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County agrees to help bail out state organization

Association of Oregon Counties misused road funds
Richard Hanners

Blue Mountain Eagle

Published on October 30, 2018 4:15PM

The Grant County Court unanimously agreed to help bail out the Association of Oregon Counties after the organization misused more than $900,000 of its road funds over the past five years.

The court agreed Oct. 24 to send $6,300 to the AOC to help make up the lost funding. Grant County’s annual dues last year were $24,000, of which about $18,000 was paid out of the county’s road fund.

There is no evidence of anyone at the AOC profiting from the misuse of funds, but the money was inappropriately transferred from the organization’s road funds to pay for other activities. The AOC’s request for assistance was voluntary.

Court support

Court members defended the bail-out as worthwhile, considering the valuable service that the organization provides the state’s 36 counties. Grant County Judge Scott Myers told the Eagle the county court has been in partnership with the AOC for decades. The organization also offers assistance to other elected officials, including the Justice of the Peace and surveyors, he said.

“They offer excellent advice and examples in road projects and planning,” Myers said. “We have established through the years a relationship that is invaluable when it comes to project experience. They see how other counties might handle a situation and share that knowledge.”

The AOC continuously carries bills for counties to the Oregon Legislature and promotes county issues in Washington, D.C., Myers said. He cited his recent trip to the White House this month as an example of an AOC service.

“When they have a problem, we need to help them, and we expect and would receive the same from them,” he said.

Commissioner Rob Raschio pointed to numerous services provided by the AOC.

“The AOC provides technical assistance to our road department, human resources, insurance for our departments and many other areas of concern for our county,” he told the Eagle. “Additionally, and of equal importance, they advocate for county interests in the legislature on topics ranging from public safety to roads to natural resources. Their existence gives our county a voice we could not afford without them, and it was important for us to help them as they try to fix the mistakes made earlier.”

Commissioner Jim Hamsher sits on the AOC’s veterans steering committee and said he appreciates the organization’s lobbying services.

“It can really make a difference,” he said.

Auditing report

The problem came to light after the AOC asked the Portland-based auditing firm Moss Adams to review transactions in the AOC’s county roads program from 2012 through 2017, verify the AOC’s financial position as of Jan. 1 and evaluate internal financial controls. Mike McArthur was the AOC executive director from 2004 until July 31, 2018, when he retired.

According to Moss Adams’ Aug. 10 report, a net amount of $780,000 was transferred out of the county roads program and had not been reimbursed by Dec. 31, 2017.

The auditing firm noted that AOC funds excluding the county roads program had been operating at annual deficits each year from 2012 through 2017. The total deficit for that time period was about $720,000, the report said.

Moss Adams concluded that the transfers from the county roads program “were utilized to finance AOC deficits during that time period. This use of funds does not meet the statutory requirements of the CRP,” the report stated.

The auditing firm included a number of recommendations for improving the AOC’s financial controls, including a policy dictating when board or managerial approval was needed to make cash transfers and implementing policies that required routine reviews to ensure statutory compliance.

On Oct. 8, the AOC board of directors unanimously voted to distribute a special assessment invoice to Oregon’s 36 counties to repay the AOC’s road fund, AOC communications director Mckenzie Farrell told the Eagle. The special assessment was based on the same formula used for membership dues — a base fee as well as fees based on population and assessed property value.

“Assessments can be repaid in one lump sum or over a period of time as agreed upon by the county and AOC,” Farrell said. “Any county assessments that are not paid will remain the responsibility of AOC.”


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