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Audit finds Mabton mayor benefited from her title, put city at risk

MABTON - An exhaustive six-month audit report released this week by the State Auditor's office claims Mabton Mayor Velva Herrera benefited from her title and allowed others to benefit from her decisions as mayor.

The audit also claims Herrera put the city of Mabton at unnecessary risk by hiring a police chief without ensuring the person met all eligibility requirements.

In total, the audit lists four findings against the city for failing to ensure compliance with state and federal laws and regulations, having inadequate internal controls over revenues, having inadequate internal controls over accountability and for Herrera not providing adequate oversight to ensure compliance with state and local laws and regulations.

Herrera began her term as mayor of Mabton in January 2006 after serving the city as a council member. She replaced Mayor David Conradt.

Concerning the mayor, the audit found that Herrera failed to ensure state and local laws were followed in billings, payroll and police services.

In 2006 the State Auditor's Office found that Herrera's personal utility account with the city was 90 days past due for six out of the 12 months. According to Mabton city policy, utilities are required to be shut off when payments are significantly overdue.

Records obtained by the State Auditor's Office show Herrera's water was shut off and then turned back on the same day despite the mayor's bill not being paid in full. From January 2007 through March 2008 Herrera's city utility bill balance was 90 days past due for 15 consecutive months with the highest amount owed reaching $600.

Two years after Herrera's account had become delinquent the mayor signed a promissory note to the city stating she would make payments on the sixth of every month. According to the State Auditor's Office promissory notes are considered a lending of credit by the city and are in violation of state law.

Herrera paid her account in full in April 2008.

The audit also found that Herrera violated city policy when she began getting paid in advance beginning in November 2006.

As far as police services go, city municipal code establishes the positions of public safety administrator and chief of police operations in the Department of Public Safety. From 2004 through most of 2006 the city administrator filled these positions.

When Herrera put the city administrator on administrative leave in September 2006, Herrera never filled the vacant position. The police chief then began performing the duties of public safety administrator, which is in violation of city code. The police chief stopped performing these duties after December 2008.

Herrera hired Robert Perales as interim police chief in August 2006. Perales was on the job through December 2008. Mabton city policy states interim positions may last only one year.

From August 2006 through December 2008 Herrera gave Perales three pay raises without the city council amending the city ordinance establishing employee salaries. The third increase came when Herrera authorized Perales to work part-time at the police department and full-time for the Mabton School District as the school resource officer for a total of 60 hours per week.

The city council never approved this and, according to the State Auditor's report, this arrangement violated city policy that states the standard work week is 40 hours.

These positions were held until the city council removed funding to support the positions, effectively eliminating them. Despite this, and with no appropriated salary in the budget, Herrera authorized Perales to return to work in January 2009.

The audit found that Herrera also failed to ensure Perales was qualified to serve in the position. Municipal code states the chief of police operations must meet state eligibility requirements that include certification as a regular and commissioned law enforcement officer. The state requires commissioned police officers to take basic training courses and pass psychological and polygraph tests.

The State Auditor's office claims Perales did not take either test before being hired. Furthermore, the audit states, Herrera did not have a state-required background check performed. A signed Peace Officer Certification form was not sent to the state Criminal Justice Training Commission either, as required by law. Despite being told about these requirements for peace officer certification by a commission representative, nothing was done to address the issue.

In the report the State Auditor's Office recommended Herrera receives training or counsel detailing the responsibilities of her position as mayor. She was also recommended to communicate with the city council more before making business decisions and to ensure state and local laws are followed before making financial decisions.

The mayor responded in writing to the State Auditor's Office regarding this finding, stating that with the police chief position the issues have been controversial between council members and the mayor, but are now moot since Perales resigned in early 2009.

As for the delinquent payments to her utility bill, Herrera acknowledged that should not have happened but claimed that city policy, no matter how informal, authorized her to make late payments. She wrote that since then that policy has been abandoned. Regarding the advance payments in her salary, Herrera said she asked then city treasurer Sharon Roy to change the date when Herrera collected her paycheck to mid-month instead of at the end of the month in order to match her mortgage payment. The mayor said Roy agreed and changed the timing, which stayed in place until Herrera directed it be changed back in April 2009.

The State Auditor's Office also dinged the city of Mabton for not monitoring its accounts to ensure compliance with state and federal laws. A whole host of problems were found in this area.

The audit looked at the years 2004, 2005, 2006, 2007 and 2008. In 2004 the city exceeded its budget in seven different funds totaling $133,583. In 2005 the city exceeded its budget in six funds totaling $35,876. During these two years Herrera was not mayor but instead served on the city council.

In 2006 Herrera became mayor and put her city administrator on leave in September. For that year the city's budget information was not retained so auditors could not determine if the budget was exceeded or not.

In 2007 five funds exceeded the city's budget by $105,007. Five funds again exceeded the budget by $237,725 in 2008.

The auditor's office also found that the city never provided annual reports to the State Auditor's Office within 150 days of the end of the calendar year for 2004, 2005 and 2007, as required by state law. According to the audit, financial statements for 2006 were incomplete. The city has not provided an annual report for the year 2008 to the auditor's office, either.

The auditors claim the city failed to reconcile bank statements during 2007 and most of 2008. When auditors reviewed reconciliation posts from July 2008 to December 2008 they found errors that ranged from $47,407 less to $120,190 more than what was recorded in the system, with no explanation.

The city failed to provide quarterly reports to the city council during 2007 and most of 2008, which is required by law. The city did provided incorrect expenditure information to the council in November 2008.

In addition to all this, the city's preliminary budget for 2009 was not available until Dec. 30, 2008, 60 days later than required by state law.

When the numbers were available, it was discovered the city had exceeded available resources in three funds during 2007 and 2008, which according to the auditor's report resulted in negative fund balances at the end of 2008 of $56,530 in the current expense fund, $11,303 in the cemetery fund and $16,092 for the 1989 bond redemptions fund. In addition to this, the 2009 budget showed expenditures for the current expense and cemetery funds are expected to exceed available resources by $44,873 in the current expense fund and $8,331 in the cemetery fund.

The auditors blamed lack of adequate knowledge or experience to properly record and report financial information or to reconcile a bank statement. The effect of this meant the city could not ensure money was used appropriately and for its intended purposes and that state and federal laws were not followed.

With the decline of available resources the auditors claimed the city's ability to operate is at risk.

In the mayor's written response she told the auditors that their report would be used as a work plan to achieve compliance. She blamed staff changes in 2007 and the city's inability to attract qualified applicants with the expertise in cash based municipal accounting and the city's software program.

She stated in her response that as of the first quarter of this year quarterly reports have been provided to council, something Councilman Mario Martinez disputes.

"That is not true," he said. "We haven't received any financial data for 2009."

The auditors also reported that for the years 2004 through 2008 the city had weak control over its utility billings and receipting. This resulted in the city not being able to ensure all money due to the city was collected and properly deposited. For instance, in 2004, again when Herrera was not mayor, $2,500 in cash and checks were lost. Because of improper internal controls the city could not determine who was responsible for the loss.

Internal controls over expenditures were also found to be weak. Credit card uses, as well as city cell phones, were abused. The city council never approved salary schedules for 2004 through 2006, something required by city code. Time sheets were not always retained so the city could not review the process to ensure the sheets were filled out correctly.

On top of all this, the city of Mabton provided a school resource officer to the Mabton School District during the 2008-09 school year without a signed agreement. As of January 2009 the city still had not billed the school district for services that began in September 2008, which would have been approximately $18,000.

Herrera authorized payment of $7,629 to the city of Granger for use of a police vehicle, gasoline and computer services between November 2006 and December 2007 even though the council voted against paying for these services. The city council finally approved payments on Jan. 22, 2008, 17 months later.

The mayor claims in her response to the audit that documentation retention and filing systems have been improved. Bank statements are also being reconciled on a monthly basis now.

The poor audit report is just one more reason why Herrera should resign, according to Martinez, who has been a vocal critic of the mayor.

"This is everything we've been fighting against for the last three and a half years," he said. "This proves our questions were warranted."

He called on Herrera, as he has in the past, to resign her position.

"She's a road block," he said. "She doesn't communicate with us, she won't allow outside help and she thinks she can do it by herself. She's going to continue to make poor decisions. That's her track record."

Herrera, who has repeatedly told the Daily Sun News in the past that she has no plans to continue on as mayor once her term is up, has apparently changed her mind.

She has filed with the Yakima County Auditor's Office and will run against Daniel Jun, Vanessa Cervantes and current Mabton Mayor Pro-tem Angel Reyna in the Aug. 18, 2009 primary election.

A phone call to Herrera's personal phone and to city hall went unreturned.

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