1 2 3 4 5 6 7 8 KERR COUNTY COMMISSIONERS COURT 9 Special Session 10 Wednesday, May 17, 2006 11 3:00 p.m. 12 Commissioners' Courtroom 13 Kerr County Courthouse 14 Kerrville, Texas 15 16 17 18 19 20 21 22 23 PRESENT: PAT TINLEY, Kerr County Judge H. A. "BUSTER" BALDWIN, Commissioner Pct. 1 24 WILLIAM "BILL" WILLIAMS, Commissioner Pct. 2 JONATHAN LETZ, Commissioner Pct. 3 25 DAVE NICHOLSON, Commissioner Pct. 4 2 1 I N D E X May 17, 2006 2 PAGE --- Commissioners' Comments 3 3 1.1 Consider/discuss, take appropriate action 4 to obtain professional accounting and/or auditing services to initiate review and 5 analysis of current and prior County grade/step payroll schedules and other payroll records 6 and obtain alternatives and/or recommendations to cure or resolve any deficiencies disclosed 7 by such analysis 3 8 --- Adjourned 32 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 3 1 On Wednesday, May 17, 2006, at 3:00 p.m., a special 2 meeting of the Kerr County Commissioners Court was held in the 3 Commissioners' Courtroom, Kerr County Courthouse, Kerrville, 4 Texas, and the following proceedings were had in open court: 5 P R O C E E D I N G S 6 JUDGE TINLEY: Let me call to order this special 7 meeting of the Kerr County Commissioners Court posted for this 8 date and time, Wednesday, May 17th of this year, at 3 p.m. We 9 have only one item on the agenda, but prior to getting to that 10 item, I think Commissioner Baldwin had some news he wanted to 11 pass on. 12 COMMISSIONER BALDWIN: Yes, sir, I do, and thank you 13 very much. I just wanted to announce the passing of one of 14 the great leaders in Kerrville this morning. Ray Crooks was a 15 battalion chief with the Kerrville Fire Department for over 30 16 years, and a true servant to our community, and my best friend 17 for 45 years, and passed away this morning with the cancer 18 issue. And just -- you know, two young children and cute 19 little wife. And, so, for you folks that pray, I would ask 20 you to lift them up in prayer for some peace. Thank you. 21 JUDGE TINLEY: Thank you. Let's move on with the 22 item on the agenda. That's consider, discuss, and take 23 appropriate action to obtain professional accounting and/or 24 auditing services to initiate review and analysis of current 25 and prior County grade/step payroll schedules and other 5-17-06 4 1 payroll records and obtain alternatives and/or recommendations 2 to cure or resolve any deficiencies disclosed by such 3 analysis. Commissioner Nicholson, I think, was given the 4 chore of trying to put together some requests for 5 qualifications of professional accounting and/or auditing 6 firms to see how we go forward on this. What do you have for 7 us, Commissioner? 8 COMMISSIONER NICHOLSON: After our meeting last 9 Friday, I consulted with the County Auditor and we identified 10 four local accounting firms that we thought probably had the 11 resources to do this -- this sort of work, and they were 12 Davidson, Freedle, Espenhover, and Overby -- that's one; 13 Massey-Itschner, Pressler-Thompson, and Stuart T. Davis. I 14 also talked with -- and I e-mailed them on Saturday morning 15 asking about their interest in submitting a proposal, and I 16 asked for them to submit it by 11 o'clock this morning. 17 Following that conversation with the County Auditor, I talked 18 to Commissioner Williams, and we identified one other local 19 firm that we know quite a bit about their work and thought 20 they would also be a good candidate for it, and that's William 21 J. Beltrone, C.P.A. So, I had a conversation with his office, 22 and forwarded the same e-mail to him that the -- that the 23 others received. The second part of your package there is the 24 e-mail I sent, and the third part of the package is a proposal 25 from William Beltrone for conducting the study that we needed 5-17-06 5 1 done, and that's the only proposal that we received. 2 So, I think the purpose of this meeting is pretty 3 limited, and I don't want to stray off the subject. The 4 purpose is to decide whether or not to make an agreement with 5 William J. Beltrone to do the audit of the Sheriff's 6 Department payroll. So, first, I'd like to talk about -- I 7 want to talk about the "whether" side, but I want to talk 8 about the "whether or not" part too. I've heard -- I've 9 gotten advice and input from my constituents and leaders in 10 the community that say, why are you hiring somebody from the 11 outside? You've got a problem that was created in the 12 courthouse. Why don't you direct those in the courthouse 13 to -- to cure the problem? 14 COMMISSIONER LETZ: I think the answer I have to 15 that -- and, actually, I have -- most people that I've talked 16 to think we're going -- should hire an outside firm. I think 17 the problem with hiring inside, you either have to look at the 18 Treasurer's office, or I would think the Auditor's office. 19 And I don't know -- I mean, those are the two financial 20 offices we have, and both of them -- one points -- I won't say 21 points the finger at the other. I personally think it's the 22 responsibility of the Treasurer's Department. The Treasurer 23 seems to point the finger at the Auditor's office. So, I -- 24 COMMISSIONER NICHOLSON: I don't think the 25 Auditor -- we ought to ask the Auditor to do it. 5-17-06 6 1 COMMISSIONER LETZ: I don't think the Auditor wants 2 to do it. 3 COMMISSIONER NICHOLSON: He needs to keep a little 4 bit of an arm's-length distance on this. But we could refer 5 it back to the Treasurer's office. This is -- that would be 6 -- in the public sector, that would be the common thing to do. 7 You've got a problem; fix it. 8 COMMISSIONER WILLIAMS: Some of the conversations 9 I've had about this have been with other agencies who 10 similarly have step and grade schedules for large blocks of 11 employees. In those discussions, I learned that those -- they 12 have the step and grade schedules created by outside 13 specialists who -- who do that work, so as to avoid this 14 problem. 15 COMMISSIONER NICHOLSON: There's reasons to do it 16 that way. I -- I understand. I just thought it would be one 17 more path to decide on whether or not we wanted to go outside. 18 COMMISSIONER LETZ: Our step and grade was created 19 by an outside source, the Nash -- 20 COMMISSIONER WILLIAMS: I kind of thought it was 21 originally. 22 COMMISSIONER LETZ: The Nash folks did it, and we -- 23 we made some adjustments, you know, adding some of the -- the 24 $1,000 or $1,500 increase, and some of those things were done 25 outside. But the actual -- our step and grade was prepared 5-17-06 7 1 out of the Nash study. 2 COMMISSIONER WILLIAMS: And then we put some other 3 incentive things in place for the law enforcement personnel. 4 COMMISSIONER LETZ: Right. 5 COMMISSIONER WILLIAMS: We created a separate step 6 and grade. 7 COMMISSIONER LETZ: Well, no, they had a separate 8 step and grade already out of the Nash study, but we just 9 added the -- and please correct me if -- Auditor or the 10 Sheriff, if I'm saying this wrong. But then we added -- we 11 did some $1,000 increases; we did some changes to the basic 12 step/grade structure for the Sheriff's Department, trying to 13 increase their salary levels to make them a little bit more 14 competitive. 15 COMMISSIONER WILLIAMS: That's right. We're saying 16 the same thing. 17 COMMISSIONER LETZ: But the actual step and grade 18 chart was created out of the Nash study for both -- or all 19 County employees. Except, you know -- 20 COMMISSIONER BALDWIN: Commissioner, I've got a 21 question for you. First of all, I -- personally, I think we 22 need to go to the outside to get someone that just is not 23 involved in any way with the numbers that float around here, 24 which are many, and just someone that just doesn't have the 25 interest like our family does here. 5-17-06 8 1 COMMISSIONER NICHOLSON: Okay. 2 COMMISSIONER BALDWIN: So -- but my question is, in 3 your opening comment, you said to look at the Sheriff's 4 Department numbers. Are we not considering the whole system? 5 COMMISSIONER WILLIAMS: I think we must. 6 COMMISSIONER BALDWIN: Well, I thought that's what 7 we had decided. If -- if we approve -- or ask Mr. Beltrone to 8 enter an agreement with us, is he going to just look at the 9 Sheriff's Office, or is he going to look at the whole system? 10 COMMISSIONER NICHOLSON: The -- it's my 11 understanding there are five step and grade schedules, one for 12 deputies and one for jailers and one for nurses and one for 13 dispatchers, and a fifth one for all other. 14 JUDGE TINLEY: No, there's not a separate one for 15 dispatchers. 16 SHERIFF HIERHOLZER: If I can address part of your 17 question, it may be answered in this same thing. There are 18 four step and grade schedules that the Sheriff's Office and 19 jail use, okay? One is deputies. One is jailers -- jailers 20 and dispatchers, okay? That's in one step and grade. One is 21 the nurse -- the nurses. And then one is clerks. If this 22 order is to look at all the Sheriff's Office, and you look at 23 the clerks, you are looking at the same step and grade 24 schedule that the rest of the courthouse uses. So, if you 25 find errors in the clerk's, which we did not, okay, when we 5-17-06 9 1 looked at them, then at that point the Court may want to come 2 back and say, all right, we need to look at everything else. 3 But if you don't find errors in the clerk's step and grade, 4 you're already looking at the step and grade the rest of the 5 courthouse is on. 6 COMMISSIONER BALDWIN: That's pretty wise, I think. 7 JUDGE TINLEY: Oh, yeah, to at least confirm the 8 ones that we think are accurate are, in fact, accurate. Yeah, 9 absolutely. 10 COMMISSIONER NICHOLSON: That's the point I was 11 getting to, is that if there are no errors in his "all other" 12 category -- classification, then there would be no errors in 13 the rest of it. But there's no reason not to test that and 14 reconfirm it. 15 COMMISSIONER WILLIAMS: I agree. 16 COMMISSIONER BALDWIN: Okay, I'm with you. 17 COMMISSIONER NICHOLSON: I want to talk about 18 Mr. Beltrone's proposal. He and his office are known to two 19 of the Commissioners, so we've got -- got some experience with 20 him. Is Michael Ketterman here? 21 MR. KETTERMAN: Right here. 22 COMMISSIONER NICHOLSON: Okay. Michael Ketterman is 23 an accountant with the Beltrone firm. And you're prepared to 24 ask -- or answer any questions. Right, Michael? 25 MR. KETTERMAN: I have -- I could answer questions, 5-17-06 10 1 and if not, I'll refer them back to Mr. Beltrone, who will be 2 here in the morning. 3 COMMISSIONER NICHOLSON: Okay. 4 MR. KETTERMAN: Okay. 5 COMMISSIONER NICHOLSON: Thank you for being here. 6 COMMISSIONER BALDWIN: Wait just a second. Does he 7 think that we're going to be here in the morning? 8 MR. KETTERMAN: No. I mean, if -- 9 COMMISSIONER BALDWIN: Tell him to come over 10 Saturday morning. 11 MR. KETTERMAN: If y'all have questions, I could 12 have Mr. Beltrone get back, either by e-mail or letter, or 13 contact y'all. 14 COMMISSIONER NICHOLSON: Aren't you going to be 15 here, Commissioner? 16 COMMISSIONER BALDWIN: No. 17 COMMISSIONER NICHOLSON: Must be a track meet going 18 on somewhere. The proposal outlines the qualifications. And, 19 again, we have some experience with him and we know him, and 20 the qualifications are good. I'm going to turn over to Page 21 3, Scope of Services. It's my understanding that this study 22 is -- is not a traditional audit; that the first process would 23 be to -- to identify -- let me just read that first sentence. 24 We will perform agreed upon procedures as determined by the 25 responsible parties. Our procedures will be conducted in 5-17-06 11 1 accordance with agreed upon procedures (AUP). So, the first 2 step, I think, would be this firm, working with County 3 officials, would establish agreed upon procedures, methodology 4 for going about the study. And then, once that's done, they 5 would get into the details of collecting the information and 6 using those agreed upon procedures to -- to produce the 7 product we're looking for. Turn to the next page. 8 COMMISSIONER BALDWIN: The agreed -- the AUP, those 9 are just -- 10 COMMISSIONER LETZ: Standard. 11 COMMISSIONER BALDWIN: He's saying standard 12 procedures that everybody uses across the great land? 13 MR. KETTERMAN: Correct. Your agreed upon 14 procedures are a part of an attestation. You have an audit, 15 you have agreed upon procedures, but an audit is more 16 full-blown, where agreed upon procedures, we're specifically 17 going to look at what y'all want to address, which is the -- 18 the payroll records. 19 COMMISSIONER BALDWIN: Okay. 20 MR. KETTERMAN: Okay. It's narrow -- more narrow in 21 scope, and it's not as costly as an audit, okay? We can agree 22 upon what y'all want to look at -- 23 COMMISSIONER BALDWIN: Okay. 24 MR. KETTERMAN: -- specifically and test that, which 25 will be the step and grade schedules, and then the payroll 5-17-06 12 1 from there. 2 COMMISSIONER NICHOLSON: I think I'm going to get 3 around to a proposal, Commissioner, that the first step in 4 this would be a meeting between the accounting firm, the 5 Sheriff, the Auditor, the Treasurer, and a representative of 6 this Court, to make sure that those agreed upon procedures 7 produce a product that we desire. 8 COMMISSIONER BALDWIN: Can I nominate Commissioner 4 9 before we get too far in this thing? 10 COMMISSIONER WILLIAMS: I'll second the nomination. 11 COMMISSIONER BALDWIN: It's done. 12 COMMISSIONER NICHOLSON: We'd better get it done 13 before Saturday, 'cause I have to go to one of my risk 14 management seminars. 15 COMMISSIONER BALDWIN: Oh, yeah. 16 COMMISSIONER NICHOLSON: This one's being held in 17 the Dominican Republic. 18 COMMISSIONER WILLIAMS: I see. (Laughter.) 19 COMMISSIONER NICHOLSON: Turn to Page 4. And here 20 is a -- I want to talk about what we can do to get this done 21 in a way that produces the product we want. And I think we 22 need to be sensitive to the fact that we can be helpful or we 23 can make the study go -- make the study be very difficult. 24 Top of Page 4 says, "You're responsible for making all 25 financial records and related information available to me." 5-17-06 13 1 That's the accounting firm. Then the second paragraph, "We 2 understand your employees will prepare your own information 3 required by us to perform the AUP and will locate any 4 documents selected by us for testing." Then the next 5 paragraph, they say they can begin next Monday, and have some 6 confidence that they can have it completed by no later than 7 June 1st. And then they go on to say, "These dates are 8 contingent upon full availability of documentation required to 9 perform the AUP, as well as the cooperation of all personnel 10 involved." I think that's the key. I think if we get a good 11 AUP, and that everybody that can provide -- everybody that 12 must provide information to them does that in a very timely 13 and diligent manner, then we'll get the product we desire. 14 COMMISSIONER BALDWIN: When you have your meeting -- 15 your little group meeting, you'll come out of there knowing 16 what information they need to round up? 17 COMMISSIONER NICHOLSON: Yes. 18 COMMISSIONER LETZ: I think -- I mean, I have no 19 problem with any of that, but I think -- it seems to me you're 20 all making it more complicated than I think this first step 21 is. I mean, the first step, as I see it, is basically turn 22 over the payroll records and the timesheet-type things from 23 the Sheriff's Department. First step is to get the step and 24 grades and just do the calculations to make them all right. 25 You know, and then compare that to what was paid. And that's 5-17-06 14 1 all we need to do. 2 COMMISSIONER NICHOLSON: That's the whole project. 3 COMMISSIONER LETZ: And then, at some point during 4 that process, we need to get the payroll records from the 5 Sheriff's Department, either from the Treasurer or from the 6 Sheriff, and address the overtime issue. That's -- 7 COMMISSIONER NICHOLSON: You have described the 8 project. 9 COMMISSIONER LETZ: Okay. I wanted to make sure we 10 were all -- 11 COMMISSIONER NICHOLSON: And the -- the agreed upon 12 procedures will have to do with who's going to turn over what 13 records and when, and who's going to be available to answer 14 questions, that sort of thing. And I think there's some 15 reason for us to be very -- very cautious on that, make very 16 sure everybody knows what their role is. Sheriff's got a 17 role. The Treasurer's got a role. 18 COMMISSIONER LETZ: I mean, the Sheriff has all of 19 the timesheet-type records that you will -- that will be 20 needed for the second phase of this. And the -- the Sheriff 21 clearly has -- or the Treasurer; I mean, several people in the 22 County have the step and grade schedules. We need to make 23 sure we're working off the correct ones. And then what was 24 paid out needs to come out of the Treasurer's office. They're 25 the ones that know what the actual paychecks that were paid. 5-17-06 15 1 And that's -- 2 COMMISSIONER NICHOLSON: You're right. And the step 3 and grade schedules that are coming out of there, 'cause she's 4 the only one that's got it on the computer. 5 COMMISSIONER LETZ: Okay. 6 SHERIFF HIERHOLZER: Not any more, but -- 7 COMMISSIONER NICHOLSON: Oh, you got it. That's 8 right, you did burn it. 9 COMMISSIONER WILLIAMS: I think, in our minds, we 10 have to confirm that it was three years ago that the error 11 took place. 12 COMMISSIONER NICHOLSON: The first -- I think we 13 know for certain that the first bad paycheck was -- was 14 delivered on October 15th, '03. 15 COMMISSIONER WILLIAMS: Okay. If we know that's the 16 case, that's fine. 17 COMMISSIONER NICHOLSON: Yeah. We want to check 18 that. 19 COMMISSIONER WILLIAMS: That's just one more thing 20 to check, that's all. 21 COMMISSIONER NICHOLSON: Mr. Auditor? 22 MR. TOMLINSON: Well, I think that the firm needs to 23 have the court records that indicate what COLA's were given 24 from day one through current so they'll have a number that 25 they can -- can work off of. So, I think we do need to 5-17-06 16 1 furnish them those records. 2 SHERIFF HIERHOLZER: And I have copies of those 3 already. 4 COMMISSIONER NICHOLSON: Do you? 5 SHERIFF HIERHOLZER: Yes, I have a copy of the -- 6 prior to, I guess, '03-'04, there's actually a court order 7 that says what the COLA was and what the deputies got and what 8 the jailers got as far as raises. After '03-'04, it's all 9 just in the court minutes in the adoption of the budget and 10 the budget process. But I also have those court minutes, as 11 many as we could get, and I'll probably get the rest of them 12 that would spell out all that. And -- 13 COMMISSIONER NICHOLSON: Sheriff, are there any 14 records that are needed that you don't have? 15 SHERIFF HIERHOLZER: I hope not. Okay? I tried to 16 get everything before I even brought this to the Court's 17 attention. I do believe we got everything. The only things I 18 do not have just at my fingertips -- and they're probably in 19 the file; we normally keep a copy of everything. Whenever we 20 sent over the letter for overtime pay, okay, my personnel 21 clerk would send over a letter saying this deputy needs to be 22 paid this many hours overtime, and this many of it will be at 23 time and a half and this much of it will be at straight time. 24 Either we will have a copy of those actual letters in their 25 file, or Barbara will have the original letters that were sent 5-17-06 17 1 to back up. But the timesheets -- the actual monthly 2 timesheets, 28-day period timesheet and the actual overtime 3 slips and that calculation, I will have all of that for the 4 last three years. 5 COMMISSIONER NICHOLSON: So, if Mr. Beltrone and 6 Mr. Ketterman have your cooperation, we're about 99 percent of 7 the way there? 8 SHERIFF HIERHOLZER: Yes, I -- I believe. And we're 9 going to -- you know, I'll cooperate with them in any way. 10 This thing needs to be solved. 11 COMMISSIONER LETZ: The only thing you probably 12 don't have is the actual disbursements from the Treasurer's 13 office. You have a record of all those? 14 SHERIFF HIERHOLZER: I do not have all of those. We 15 do have some, because we get a record, once a payroll goes on, 16 on what was paid. We started doing that, but it's not -- it's 17 not that old. So, most of that can come out of the computer 18 system on the payroll report, which shows what they were paid 19 and what was taken out. 20 COMMISSIONER WILLIAMS: Tommy, isn't there a 21 green-bar printout on payroll every two weeks? 22 MR. TOMLINSON: Yeah. 23 COMMISSIONER WILLIAMS: Just go back to the 24 green-bar printout. 25 SHERIFF HIERHOLZER: Yeah. That's what we're -- so 5-17-06 18 1 it shouldn't be all that difficult to get them all the 2 information they need. 3 COMMISSIONER NICHOLSON: So, you may have all of the 4 information, then. 5 SHERIFF HIERHOLZER: I may have most of the 6 information, except copies of the actual checks, which I don't 7 know if anybody does. Only thing is, I will -- we have, as 8 the Court knows, some prior commitments Friday afternoon, and 9 after those commitments I won't be available. Of course, 10 it'll already be 4:00 or 5 o'clock Friday, and I'll be out 11 till Monday. 12 COMMISSIONER LETZ: Another question -- I have no 13 problem with going with Mr. Beltrone, but did you have any 14 communication from the other firms? 15 COMMISSIONER NICHOLSON: I had one e-mail me back 16 and say he wasn't interested, or couldn't do it. 17 COMMISSIONER LETZ: Right. 18 COMMISSIONER NICHOLSON: And I didn't hear from the 19 other three. 20 COMMISSIONER LETZ: And where's the -- 21 COMMISSIONER BALDWIN: Money come from? 22 COMMISSIONER LETZ: -- money coming from? 23 COMMISSIONER WILLIAMS: Good question. 24 COMMISSIONER NICHOLSON: I just deal with the 25 difficult issues. 5-17-06 19 1 COMMISSIONER BALDWIN: I know our Professional 2 Services is -- 3 COMMISSIONER LETZ: Gone. 4 COMMISSIONER BALDWIN: -- kaput. But we can get it 5 out of Tommy's salary or something, maybe. 6 SHERIFF HIERHOLZER: If I can make a -- 7 COMMISSIONER BALDWIN: Or the Sheriff's salary. 8 Sheriff's salary. 9 SHERIFF HIERHOLZER: If I can make a suggestion, 10 'cause there is a budget amendment coming up at your next 11 Commissioners Court. 12 COMMISSIONER BALDWIN: Oh, lord. 13 SHERIFF HIERHOLZER: Some overtime -- or vehicle 14 maintenance on the jail side. But this year, we budgeted for 15 computer software and maintenance in the jail side, $23,000, 16 which was the projected software maintenance from Software 17 Group, and as of date, we haven't spent any. And I know 18 they're making some budget amendments coming out of that 19 budget line because of the availability of those funds. And 20 with the new computer system, I'm not sure if we will have 21 anything come out of that. 22 MR. TOMLINSON: We shouldn't for the rest of this 23 year. 24 SHERIFF HIERHOLZER: So, there should be -- this 25 type of bill, if it runs along those estimates -- I'm going to 5-17-06 20 1 have to take jail overtime out of that too later on through 2 the budget year, this current year, but there should be enough 3 in that line item to make a budget amendment with software 4 maintenance from the jail. 5 COMMISSIONER BALDWIN: The court order would read 6 "up to 4,300"? 7 COMMISSIONER WILLIAMS: Yeah, 'cause he says not to 8 exceed 43. 9 COMMISSIONER NICHOLSON: I'll make a motion that 10 we -- 11 SHERIFF HIERHOLZER: There is another deal on top of 12 that 4,300, if you actually look at the paragraph. 13 MR. TOMLINSON: Out-of-pocket expenses are not 14 included in the 4,300. 15 MR. KETTERMAN: Can I make a statement, please? I'm 16 Mike Ketterman. The out-of-pocket expenses, I don't think he 17 usually -- that's just to cover in case something 18 extraordinary comes out. And if you look before where he puts 19 3,800 to 4,300, he says that what we're going to charge is on 20 an hourly basis, okay? So, it could be a lot less than that. 21 By the way the Sheriff sounds, if all y'all's records are 22 intact and we don't have to do a lot of that, it's going to go 23 back to what Commissioner Loetz -- is that -- 24 COMMISSIONER LETZ: Letz. 25 MR. KETTERMAN: Letz, I'm sorry. It's just going to 5-17-06 21 1 be a matter of seeing that the pay scales are correct, 2 recalculating, and then comparing them to what was paid 3 originally, so it could be a little bit less than that also. 4 I don't want to say it is, but he did say it's going to be 5 based on an hourly rate, not a -- not to exceed 4,300. So, it 6 could come in -- if everything's looking good and we only have 7 to spend 25 hours on it, then it could be less than that, 8 okay? 9 COMMISSIONER LETZ: Don't get our hopes up. 10 MR. KETTERMAN: Well, I just wanted to let you -- it 11 could -- you know, that's -- he's going to just do it on how 12 many hours we actually work on the audit. 13 COMMISSIONER WILLIAMS: You need to take the outside 14 number. 15 COMMISSIONER NICHOLSON: I'm going to make a motion 16 that we enter into an agreement with William J. Beltrone, 17 certified public accounting firm, to conduct an audit of the 18 Kerr County Sheriff's Office payroll going back to October 1, 19 2003, and authorize -- and the cost of that audit will be no 20 more than $4,300 plus incidental expenses limited to a maximum 21 of $200, and that we authorize the County Judge to sign that 22 agreement, and that we direct the Sheriff and the Treasurer to 23 cooperate in the study to make sure it's done expeditiously. 24 COMMISSIONER LETZ: And that yourself be the 25 representative from the Commissioners Court? 5-17-06 22 1 COMMISSIONER NICHOLSON: Yes, I'll be that. 2 COMMISSIONER LETZ: Second. 3 JUDGE TINLEY: And those same individuals to -- to 4 establish the agreed upon procedures. 5 MR. TOMLINSON: Right, that's what my comment was 6 going to be. 7 JUDGE TINLEY: Along with the -- along with the -- 8 COMMISSIONER WILLIAMS: Auditor. 9 COMMISSIONER NICHOLSON: With the assistance of the 10 County Auditor. 11 JUDGE TINLEY: Okay. 12 SHERIFF HIERHOLZER: He's going to be part of that. 13 MR. TOMLINSON: "Audit" gives it a little more 14 different connotation than what we're really doing, so "agreed 15 upon procedures" I think is a good -- good term. 16 JUDGE TINLEY: Yeah. I have a motion and a second. 17 Have we got everything included in there that needs to be? 18 COMMISSIONER BALDWIN: Yes, sir. I've got a 19 question before the actual agreement. Are you going to 20 include the County Attorney in this meeting? 21 COMMISSIONER NICHOLSON: Let's -- yeah. 22 COMMISSIONER BALDWIN: To draw up an agreement? 23 COMMISSIONER NICHOLSON: Let's make the agreement 24 subject to the approval in form of the County Attorney. 25 Though I would like to have the County Attorney present. 5-17-06 23 1 COMMISSIONER BALDWIN: So he's going to actually 2 write the -- write an agreement of some sort? 3 COMMISSIONER NICHOLSON: It's written here. He's 4 going to approve it. 5 COMMISSIONER BALDWIN: Okay, I'm with you. 6 COMMISSIONER WILLIAMS: Or you may amend it 7 slightly, but -- 8 COMMISSIONER BALDWIN: Okay. 9 COMMISSIONER LETZ: Once the -- 10 JUDGE TINLEY: Essentially, the agreement is the 11 proposal which is made here that we have before us. 12 COMMISSIONER BALDWIN: I'm with you. 13 COMMISSIONER NICHOLSON: He's already had it since 14 1:30, so he may have already completed his review. 15 JUDGE TINLEY: Okay. Anything further? Any other 16 questions or discussion on the motion? All in favor of the 17 motion, signify by raising your right hand. 18 (The motion carried by unanimous vote.) 19 JUDGE TINLEY: All opposed, same sign. 20 (No response.) 21 JUDGE TINLEY: The motion does carry. Is that it, 22 gentlemen? 23 COMMISSIONER LETZ: No. The question I have is, 24 this answers this part of it. 25 JUDGE TINLEY: Okay. 5-17-06 24 1 COMMISSIONER LETZ: But we talked about, at the last 2 meeting, that -- possibly looking at the whole payroll 3 function a little bit more in-depth as to who does it and how 4 we're going to do it in the future in the county, 'cause we've 5 had a lot of problems for the last year. I think we all 6 probably received -- well, did everyone get the copy of all 7 the Attorney General opinions? 8 COMMISSIONER WILLIAMS: I did. 9 COMMISSIONER LETZ: There are several of them. I 10 asked Rex to look into it. He looked into several opinions, 11 and it's very clear that the -- as I read them -- please -- 12 I'll ask Rex to stand up in just a second. As I read them, 13 the Treasurer is responsible for disbursement of payroll 14 funds, period. There's no discretion there. However, there 15 is some discretion as to who kind of gets you from the point 16 of the work being done and the checks being cut, and there is 17 -- we -- the Court does have some discretion to have some of 18 that function done somewhere else, as long as the disbursement 19 goes back to the Treasurer's department. Is that -- did I 20 read through all those opinions correctly? Or I should say 21 the summaries of all those opinions correctly? 22 MR. EMERSON: That's a pretty good summary. 23 COMMISSIONER NICHOLSON: And? You've got some more 24 recent information? 25 MR. EMERSON: Well, there's a Texas Supreme Court 5-17-06 25 1 case that supplements the Attorney General opinions. It's the 2 Commissioners Court of Titus County versus Agan, A-g-a-n, at 3 940 SW 2d 77, and it essentially says what you just did. It 4 overrules a couple of the Attorney General opinions that are 5 in this packet, and affirms the others. 6 COMMISSIONER LETZ: So, what I'm -- I guess what I'm 7 getting at, one of things I'd like to look at is hiring an 8 outside company to do a lot of this payroll function. I think 9 there are a lot of -- many companies in the private sector 10 that do that for businesses, and do all of the state and 11 federal filings and do everything, basically get it all 12 together, figure out the numbers. And then the disk, so to 13 speak, will be transferred to the Treasurer, and checks 14 disbursed. And I think we have the authority to do that, as I 15 read the opinions. And I'd like to look into it, find out 16 what the cost is to do that. It may be cost prohibitive, and 17 it may be a big benefit. If it is, you know, beneficial from 18 a payroll -- I mean from a dollar standpoint to the County, 19 I'd certainly be in favor of doing it. And I suspect it's 20 going to be cheaper than having the staffing level we 21 currently have in the Treasurer's office. 22 COMMISSIONER NICHOLSON: I would like to look at 23 that further, I agree. That's -- that may be another option 24 to decide that. 25 COMMISSIONER LETZ: And that may be -- I mean, 5-17-06 26 1 that's just -- I don't see the real benefit, in my mind, of -- 2 of moving that function -- well, I don't even -- moving it to 3 another department; I don't want to start more county 4 government. I'd rather privatize part of that, if we could. 5 COMMISSIONER BALDWIN: But you could either 6 privatize it outside or move it to the Maintenance Department 7 if you wanted to. I mean, you could. 8 COMMISSIONER LETZ: Could. Maybe it fits there. 9 But I don't think so. 10 COMMISSIONER BALDWIN: No, I wouldn't want to do 11 that either. 12 COMMISSIONER LETZ: I'd like -- 13 COMMISSIONER BALDWIN: You know, I'm -- the check in 14 my mind is about -- you know, and I haven't read that stuff -- 15 the legalities of moving some of it around, moving it outside 16 and those kind of things. I hope we can. I hope we can take 17 a look at that, and those other functions that we've put down 18 there as well. 19 COMMISSIONER LETZ: Right. 20 COMMISSIONER WILLIAMS: I'm glad you mentioned that, 21 'cause I'd like to take a look at the whole human resource 22 package. 23 COMMISSIONER LETZ: I think we -- and you may -- you 24 may be able to outsource the entire human resource package, or 25 you may be able -- you can have some check inside. And I 5-17-06 27 1 think those companies that do that payroll function probably 2 do the other function as well. But I know there's a lot of 3 companies out there that do the payroll function alone, and 4 for small businesses, it's -- I know a lot of times, it's very 5 economical to do it that way. And I would classify it, from 6 the size, county government is a small business. 7 COMMISSIONER BALDWIN: Yeah, maybe. 8 COMMISSIONER LETZ: Maybe not run that way 9 sometimes, but -- 10 COMMISSIONER NICHOLSON: Small business with a lot 11 of people. 12 COMMISSIONER WILLIAMS: Yeah, 300 employees is not 13 exactly small business. 14 COMMISSIONER BALDWIN: Well, I'm excited about that, 15 Commissioner. 16 COMMISSIONER LETZ: So, how do we -- Tommy, how do 17 we get -- how would you recommend we get from a concept to 18 getting a proposal? I mean, how do we find out whether -- who 19 does that function? Or you may not even know the answer. 20 MR. TOMLINSON: Well, I read the A.G.'s opinions and 21 the -- to read that the Commissioners Court can assign the 22 duties to another -- to another officer, but it's silent as to 23 whether or not you can contract it to a third-party. I have 24 not seen any -- any opinion or statute that says that you can 25 or can't contract with -- with a third-party. 5-17-06 28 1 COMMISSIONER WILLIAMS: I'll bet we can get hold of 2 Texas Association of Counties and find out pretty quick. 3 MR. TOMLINSON: Now, we do contract the -- you know, 4 our health insurance administration to a third-party. I don't 5 know if that's the -- if that's the same thing or not. So, I 6 think I'd want to make sure that we have the legal authority 7 to actually contract with a third-party. 8 COMMISSIONER LETZ: I think you still -- even if you 9 contract it, there has to be a responsible party in the county 10 who's accountable for it. I mean, you can't just -- you 11 can't -- I agree, you certainly can't -- I don't think you can 12 assign it all out. 13 COMMISSIONER WILLIAMS: Well, the constitutional 14 responsibility talks about disbursement of funds as being -- 15 being the constitutional responsibility of the Treasurer. 16 COMMISSIONER LETZ: Correct. 17 COMMISSIONER WILLIAMS: So, at some point in time, 18 if we're going to follow through with what you're talking 19 about, we got to figure out where you draw the line in terms 20 of preparation for the disbursement of funds and the actual 21 disbursement of funds, and that's what you're talking about. 22 There is a line of demarcation there. What is it? 23 MR. TOMLINSON: Well, I think -- I think that the 24 Commissioners Court can determine what part of the process 25 they want to contract out or -- or delegate. My thought is 5-17-06 29 1 whether or not you have the authority to contract or not. 2 COMMISSIONER WILLIAMS: Okay. 3 COMMISSIONER BALDWIN: That's what I'm wondering 4 about as well. 5 MR. TOMLINSON: See, I can't -- I've never read 6 anything that addresses that, and so I -- 7 COMMISSIONER LETZ: Well, Rex, you have a new 8 question. 'Cause I think we ought to find out -- try to get 9 an answer to that, if we can contract the function out, before 10 we go out for -- waste a lot of time. 11 MR. EMERSON: I need to do some more research. I'm 12 kind of like Tommy. In my research on this issue so far, I 13 haven't seen anything that addresses that particular point. 14 There's plenty of cases and A.G. opinions that say that the 15 Court has the authority to authorize a, quote, official of a 16 county to handle it. You know, and there's implied authority 17 of y'all to hire experts to perform your duties. But I don't 18 know about actually hiring out the preparation, as such. 19 COMMISSIONER BALDWIN: Tommy, what is -- what is 20 your office function as far as getting the check out the door 21 and preparation? 22 MR. TOMLINSON: As far as our -- I mean, the way I 23 look at our function as the payroll goes is on the -- on the 24 other end of the process. My -- our interest is to determine 25 whether or not what's being paid has actually been budgeted. 5-17-06 30 1 In other words, that's what we do, is we -- we randomly pick 2 individuals from the system and determine whether or not their 3 paycheck equals what the budget approved. And we test -- you 4 know, we test that to determine if the retirement percentage 5 is correct or if, you know, the FICA's correct, and virtually 6 dissect that individual's record to see if -- if everything is 7 correct on that particular paycheck. And then -- and then 8 during the year, I do an analysis on every department's budget 9 as a whole to see if what's being -- the total of what's being 10 paid equals what's budgeted for that department. And 11 that's -- I call it an analytical review of the payroll in a 12 department. So, I think that's our function, is to see 13 whether or not we're doing what we said we'd do as far as the 14 budget's concerned. 15 COMMISSIONER BALDWIN: That's a good check and 16 balance between you and the Treasurer's office. That's a good 17 check and balance, I think. But your signature goes out on 18 the checks, do they not? 19 MR. TOMLINSON: They do on all checks. 20 COMMISSIONER BALDWIN: On all checks. Now, if we -- 21 if we changed the system like what we're talking about, would 22 that affect anything that you do, including check signing? 23 MR. TOMLINSON: No. I think it would -- if you did 24 this with a third-party, there would have to be some -- some 25 communication electronically between our offices and the 5-17-06 31 1 processor. Once the processing is done, then, in my mind, 2 they would -- they would transmit that process back to us. 3 COMMISSIONER BALDWIN: Mm-hmm. 4 MR. TOMLINSON: We would approve it and then attach 5 our signatures to -- to the check. 6 COMMISSIONER LETZ: That's how I see it. So, they 7 send it all back, and then it's still the County's 8 responsibility to -- 9 COMMISSIONER NICHOLSON: Yeah. 10 COMMISSIONER LETZ: -- look at it, make sure that it 11 looks right and do some checks on it, and then disburse the 12 funds. 13 COMMISSIONER WILLIAMS: In doing random checks of 14 employees, or tests of employees for accuracy and payroll 15 payment accuracy -- you did say you did that? 16 MR. TOMLINSON: Yes. 17 COMMISSIONER WILLIAMS: Does your office also test 18 the step and grade schedule? 19 MR. TOMLINSON: No, we have not tested it. We -- 20 our -- our emphasis is on what's actually paid as in relation 21 to budget. You know, our function is more related to what's 22 been authorized on the other end of the transaction. 23 COMMISSIONER WILLIAMS: Okay. 24 COMMISSIONER BALDWIN: That's a good process. I 25 like it. 5-17-06 32 1 JUDGE TINLEY: Anything else, gentlemen? 2 COMMISSIONER NICHOLSON: Just a request. 3 Mr. Ketterman, could you stick around for a couple of minutes? 4 And the Sheriff, Auditor and Attorney. 5 COMMISSIONER BALDWIN: Wait, does that 200 bucks a 6 day start rolling then? 7 COMMISSIONER NICHOLSON: Yeah. 8 JUDGE TINLEY: Yeah. 9 MR. KETTERMAN: I don't think it starts today. 10 COMMISSIONER BALDWIN: Okay. 11 COMMISSIONER NICHOLSON: Time's already running. 12 COMMISSIONER LETZ: And I'll just put this item back 13 on the agenda -- something similar to this, anyway, so we can 14 discuss the issue of finding out if we can contract it out or 15 other options. 16 JUDGE TINLEY: Anything else, gentlemen? We stand 17 adjourned. 18 (Commissioners Court adjourned at 3:40 p.m.) 19 - - - - - - - - - - 20 21 22 23 24 25 5-17-06 33 1 STATE OF TEXAS | 2 COUNTY OF KERR | 3 The above and foregoing is a true and complete 4 transcription of my stenotype notes taken in my capacity as 5 County Clerk of the Commissioners Court of Kerr County, 6 Texas, at the time and place heretofore set forth. 7 DATED at Kerrville, Texas, this 18th day of May, 2006. 8 9 10 JANNETT PIEPER, Kerr County Clerk 11 BY: _________________________________ Kathy Banik, Deputy County Clerk 12 Certified Shorthand Reporter 13 14 15 16 17 18 19 20 21 22 23 24 25 5-17-06