Lawrence City Hall, 6 E. Sixth St., is pictured on May 3, 2016.

The amount of payments left uncollected by the City of Lawrence continues to rise, with the total now nearing $700,000.

The bulk of the missing dollars — about $430,000 — comes from recently discovered amounts uncollected from Douglas County. Earlier this year, the city also found it failed to bill the Riverfront Plaza for more than $250,000.

The county and city share the costs of running the Lawrence-Douglas County Planning Department, and City Manager Tom Markus told the City Commission that it was recently determined that the county’s payment hadn’t been received for the past three years. Markus was frank with commissioners at their Tuesday meeting regarding the discovery, which he said was made during a recent review of the city’s revenue variances.

“I suppose it suggests that both of us don’t have very good accounting when we don’t recognize that we haven’t been paid and they haven’t paid us,” Markus told the commission. “But I’m not wishing to get into their situation; I have enough of my own to deal with.”

Markus said that for the city’s part, the errors were due to problems in the city’s billing department. He said the city has lacked documented billing processes and procedures for managing payment agreements.

Unbilled costs

Assistant City Manager Casey Toomay told the Journal-World the city did not find any record indicating it had billed the county for the planning costs. The county pays one-sixth of the costs, so the amount must be calculated each year.

Douglas County Administrator Craig Weinaug said the county was aware that it had not gotten an invoice. Weinaug said the county informed the city that it hadn’t been billed during budget discussions among county and city staff in both 2015 and 2016.

“We’re aware of it; we weren’t trying to get out of paying it,” Weinaug said. “We were waiting for them to send us an invoice of the calculation. And then neither the city nor the county followed up after that initial contact from us to them pointing out that they had not billed us.”

Weinaug said that the funding agreement for planning is one of more than 30 between the county and the city and that there is shared responsibility for the error.

“I don’t have any interest in pointing fingers back at them,” Weinaug said. “My response to Tom (Markus) was we both got some issues here that need to be fixed.”

Toomay said that city staff realized the 2017 payment hadn’t been received at the end of September, and subsequently discovered the past two years were also missing. She said the county has since paid the back payments for 2015 and 2016, totaling about $427,000. The 2017 payment is about $229,000 and has also been paid.

Other missing payments

The uncollected payments from the county join others recently discovered as part of an outside audit, commissioned by the city, to review its billing procedures.

Before the discovery of the county payments, the most notable error was about $256,000 in ground lease payments owed to the city by the Riverfront Plaza. Those payments went unbilled and uncollected for several years.

Markus said that thus far a total of about $686,000 in payments has been collected as a result of the audit. Those include the Riverfront lease payments, county planning payments for 2015 and 2016, as well as smaller lease payments that went uncollected.

Auditor RSM’s initial assessment, completed in June, found that poor record keeping, insufficient employee training and a lack of oversight caused the errors. RSM also told the commission at that time that a primary issue was a combination of staff turnover and a faulty data conversion when the city transferred to a new billing software system in 2013. It was noted that employees previously managed some payments via their individual calendars.

Additional steps

The missing county payments weren’t identified in the initial assessment, which surveyed city departments regarding payment agreements. Markus said that the county payments didn’t show up in the survey suggests there is also a problem with that process. He said the city is working with RSM to ensure all payment agreements are identified.

“Staff is discussing additional steps with RSM, that they can take to make sure that any other outstanding items are discovered,” Markus said. “While my confidence is better, I’m not going to say conclusively that we aren’t going to catch something else. We are going to continue to look.”

Another factor is that the county payments can’t be easily identified in the city’s budget. When asked why the missing payments weren’t noticed during the city’s annual budget process, Toomay said that currently payments from the county are not itemized. She said that will change beginning next year.

“We’ve reviewed how we account for revenue paid by the county, and we’ve made some modifications to make it easier to identify missing payments,” Toomay said. “Moving more toward itemizing them out in our account structure.”

Originally, it was estimated the outside audit of the city’s billing practices would be complete at the end of October. Markus said the audit is ongoing and should now be complete in December. He told the commission that he thinks the best thing to do is to be transparent about the mistakes and let the public know what happened and what is being done to correct it.

“It’s painful to all of us, but what I’ve told staff is it doesn’t make any difference actually when it occurred,” Markus said. “I’ve been here 18, 19 months; I own this. It’s all going to come back to me eventually, and I have to make sure that this stuff is taken care of.”