he said these sagas and their lessons won't be a deterrent for him to serve on other boards, "it will be a consideration."

'A wake-up call'

Luallen, who issued a set of recommendations for board members shortly after her office audited the airport, says she is getting calls from all over the state from various boards and commissions — from the Paducah Industrial Authority to the Kentucky Educational Television Foundation — that want advice or are changing their policies and procedures.

"I think these controversies will have an impact all across Kentucky," she said. "I just sense this has been a wake-up call for a number of groups and board members who may not have realized how much responsibility a board member has, how accountable they have to be for every dollar that is spent."

More UNBRIDLED Spending Of Public Funds Draws Deserved Sharp Rebuke.

Pike County leader assails KACo spending, lack of oversight
By Ryan Alessi

The top official in Eastern Kentucky's most populous county accused the Kentucky Association of Counties of spending public money "like drunken sailors" and called for swift corrective action, including replacing those who made improper purchases.

Judge-Executive Wayne T. Rutherford e-mailed a three-page letter on Wednesday to his colleagues in county courthouses across the state that chastises officials on KACo's executive committee, who he said "completely failed in their duty of oversight of the executive director" and of KACo's spending.

Rutherford wrote that he was particularly troubled by charges made on KACo credit cards to "gambling casinos (and) strip joints" at the same time the organization increased administrative fees on its insurance and finance products.
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He also called on the non-profit organization — which provides insurance, project financing, training, lobbying and legal services to counties — to lower its rates and cut dues, which each county pays from tax coffers.

In a review of KACo's spending, the Herald-Leader found last month that the top five officials spent $600,000 on travel and other expenses in two years. In addition, KACo's 2008 president spent nearly $20,000 during his one-year term.

Among KACO's expenses were two $7,000 dinners, hotel rooms costing $450 a night, charges to two Louisville strip clubs and $445 spent with a Lexington escort service.

In a play on KACo's motto — "working for you in ways you never imagined" — Rutherford wrote that "these people spent money in ways I never imagined!"

One of Pike County's magistrates, Chris Harris, serves on KACo's executive committee as the second vice president. Harris and KACo president J. Michael Foster, the Christian County attorney, have been outspoken in pledging reforms at KACo.

Harris said KACo leaders will listen to Rutherford and others as they look at ways to tighten oversight, but he said Rutherford seemed to be taking "cheap shots."

"What's behind that is you've got a man who's afraid that I'm going to run against him for county judge, and he's trying to use this against me," Harris said.

Rutherford didn't mention Harris in the letter. He did single out Spencer County Judge-Executive David Jenkins, the 2008 president, whose KACo-issued credit card was used to pay for many of the charges Rutherford found objectionable.

"Not only am I upset with the board of directors and officers, but also with the Spencer County judge-executive's poor judgment because this type of conduct tarnishes the image of all Kentucky officials," Rutherford wrote.

Jenkins admitted to making charges at the Belterra Casino in Indiana and at the Hooters Casino in Las Vegas, although he denied that the $937 he spent at the casinos was for gambling. Jenkins has disputed charging $620 at Louisville strip clubs and a Lexington escort service. But the credit card issuer denied KACo's request to refund the money.

Jenkins didn't return a phone call Wednesday.

KACo's general counsel, Tim Sturgill, said in a statement that KACo officials "will respond directly to Judge Rutherford regarding his concerns."

Many local officials have praised KACo for its services, including insurance policies that often cost less than those offered by private companies. The organization must clean up any problems to preserve those beneficial programs, said LaRue County Judge-Executive Tommy Turner, who is a KACo board member.

"There is quite a sentiment to right the KACo ship," Turner said.

Some ideas, such as tightening expense oversight, "should be simple to implement," he said. Other moves "could involve changing some of the personnel," which will probably be a more complicated debate, Turner said.

State Auditor Crit Luallen announced this month that her office will investigate KACo's spending. In May, she released 28 recommendations to help non-profit boards increase oversight, which Rutherford said KACo's board should adopt at once.

Rutherford dispatched his letter Wednesday as county officials convened in Louisville for a four-day joint conference of the Kentucky County Judge-Executive Association and the Kentucky Magistrates and Commissioners Association. KACo Executive Director Bob Arnold and Luallen are among the officials scheduled to address the group on Thursday.

Rutherford offered 11 recommendations of his own to "bring this great organization back in line with its intended purpose," including calling for the resignation of officers or board members who participated in casino or strip club entertainment. He also suggested that KACo's board should "consider replacing the present director and chief financial officer."

One charge to the Lexington escort service Campus Cuties, which bills under the name Calypso Enterprises, appeared on Arnold's KACo credit card in May 2007. Arnold, who is legally blind, denied making that charge but conceded that his credit card statements weren't thoroughly vetted.

Rutherford also recommended that KACo release to the media a list of participants who were present at expensive meals, trips and entertainment events paid for by KACo. Receipts and credit card statements of KACo leaders rarely included a report of which officials or staff attended, the Herald-Leader's review found.

He called for further cost savings at KACo, such as canceling advertising during University of Kentucky sporting events and renting out the $12 million headquarters that KACo is building instead of moving into it.

"I have been concerned about KACo for some time," Rutherford wrote, addressing the county officials who serve on KACo's board. "I cannot overstate how strongly I urge you to use your position of influence as KACo board of directors and officers to bring this organization back to its intended purpose, that is one which serves Kentucky counties rather than its own leadership."

His letter ended with a quote from Galatians: "for whatsoever a man soweth, that shall he also reap."

Editor's comment: Read the CJE's letter.

Politics or not, the CJE is right and the officials deserve the rebuke.

Barbara Boxer: "Call Me Senator". Watch Video.

Kentucky Senators (With House Help) Display UNBRIDLED Arrogance, That Is Unconstitutional To Boot.

Read more, and follow the shameful list of Senators.