Staying with the story
The Springfield News-Sun has been digging into a state auditor’s report on the Clark County Department of Job and Family Services since the news first broke in October.
Clark County has more than 30 “off-the-book” accounts like ones used by the Department of Job and Family Services that were recently flagged in a state audit.
A Springfield News-Sun investigation found that the practice is allowed, but the state auditor’s office says it’s not the ideal financial management method for government agencies and not appropriate in all cases.
“A number of these, we think that they should be on the books,” said Bob Hinkle, chief deputy auditor for Auditor of State Dave Yost. “But there may be times when they need that cash on hand.”
The outside accounts typically are outside the control of the county treasury but set up by a government agency directly with a bank.
State auditors issued a finding of recovery in October for nearly $25,000 against former Clark County DJFS leaders for using the off-the-book accounts to move a check from the Rocking Horse Center to its Children Services levy campaign in 2010. The audit accused the county agency of “going rogue” by using public money for a campaign contribution.
The News-Sun reviewed more than 10 years of deposits and withdrawals from the DJFS outside checking and savings accounts. That examination found that the accounts were routinely used to support local foster children and no other campaign contributions were found.
But the investigation into the 2010 campaign contribution revealed that part or all of that $25,000 may have been public money generated by a county-funded event and that it may have been reported incorrectly on campaign finance reports.
Former DJFS Director Bob Suver and former Fiscal Administrator Jean Chepp denied any wrongdoing related to the campaign donation and said the funds were never public, and the transaction was simply a private donation that got routed incorrectly.
Local attorney Dan Harkins is representing them both as Clark County Prosecutor Andy Wilson decides whether the county will sue to recover the funds.
His clients weren’t hiding anything, disclosing all activity on the segregated accounts to the county auditor’s office every year, Harkins said.
“Were any public funds ever used for the campaign? Our position is no,” he said.
County contract paid for co-sponsored events
The state contends that at least some of the money donated to the Making Life Better for Kids Committee was proceeds from educational events co-sponsored by Rocking Horse and DJFS.
The events date back to 2004 and included conferences for local health professionals and community classes like a parenting seminar held at Kuss Auditorium.
The county paid $20,000 annually to Rocking Horse to hold these events as part of a larger contract for a foster care nurse coordinator.
The contract doesn’t specify what was to be done with any proceeds from these events, for which admission or registration fees were charged, but Rocking Horse Chief Executive Officer Chris Cook said the agencies had a verbal agreement that the two sponsors would split the proceeds.
He said the events made about $5,000 each year, but Harkins contends there is no documentation of that profit and it is his understanding that the events didn’t make any money.
Former Rocking Horse Director Dana Engle, who held that position in 2010, didn’t return several calls seeking comment.
Whether or not there were profits made, Rocking Horse didn’t pay any money to DJFS until 2010, when Suver requested a donation for the levy campaign.
“I appreciate you allowing the Family and Children Services Division of my agency to be a co-sponsor and share in the proceeds coming from these events,” he wrote in a letter to Engle seeking donations in June of 2010. “With the levy campaign approaching, it is my request to have these proceeds paid over to the Making Life Better for Kids’ Committee.”
Deposit invoices reviewed by the News-Sun confirm no money was donated from Rocking Horse to the accounts in question between 2004 and 2009.
“I viewed it more as their event than ours,” Suver said. “We never got an accounting of what it made.”
He had no idea what the total proceeds were over the years, he said, and Rocking Horse promised to donate the county’s share to support the levy.
In a letter to Harkins in August, Engle referred to the check as, “the amount requested ($25,000).”
But Harkins said the money was simply a donation.
“None of the money that went to the levy campaign was related to the money under contract,” he said.
Even if the contract had specified some arrangement for profit sharing, Harkins said, that contract was approved by county commissioners and Suver shouldn’t be held responsible.
County commissioners said this week that they didn’t know anything about the event co-sponsorship and referred all questions to Clark County Administrator Nathan Kennedy.
“These things never came up until this last thing with the audit,” Commissioner Richard Lohnes said.
Kennedy said he became suspicious of the arrangements surrounding the events when he learned in 2013 that proceeds were used for the campaign donation.
“When someone gets paid twice for the same costs, what’s that sound like?” he asked, referring to the fact that the county gave $20,000 for educational events that also charged a registration fee and made a profit.
In 2012 and 2013, the Rocking Horse donated about $1,900 to DJFS’s Children’s Home fund, proceeds from the events in those years, Suver said.
The $20,000 sponsorship wasn’t included in the most recent contract for 2014 through 2016.
DJFS asked for a second check
Rocking Horse initially followed correct procedure to make the levy donation, writing a check to the campaign committee.
A few days later, however, an unidentified DJFS employee returned that check and requested Engle write a new one to the department itself.
Suver and Chepp said neither of them made this request and they don’t know who did.
“Neither of them received the mail,” with the original check, Harkins said.
A handwritten note on the check invoice, signed by Jean Chepp on the day it was deposited, gives instructions for what was to happen with the second check.
“Rocking Horse Center’s payment for JFS’s co-sponsorship of events. To be transferred to checking account. Check to be written to ‘Making Life Better for Children’ campaign fund,” it reads.
That notation does not mean the money actually was proceeds from any events, Harkins said.
“There’s nothing to prove that is a correct statement,” he said.
But state auditors identified it as transaction of public funds for the benefit of a campaign, which is prohibited by Ohio Revised Code.
Donation reported as income on campaign finance form
Once the money was given to the campaign, committee Treasurer Peg Foley listed it as “investment or interest income,” under the “other income” section of a pre-general election campaign finance disclosure form filed with the Clark County Board of Elections.
The “other income” label is intended for narrow purposes that include interest earned from bank accounts, income earned by the committee selling something to supporters — like bumper stickers or T-shirts — and any refunds issued to the committee, campaign finance experts and the Secretary of State’s Office said.
“A loan, a refund or interest, that’s about it,” said Phil Richter, executive director of the Ohio Elections Commission.
All donations from individuals, nonprofits and businesses should be logged as contributions.
“I don’t know why they would do that,” Richter said.
Foley didn’t return multiple calls for comment.
The Clark County Board of Elections didn’t raise a red flag about the reported income at the time, but current Director Matthew Tlachac said it probably should have been looked into further.
“That wasn’t properly done,” he said. “I can’t really determine why it was reported that way.”
Election officials said there isn’t any reason the Rocking Horse Center couldn’t donate to the levy campaign, even though it holds several contracts with the county, including the nurse coordinator contract worth $182,000, a $141,000 Medicaid contract and $40,000 for the Healthy Steps Program.
As a nonprofit they are able to donate to advocacy campaigns, Harkins said, and neither Suver nor Chepp had any dealings with the campaign finance reports.
‘Outside’ accounts common
Kennedy requested the state look into this transaction, in part due to his discovery that DJFS was maintaining a savings and checking account off the books.
But these type of segregated cash accounts are common, according to county and state officials. A dozen different Clark County departments maintain a total of more than 30 such accounts.
The accounts are used for transactions that the management of the department has determined don’t require approval by the county treasurer or commissioners.
For example the sheriff and prosecutor both have furtherance of justice accounts.
“Something that comes up that we need money right away,” Clark County Sheriff Gene Kelly said, like cash for a drug buy operation or to send a deputy out of state to transport a suspect.
From an auditing perspective, the preferred best practice would be that all accounts fall under the budget and appropriations control of the county treasury, Deputy Auditor Hinkle said, but it’s not always practical or possible to get approval for every transaction.
“Segregated cash accounts are outside the operation of the county auditor and county treasurer,” he said. “We refer to them sometimes as ‘off-book’ accounts, but that doesn’t mean there’s anything wrong with them.”
The money in the DJFS accounts paid for birthday and holiday parties, school-related expenses like yearbook photos, as well as outings for Clark County foster children, according to the transactions reviewed by the News-Sun.
DJFS sends out letters seeking donations to this fund every year in advance of the holidays and numerous individuals and organizations have donated thousands over the years, including the Union Club, Springfield Foundation, local VFWs and the Fraternal Order of Police.
The fund is sometimes referred to as the Shinkle Trust because more than $95,000 was left to the home at the bequest of Lois Mabel Shinkle upon her death in 1998.
The off-book Children’s Home accounts have been closed and will now be maintained by the Clark County treasurer.
The Ohio Department of Job and Family Services doesn’t track whether each autonomous county DJFS keeps outside accounts like this, spokesman Ben Johnson said, so he couldn’t say if this is a common practice.
But state auditors have seen similar accounts.
“In most counties we’re going to see an account like this for the benefit of the kids,” Hinkle said.
Accounts subject to state audit
Each year Clark County Director of Accounting and Auditing Dave Crew sends out a memo to all county departments and boards requesting financial statements for all of their accounts for the previous year.
Documents going back five years show that the Children’s Home accounts have been disclosed each year. Crew rolls all of the accounts into the financial statements that he sends to the state for audit.
Just because they are disclosed, doesn’t mean auditors inspect every account each year, Hinkle said.
“I don’t believe that we had taken a look at this particular account in a few years,” he said. “We took a look at it this year because the county administrator brought it to our attention.”
After looking at the 2010 check in question, auditors also examined several years worth of transactions and determined that no other payments were suspicious, according to the audit.
Suver’s attorney Harkins speculated that Kennedy raised the red flag about the outside accounts and campaign donation out of a personal agenda against Suver, a claim that Kennedy denies.
“There’s no way this is personal,” Kennedy said.
As a CPA he’s required to report suspicious accounting practices to the state, he said, or his license could be in jeopardy.
“I’m not covering up stuff like that,” he said.
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