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A matter of trust 

Hit by critical audit, public trustee might seek greater independence

click to enlarge I feel like I spent my first four years in this office just getting the hang of the foreclosure process, and now Im just getting the hang of the accounting stuff.  Public Trustee Holly Williams - TERJE LANGELAND
  • Terje Langeland
  • I feel like I spent my first four years in this office just getting the hang of the foreclosure process, and now Im just getting the hang of the accounting stuff. Public Trustee Holly Williams

El Paso County officials reacted with alarm earlier this year when an audit revealed serious accounting problems in the office of the county's public trustee.

But they shouldn't have been surprised.

A review of past audits, along with interviews with county officials, shows that accounting problems in the office date back several years. Some of the problems predate the current public trustee, Holly Williams.

But problems spun out of control last year, apparently due to a combination of increased workload in the office and staff changes driven partly by internal strife.

According to a 2002 audit, problems included failing to reconcile certain accounts, allowing uncashed checks to be stored in unlocked file cabinets, and having the same person who was responsible for bank transactions also reconcile accounts, creating a risk of fraud and errors.

Williams, who was appointed trustee by Gov. Bill Owens in 1999, says she's now working to fix the problems.

"We're really rethinking how we do everything here," Williams said.

Meanwhile, reluctance by the County Commissioners to help her has Williams considering whether the office should seek greater independence from county government.

Major staff upheaval

There's no question that Williams' office, which serves property owners by processing housing foreclosures and releasing mortgage liens, has seen its workload grow.

Releases almost doubled from 34,000 in 2001 to 65,000 last year, due to a refinancing boom. At the same time, foreclosures shot up 37 percent.

Meanwhile, "we had a little fight going on in here last year," Williams said. "We have gone through some major staff upheaval."

Remarks by a staff member, viewed by co-workers as racially insensitive, sparked an investigation by county human-resources staff. The outcome was a restructuring of the department, though no one quit or was fired over the incident, Williams said.

While the most recent audit of Williams' office suggests accounting problems got worse last year, several audits going back as far as 1998 identified accounting lapses.

Williams met repeatedly with county staff, including Finance Director Julie Johnson, to discuss the problems. But county administrator Terry Harris says that while county officials were concerned, they couldn't do much.

"We don't have oversight over any of their administrative actions," Harris said. "That's why that kept showing up in the audit, every single year. ...We kept trying to correct the problems and never got it corrected."

Yet, after the 2002 audit came out, Johnson appeared shocked, at least in an Aug. 31 article in the Gazette, saying the accounting problems were so bad she couldn't tell whether money had been stolen. "You can assume there's theft going on there, because there's no assurance there's not," Johnson told the newspaper.

Johnson did not return phone calls seeking comment for this story.

Security cameras installed

Williams says theft or fraud has "absolutely not" occurred, though she admits she can't prove her assertion.

"We wouldn't have the records to determine that," she said.

She is now implementing the auditors' recommendations to fix the accounting problems, she says. The office has installed security cameras, is upgrading its software, and has hired additional staff.

The changes, however, have required additional funds, causing conflict with the Board of County Commissioners.

Though the trustee's office operates largely independent of county government, state law dictates that the county commissioners must approve the office's budget. And while the office is funded entirely by customer fees -- requiring no taxpayer subsidy -- any surplus the office generates goes into the county's general fund.

Usually, if the trustee's office faces a budget shortfall, commissioners have agreed to let the office spend more of its revenue surplus. But in April this year, when Williams asked for an additional $110,000 to carry out the auditors' recommendations, the commissioners balked.

The commissioners were reluctant to spend more of what one newspaper account described as "taxpayer" money. Williams underscores that the money doesn't come from taxpayers, though the fees are public funds. Last year, she points out, the office took in more than $1.4 million in fees but spent only $705,600, resulting in a $700,000 windfall for the county's general fund.

"I'm asking for my own money," she said.

After Williams hired local attorney Bob Gardner to argue her point and reduced her request to $83,000, the commissioners relented. (Gardner, a longtime Republican activist, is also serving with Williams as the co-chair of the Dan May for District Attorney political campaign. In 2001, Williams also hired her husband, Wayne Williams, to do legal work for the office. She denied the connections represent any clear conflict of interest, however.)

Williams is now considering seeking greater independence from county government. In some counties, the trustee's office controls its own revenues. But if Williams were to do so as well, it would mean giving up several of the benefits of the current relationship with the county.

While the trustee's office hands over surpluses to the general fund, it also receives free office space, technology support, payroll processing, employee benefits administration and other services from the county. The question is whether the office would be better off contracting independently for those services.

Harris, the county administrator, says he doesn't think it would, though he admitted, "I don't have the numbers to back it up yet."

Management problem'

Meanwhile, some have raised questions about Williams' qualifications to run the trustee's office. "I believe what we have there is a management problem," Commissioner Jim Bensberg told the Gazette in August.

State statutes set minimal qualifications for the job -- a candidate must have either 10 years of business and administrative experience or a college degree and five years' experience.

Williams, who has a bachelor's degree in American government, had only limited work experience, having been a piano teacher and an office manager for the El Paso County Republican Party.

"I feel like I spent my first four years in this office just getting the hang of the foreclosure process, and now I'm just getting the hang of the accounting stuff," Williams admitted.

She had, however, another advantage in getting appointed: She and her husband, now a county commissioner, had run both of Owens' election campaigns in El Paso County.

Such connections are typical. Most public trustees in large Front Range counties have served as Republican activists or officeholders, or have worked on Owens' campaigns. Most of them, however, have stronger administrative backgrounds than Williams, having served as legislators, business owners and school administrators.

A spokesman for Owens, Dan Hopkins, said the governor appoints people he trusts, and those are usually people he's met through Republican politics.

"It's not a patronage job," Hopkins said.

Public trustees don't need to know all the details of the office's operations coming in because they can hire experts to handle that, Hopkins said.

Hopkins says Williams has informed Owens of the problems uncovered by the audit and the progress in fixing those problems as recommended by the auditors.

"We're confident that she can implement the recommendations," Hopkins said.

Bensberg, meanwhile, refused to elaborate on his comments regarding Williams' management abilities. Reached by phone, Bensberg said only, "I have no comment for the Independent. I have to go."

He then hung up the phone.

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