WITHHOLDING INFORMATION

1. Administrator: Rick Childers:

A. We’ve discussed compliance issues with MoDOT Aviation to satisfy the most recent closure requirements of the FAA, which includes allegations regarding fund management at the airport.

Administrator Rick Childers is incorrect in stating that this issue is a closure requirement.  This is a compliance requirement.  The closure is not being considered at this time, or being negotiated.  The FAA is not negotiating with the city.  The city’s closure request will remain on hold until they are in compliance with the FAA obligations.  The items that the city has addressed so far are the only items that the FAA is aware of at the present time.   Due to the appearance that the city does not intend to operate the airport in accordance with the grant obligations, the FAA will become aware of other compliance issues as time goes on, and certainly these will include financial issues once the airport records are being kept in accordance with the FAA regulations.  More than likely the requirement for a bank account for the airport was required due to the fact that the city did, or could not comply with the request by MoDOT, the FAA, and the OIG for the financial documentation for the airport.  

From the 12/21/12 compliance, (not closure) letter from MoDOT

Item #1 Airport Revenue Accounting —

The hotline complaint investigation confirmed the City deposits airport revenue into the City’s general fund. During the investigation, the City was asked to present a clear accounting history of airport revenue. In its reply, the City provided accounting ledgers and general fund records from 2003 through 2008. The FAA reviewed the documentation provided and made the following determination:

The City ‘financial records are not complete. Airport revenue and expenses must be separate from the General Fund so separation of funds can be determined.

In response to this finding, the City provided the following statement in its August 28, 2012 correspondence:

Elimination of non-line item budgeting for airport revenues and expenses implemented in 2008 has resulted in significantly enhanced record-keeping. This will continue.

"MoDOT and the FAA appreciate the City’s interest in enhancing its record keeping, but the City’s proposal does not address the continued deposit of airport revenue into the general fund. The City did not provide accounting ledgers and general fund records from 2009 through 2012 in response to this request, but based upon the City’s response in its August 28, 2012 correspondence, MoDOT and the FAA assume that deposit of airport revenue into the general fund has continued.
By failing to provide a clear method of airport accounting and revenue use, the City could be found in violation of its federal grant assurance obligations. Grant Assurance 26d. provides in pertinent part that an airport sponsor will “in a format and time prescribed by the Secretary, provide to the Secretary and make available to the public following each of its fiscal years, an annual report listing in detail: (i) all amounts paid by the airport to any other unit of government and the purposes for which each such payment was made; and (ii) all services and property provided by the airport to other units of government and the amount of compensation received for provision of each such service and property” (See also title 49 U.S.C. §47107(a)(15), (18), and (19)).
An acceptable corrective action plan will include steps to demonstrate that the City will cease deposit of airport revenue into the general fund and will keep clear accounting records documenting airport income and expenses.

The City did not provide accounting ledgers and general fund records from 2009 through 2012 in response to this request,"

When you withhold information from the Feds, it presents the appearance that there is something that the city does not want the Feds to see.   This is a very simple concept.  When the Feds ask you for the financial information, give it to them.  Don’t wine and carry on about how ignorant the Feds are and that they don’t know what they are talking about. 

“Mayor Blum stated you have before you 2009, 2010, 2011 and 2012 documentation, in front of you, that shows all revenue and all expenses. Mayor Blum stated the only thing we can determine is the fact that they want us to go out and physically open a separate checking account.   Administrator Childers stated that is the only thing I can read into it, it is already maintained by a separately identified managed fund and noted by the auditor as a separate fund, and it’s as separate a fund as you can get and that doesn't seem to be enough. Alderman Fuchs stated, so the auditor is approving this system and they are requesting that we maintain that facility with additional banking, additional book work, and additional staff time to manage this in a separate account. Mayor Blum stated that is correct. Administrator Childers stated it’s possible they simply don’t understand anything about accounting and if we have it in a separate bank then maybe they will understand that. Mayor Blum stated maybe it is just their procedure.

Read this again.  From MoDOT, "the City provided accounting ledgers and general fund records from 2003 through 2008."

From Ron Blum, “Mayor Blum stated you have before you 2009, 2010, 2011 and 2012 documentation, in front of you, that shows all revenue and all expenses."  

What is happening here.  It appears that the mayor is trying to give the impression that the city did what the FAA asked them to do, and now they are being picked on.  

Why did the city not send 09,10,11,12 revenue and expenses when they were requested? 

Alderman Dierker stated he does not understand this because it is already line item and separated, if this is the route we need to take to show them the appropriations are correct, then that’s what we will do. Aldermen Tate asks if we go in the red on that account then what will we do. Administrator Childers stated the only reason the airport continues to exist is because the city continues to subsidize the airport every year. We will do the same thing we always do; the city will send a check to put in that account.

Administrator Childers stated it’s possible they simply don’t understand anything about accounting and if we have it in a separate bank then maybe they will understand that.

“Administrator Childers stated the only reason the airport continues to exist is because the city continues to subsidize the airport every year.”  The reason the airport continues to exist is due to the fact that it is required to do so by Federal Law, and will continue to exist long after this administration is long gone.  The reason the city will subsidize the airport is because of bad management practices by the city.

“Mayor Blum stated as part of the response from Ms. Ludwig, there was a comparison between airports in Sullivan, Washington and St. Clair, that the rental rates are not comparable. Mayor Blum stated this is my personal belief; you cannot compare Washington and Sullivan financial status to St. Clair’s financial status. To me that is like saying we have more money, we are going to put you out of business by keeping the rates lower.
I will reiterate one last time, we are being set-up to fail, we are already there, were set-up to fail.”

The management practices executed by the city are the reason for the failure mentioned here.  No one else but the city is to blame.  To put it plainly, the city got caught.