County Council to consider audits

LIHUE — The Kauai County Council this morning will discuss authorizing the audits of several departments based on concerns about potentially illegal mismanagement of federal government funds, overtime abuse, pension spiking, low morale and managerial incompetence.

In an April 25 memorandum to the council, Council Chair Arryl Kaneshiro outlined the need for four performance audits to examine processes and practices in the fire department along with certain aspects of the Department of Public Works.

According to Kaneshiro’s memo, impetus for planning the audits came in-part from complaints submitted to the council by local contractors, county employees and members of the community about federal flood disaster relief funds being awarded to local companies without going through the legal public bidding process.

An evaluation of the bidding and awarding process is necessary to identify whether the rules and laws were followed appropriately “so that the county is not subjected to the deobligation of funds,” by the Federal Emergency Management Agency or the state.

The audit would also examine whether emergency proclamations issued in the wake of last year’s North Shore floods have been abused “in order to award contracts to certain vendors or companies,” Kaneshiro wrote.

Complaints about the DPW’s Solid Waste Division have also reached the council, which the memo says has been informed by members of the public and DPW employees, “that the morale within all facets of the Solid Waste Division is at an all-time low, explaining that an audit may be necessary to determine the cause of the problem and and its potential effects on employee performance.

The Solid Waste Division audit would also focus on DPW procedures for scheduling and approving requests for “flex-time,” a policy that allows county employees some leeway in deciding when they start and end their work day.

The council also appears to be concerned with the Kauai Fire Department’s rising operating costs.

In the past five years, the fire department’s annual budget has grown nearly 40 percent, from about $24 million in 2014 to the nearly $33 million in the current fiscal year. Roughly half of that $9 million increase comes from sharp spikes in overtime spending and excess pension costs, according to the figures in Kaneshiro’s memo.

Since 2014, the KFD’s overtime budget has more than tripled, despite the fact that the total number of fire department personnel has remained essentially unchanged. Five years ago, the fire department’s overtime budget stood at a little over $1 million for 199 employees. Today, the department has roughly a dozen additional staff members — the KFD 2018 annual report listed 213 total employees — but its overtime budget has risen to more than $3.2 million.

The department’s excess pension costs have also risen dramatically, according to the memo, which attributes the ten-fold increase in pension payments over the last five years to a 2012 legislative change that allowed government employees to disproportionately boost their retirement benefits by logging extra hours during the months leading up to retirement, a practice commonly referred to as “pension spiking.”

Last year, the KFD spent over $2.2 million more on pension costs than it did just four years prior, rising from about $200,000 to more than $2.4 million. Perhaps more even more concerning than the 1,100-percent increase, is the distinct and steady rise in average pension payments per employee.

In 2014, $213,000 covered the pension costs of seven KFD retirees, which works out to a little over $30,000 for each person. The following year, the number of retirees covered by the KFD’s pension plan more than tripled, but the department spent five times as much on pension costs. The trend continued.

In 2016, the KFD paid each pensioner about $64,000, already double the average two years before. In 2017, it cost over $71,000 for each retiree. Last year, the KFD doled out $115,464 on average to each of the 21 employees eligible for its pension plan.

Kaneshiro wrote in his memo that the council finds it necessary to conduct an audit of the fire department “to determine if the management of KFD is being conducted effectively and efficiently.”

The special council meeting is set to begin about 8:45 at the Historic Council Building.