Two Chattanooga Public Library employees were reported to the Tennessee comptroller’s office for potentially fraudulent activity after an investigation by the city’s Office of Internal Audit questioned their use of paid leave and lax record keeping.
The report by City Auditor Stan Sewell raises significant questions about the lack of internal controls at the city-owned library, and it identifies several instances in which a handful of employees skirted guidelines for paid time off and travel reimbursements.
Meg Backus, systems administrator, and Nate Hill, assistant library director, were paid by the library while performing outside consulting work. Backus acknowledged that she submitted false information on time records, deleted information requested by the auditor and made false statements during Sewell’s investigation, according to a memo he sent to the library’s board of directors and the mayor’s office Tuesday. Her supervisor, Nate Hill, failed to report "substantial" amounts of leave himself. And he received duplicate reimbursements for airfare.
Sewell’s report casts a dark cloud around an institution that has garnered national media attention and accolades since its 2011 reorganization and the recruitment of Corinne Hill as its executive director. The Library Journal named Hill Librarian of the Year earlier this year. The Chattanooga Public Library is often lauded for its innovative strategies and outside-the-box initiatives. Its newly instilled culture as a "library of the future" often draws comparisons to tech startups.
But the latitude taken by some of its employees clashes with the bureaucratic regulations a public agency is expected to adhere to.
In his report, Sewell said the library "lacks documented policies and procedures for many key areas." Its "antiquated," decades-old operating policies "do not appear to have been formally implemented by the new organization created in 2011," he said.
"Although many staff appear to be aware of, and to some extent complying with, procedures of the predecessor organization, the library lacks official policies and procedures for many fundamental areas," he said.
A spokeswoman for the library referred requests for comment to Jim Kennedy, board chairman, who did not respond to messages Thursday afternoon.
Chattanooga’s Chief Operating Officer Brent Goldberg said City Hall expects its agencies "to have policies and procedures in place to ensure the best use of taxpayer dollars."
"This circumstance is unacceptable, and the library board has assured us they will quickly take action by putting in place the checks and balances to address these issues," he said in a prepared statement.
Paid leave, travel reimbursements
Many of the findings in Sewell’s report relate to discrepancies over the use of paid leave and travel reimbursements.
Corinne Hill; Nate Hill; Mary Barnett, social media coordinator; and Backus took vacation time but failed to report the leave to the library’s personnel officer, who processes payroll.
Nate Hill and Backus performed paid consulting or speaking engagements while being paid by the library for 48 and 40 hours, respectively. Neither reported the leave to the personnel officer. Nate Hill does not review or approve his staff’s timesheets, some of which were submitted more than six months later. Backus acknowledged she listed false information on timesheets.
The library lacks "substantive" travel policies other than a legacy policy from 1996 that only requires its staff to file a form to claim travel expenses, according to Sewell’s report.
Expense reports filed by Corinne Hill, Nate Hill and Backus reveal that they did not consistently use rates established by the federal government when booking hotel rooms, which would have saved taxpayers $1,067 from October 2012 through November 2013.
Corinne Hill was overpaid $972 for travel reimbursements on a trip to Denmark and $74.50 for meals on a trip to Singapore. Nate Hill attended a Chicago conference in June 2013 for which he received duplicate reimbursements of $403.60 for airfare—once from the library and once from Friends of the Library, a nonprofit organization. Though the overpayments were discussed with them in February 2014, neither had reimbursed the library as of Tuesday, the auditor’s report states.
Sewell’s investigation was prompted by multiple reports of waste and improper behavior within a short time period.
One of the complaints was found to be a "routine part of library business." There was no fraudulent intent with the removal and sell of library books, Sewell’s report concludes. The books were donated to Friends of the Library for resale. The funds are used to support the library.
In response to another complaint, Sewell found that the library’s attempts to dispose of old computer equipment and furniture were proper.
However, the auditor’s report recommends that the board adopt formal policies for disposing of inventory. The board should adopt the city’s personnel codes. It should comply with state law regarding disbursement of library funds, which should be authorized by two board members.
The board has already adopted the city’s travel regulations as recommended by the auditor’s office, according to the report.
The lack of internal controls became a concern for the auditor as he reviewed the library’s practices.
He recommends that the board comply with the Tennessee Open Meetings Act by posting a schedule of meetings online and notices of upcoming meetings on the library’s main door.
After its formation in 2011, the board was required to adopt bylaws and elect officers. As of last month, bylaws had not been adopted.
"During this project, we developed a general concern about legal compliance and weaknesses in the internal control structure," Sewell said.
Updated @ 3:49 p.m. on 8/28/14 to add more information.
Updated @ 7:56 p.m. on 8/28/14 to add more information.