(The Center Square) – The Iowa Auditor of State released a special investigation report Thursday identifying nearly $57,000 of improper (“personal in nature or not necessary or reasonable”) payments in Promise City, a city in Wayne County with a population of about 110.
The disbursements included $13,211.59 of unauthorized payroll and related costs for payments to former city clerk Debra Eccleston and another city employee, roughly $17,100 of personal purchases from Walmart, and $9,700 of payments to Alliant Energy for Eccleston’s personal accounts.
Eccleston should have received a total of $13,483 net pay over that period, but 120 checks described in the report as either actual or “appeared to be” payroll amounts totaled $26,694.59.
Walmart provided the Iowa Auditor of State with descriptions of purchased items. They included cat toys, cereals, toiletries and snacks, the report showed.
There were also $2,172.72 in unsupported disbursements, which included purchases at Walmart and Dollar General, with insufficient information to determine purchases, the report said.
“As a result, it was not possible to determine if the purchases were for City operations or personal in nature,” the report said.
The audit found that Eccleston issued an unauthorized $939.88 payment to part-time Public Works employee Jacob (Jake) Steele, whose monthly gross salary was $200.
Promise City officials requested the state auditor to conduct the special investigation. The office reviewed bank accounts activity from February 2012 through August 2020. General operating checking account records were not available for the period before September 3, 2013, although sewer account records were.
Deposits for sewer services over that period were about $27,400 less than expected, the report said.
Iowa Auditor of State Rob Sand said Promise City officials did not implement policies or procedures to address recommendations, such as making sure the city’s annual financial reports agreed with city records.
Sand recommended Promise City segregate duties, independently review bank statements and bank reconciliations, require and review sewer reconciliations and delinquent account listings, and review and pay disbursements in a timely manner. He also said city officials should have an accounting system for payment preparation, accounts receivable management, bank reconciliations and financial reporting that accurately summarizes monthly sewer billings, amounts collected and amounts due per sewer account.
City officials said Eccleston worked at home without set hours and received a computer but not a printer from the city. Eccleston was hired with a salary of $125 per month, which was raised $75 per month to improve the collection of monthly sewer payments. She was eligible for reimbursements for items she bought with her money on behalf of the city.
“Because the City does not have a City Hall to maintain, purchases should be limited and would include general office supplies such as pens, ink and paper used to print reports for Council meetings, reports and forms to be filed on behalf of the City, sewer payment booklets, and past due notices for sewer payments."
Eccleston did not respond to multiple voicemail messages from the office after telling them that she needed to check her schedule before meeting with them.
“Any misuse of public funds can be a struggle for a city,” Iowa League of Cities Executive Director Alan Kemp told The Center Square in an emailed statement Thursday. “Smaller cities may have fewer resources to make up for the loss. There should be a bond in place that can help cover some of the loss. Perhaps the city can claw back some of the money from the former clerk.”
Kemp said that the long-term nature of the misappropriation reduces the financial shock, making it easier for the city to meet financial obligations.
“That would not be the case if these funds were taken all at once,” he said. “The city will just have to judiciously rebuild their fund balance over time.”
Iowa Attorney General Chief of Staff Lynn Hicks told The Center Square in an emailed statement Thursday that since it is possible the case could be referred to his office, they could not provide comment.