Summary: Embattled Katheryn
Shields says she will run for Mayor of Kansas City in the February 27, 2007
election.
In a surprising move (10/30),
Jackson County executive Katheryn Shields officially announced on KMBZ-980 that she will
run for Mayor of Kansas City in the upcoming election.
Shields was on the "Jerry Agar"
afternoon talk show with substitute hosts news director Scott Parks and Mike
Shanin. To everyone's surprise, when asked by Parks if she had decided to
run for mayor she said she was a candidate for the post.
Ironically, her announcement came
on the heels of an investigative report (below) by DeAnn Smith in the Kansas City Star
(10/29) that questioned how Shields had spent funds earmarked for
courtroom improvements.
(Update: According to DeAnn Smith (10/31), the following folks have also
announced their candidacies for the mayoral position: Council members Alvin
Brooks, Charles Eddy, John Fairfield and Becky Nace; former Partnership for
Children director Janice Ellis; businessmen Stanford Glazer and Henry Klein; and
former Barnes chief of staff Joe Serviss.) Note: Jim Glover jumped into the fray
11/1.
A STAR WATCHDOG REPORT | Some funds not
used on courtrooms
Shields' spending troubles officials
Jackson County legislators alarmed by “spree” at the end of executive’s tenure.
By DEANN SMITH
The Kansas City Star
In 1997, Jackson County told the public that it would spend $6.1 million in bond
money for courtroom improvements.
But more than $2 million of that money has been spent or is planned to be spent
on anything but courtrooms.
A review of county contracts by The Kansas City Star shows that County Executive
Katheryn Shields has used $1.3 million of the bond money to buy computers,
software and furniture, and plans to spend an additional $1.1 million on a
conference room and fire sprinkler system.
County legislators, already alarmed by Shields’ spending at the end of her
tenure, said they had no idea that those projects were coming from courtroom
bond money.
“It is an outrage in a long line of outrageous behavior,” Legislator Dan
Tarwater said.
Tarwater and some other county officials fear that Shields’ plans could hurt the
county’s credit rating, causing higher interest payments.
Legislator Bob Stringfield called for an independent audit of the bond
expenditures.
“This is very troubling,” Stringfield said. “I don’t think this is what the
public expects for us to do with the bond money.”
Shields shrugs off the criticism, saying she can’t let up on doing her best for
the county. She says the county’s rating will remain as strong as ever.
“These are projects that need to be done,” she said. “It might irritate people
but I am county executive until Dec. 31.”
The spending issue already had been reaching a head because of the 100-seat
conference room on which Shields wants to spend $532,000.
Shields said employees regularly need a large meeting room. The county has
several small conference rooms throughout the downtown courthouse, plus the
legislative chambers, which has seating for more than 100. But Shields noted
there are few tables in the rooms and employees sitting in theater-style seats
have no easy way to take notes and put books in front of them.
Tarwater, Legislative Chairman Henry Rizzo and others said they were
flabbergasted that a top-of-the-line conference room would be a priority for the
county, with all its other needs.
Rizzo said that on the rare occasion when the county needs to seat 100
employees, it could easily find a place free or for a low rent.
And he blasted Shields’ “spending spree.”
“She’s having a fire sale before leaving office,” Rizzo said.
Several legislators and Prosecutor Mike Sanders, the Democratic nominee for
county executive, vow to kill the conference room.
But Shields, without their knowledge or approval, already has issued a $26,000
architectural contract for the conference room.
The Star’s review of Shields’ personal service contracts also found she spent
$15,000 from the bond money on a contract in August to help with the troubled
implementation of new finance and human resources software and hardware.
Political opponents have long questioned Shields’ spending habits, especially
no-bid contracts for consultants.
But some officials say they were naïve to think she might change her habits as
she prepares to leave office on a high note while she considers a run for Kansas
City mayor.
Legislator Rhonda Shoemaker said Shields needs to discuss her spending publicly,
especially about the bonds.
“She’s spending all the money up before the new administration arrives,” she
said. “It would put her in a better light if she would come to the Legislature
and discuss her end-of-tenure expenditures.”
But Legislator Dennis Waits defends Shields, saying she has kept legislators up
to speed and trusts her to act in the county’s best interests.
“She’s still the county executive and we owe her the respect to let her continue
to handle things in Jackson County in the manner in which she deems
appropriate,” Waits said.
About the bonds
In 1997, legislators approved $7.75 million in bonds for an expansion at Truman
Medical Center and the county medical examiner’s office and courtroom
improvements at the Kansas City and Independence courthouses.
Shields and legislators collaborated on the plan, with former county legislator
Victor Callahan pushing hard to see that the bulk of the funds would go for
upgrades at the Independence courthouse.
Of the total, $6.1 million was for courtroom improvements. According to the bond
indenture agreement, that money was to be spent on “the expansion, renovation,
remodeling, improvement, furnishing and equipping of courtrooms for the county
in Kansas City, Missouri, and Independence, Missouri.”
Anything left over was supposed to pay off the bonds early, according to the
bond agreement.
But here’s where the money went, The Star found.
For courtroom or courtroom-related improvements:
•About $3.5 million for courtroom improvements in Independence and Kansas City.
•About $1.1 million for heating and air-conditioning upgrades and environmental
improvements in the courthouses, which included court and noncourt areas.
For other expenditures:
•About $1 million to purchase new hardware and software for finance and payroll.
•About $365,000 for sheriff’s office renovations.
•About $120,000 for computers and furniture for the assessment department.
•An additional $80,000 to overhaul the Kansas City legislative chambers, which
included four emergency no-bid, marble-top tables for $19,500.
•$15,000 this year for the consulting contract to help get the finance and
payroll systems operating.
•$4,000 this year on salaries of temporary workers to do filing and data entry
work.
(Largely because of interest earned on bonds before they were spent, the total
available for courtroom projects grew to $7.1 million.)
A majority of county legislators say they didn’t know Shields has tapped the
account without their knowledge for purposes beyond the initial intent of the
bonds.
For example, The Star found, in summer 2005 Shields rushed through votes on two
contracts to spend $1 million for the hardware and software for finance and
payroll.
Documents submitted to legislators indicated the money would come out of 2005
budget accounts. The only indication that 1997 bond funds were being used was
the 11-number account code on the last page.
Shields now wants to use the remaining bond money to pay for the $532,000
conference room, and she already took the $26,000 architectural fee from that
account. She also wants to spend more than $550,000 on a new fire sprinkler
system, although bonds may not cover that entire amount.
Shields concedes she failed to tell legislators or circuit judges that there
were leftover bond funds.
“I was under the understanding that the money was no longer available,” said
Jackson County Presiding Judge J.D. Williamson, who wanted more capital
improvement projects in the courts.
“We have been making inquiries for years,” Williamson said.
Rizzo said he feels duped. He asked Shields at the 2005 meeting about “any kind
of bonds or anything we could” do for courthouse security. Shields did not
mention the 1997 bonds promised for courtroom improvements, instead suggesting a
bond election.
Rizzo said he was alarmed to learn that legislators had unknowingly used 1997
bond funds to buy the software and hardware.
Shields said no such disclosure was needed because her job is to bring the best
projects possible forward and ensure there is the money for them.
“They (legislators) don’t even know what the 1997 bonds are,” she said.
But Tarwater and Callahan, now a state representative, say they did. Both men
voted for the 1997 bonds and say Shields has broken faith with the public.
Credit risk?
Even worse, Callahan said he fears the bond covenant has been breached, which he
said could affect the county’s credit rating.
“Bonds are not to provide a slush fund for nine years after the bonds were
issued for spending on whatever things she can think of,” he said.
Rizzo concurred, saying he is concerned that Shields’ spending could cause the
county to make higher interest payments.
Whether that will happen is not clear. It would depend on whether the federal
government does an audit and finds the agreement was broken.
Randolph Mayer, a bond counsel and partner for Fulbright & Jaworski in New York
City, said bond indenture agreements control how bonds are spent.
“If the money hasn’t been spent in a way that conforms to treasury regulations
then the issue could be criticized upon audit, and the exempt status on the
interest on the bonds might be compromised,” Mayer said. He declined specific
comment on Jackson County’s bond spending.
Shields and county financial advisor Jack Holland say the 1997 bonds have been
used in accordance with Internal Revenue Service regulations and the county’s
credit rating is exemplary. They say the bonds could be spent on projects beyond
courtroom-related ones because the bond agreement included the legal definition
of the downtown courthouse.
“The trust indenture is broad enough that it gives the county the flexibility to
use the project funds for other county facilities and equipment-related
operations,” Holland said.
Shields concurred.
“This is all much ado about nothing,” Shields said, adding she is leaving the
courthouse with a legacy she is proud of. “The projects are wonderful.”
A majority of county legislators admit they could have done a better job of
questioning Shields’ spending, including Legislator Eugene Standifer. But they
vow to reject her effort to build a ground-floor conference room, and they want
a discussion about how to best use the remaining $1 million in bond money —
whether to pay off the bonds or use it for capital projects.
Tarwater said taxpayers can take comfort in knowing that Shields’ tenure and
county spending will end Dec. 31.
“Soon she will no longer be here,” he said. “I am very happy it is coming to an
end.”
The long goodbye
Shields also is receiving criticism for three parties paid for with public money
(though not from 1997 bond funds). In the past month, taxpayers have paid almost
$10,000 for receptions that have largely feted Shields’ 12 years as county
executive, including a 60th birthday party on Tuesday:
•Sept. 27 — A reception to unveil the “Vault” mural at the Jackson County
courthouse that includes Shields’ image. Cost, including brochures — almost
$1,500. Party was paid for with 2003 bond funds, so the cost of the festivities
will require interest payments.
•Oct. 11 — State of the County address and reception. Cost was $5,000, which
included printing and mailing invitations, catering with fine china, a large
floral arrangement and videographers to record the event. Funds came from the
county executive’s budget.
•Tuesday — A reception to honor Shields’ environmental efforts and celebrate her
60th birthday. Budget was $2,500. County employee Chris Bussen said employees
spent four months on three committees planning the surprise birthday party. Cost
included catering, two “Thanks Katheryn” cakes, one “Happy Birthday Katheryn”
cake, balloons with festive messages and special replica coins. Proceeds the
county receives for recycling paper and other materials paid for the party.
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To reach DeAnn Smith, call (816) 234-4412 or send e-mail to [email protected].
