ROGERSVILLE — A resolution requiring nonprofits to provide financial records from the previous year before receiving their annual Hawkins County contribution was withdrawn from the county commission Monday following a lengthy discussion.

The resolution would have taken effect during the 2021-22 budget process, although County Mayor Jim Lee started his own nonprofit auditing program last year.

In September, Lee sent notices to all county contribution recipients, many of which are fire departments and other emergency services, that they would have to submit financial records dating back three years before their funding would be released.

That move was met with mixed reactions, with some commissioners expressing concern that the mayor lacked the authority to withhold funding that had already been approved in the budget by the full commission.

There was also support for Lee’s records requirement, however, in light of four nonprofits being investigated last year for allegations of irregular spending and, in one case, outright theft.

Commission sets requirements for contribution eligibility

In December, the commission’s Budget Committee voted 6-0 to recommend that the full commission adopt a resolution requiring bank statements, canceled checks and other pertinent financial records from all nonprofit agencies when they make their annual contribution request.

On Monday, however, some commissioners questioned whether the county commission was overstepping its authority by requiring records of all expenditures.

“Could we just ask for the money that’s appropriated from the county, from the checks or the way they distribute it?” asked commissioner Charles Housewright. “Is is opening up some kind of (legal liability) when you’re asking for their whole financial reports for the entire year? Is that overstepping our bounds?”

County Attorney Jim Phillips said it’s up to the commission to determine its requirements for contribution eligibility.

“As long as it’s pertaining to checking their expenses, it’s up to the commission to determine how far they want to go on that, if this is too far, or if they water it down. They can do whatever they want,” he said.

Housewright made a motion to table the resolution to change the wording, but that motion was defeated 12-9.

“That is our money. We can do what we want with it”

“We are overstepping the boundaries of their (the nonprofits’) board,” said Commissioner Mike Herrell. “Their board makes all their decisions, and I don’t think it’s a good thing.”

Lakeview Volunteer Fire Department Chief Curtis Bean told the commission there has been discussion about departments creating separate accounts for funds that are contributed by the county so the use of that money can be tracked.

“We have no issue with giving a financial report for the county money,” Bean said. “We are not operating on county money only. If we were, there’d be no issue at all. But we’re doing roadblocks, we’re doing fundraisers, and that money has nothing to do with what the county commission gives us. ...That is our money. We can do what we want with it.”

“He’s way overstepping his bounds”

Commissioner Hannah Winegar made a motion to amend the resolution to state that the county will require annual records for how county contribution funds are spent only.

“I can see us nitpicking what you spend, and that’s not our job,” Winegar said.

The amendment was approved 18-3 with Housewright, Keith Gibson and Jeff Barrett opposed.

Gibson, who was among five commissioners replaced on the Budget Committee as of Jan. 1, noted that this resolution was one of the last recommendations the old committee made. Following the lengthy discussion, Gibson agreed to withdraw the resolution so that the new Budget Committee can address the concerns raised Monday and make a new recommendation.

Bean said Lakeview VFD hasn’t received its county funding yet. He said his department’s previous treasurer passed away, and they didn’t know where records were stored, so they will have to get copies of old checks from the bank, which was going to cost $1,000.

“This (records requirement) was not even in play when we agreed to give them this money in the budget,” Winegar added. “If he (Mayor Lee) is withholding their money based on something that we’ve never put into play, he’s way overstepping his bounds. If this is the first time we’ve ever put something like this into play, then there is no reason (Lakeview VFD) should not have this money that was voted on last August.”

Mayor’s response to legality questions

Lee didn’t attend Monday’s meeting, but on Wednesday he responded to Times News questions by sending copies of the information he received from CTAS (the University of Tennessee’s County Technical Advisory Service) reinforcing his assertion that he has the right to demand financial records and withhold funds.

One CTAS guideline regarding county mayor duties state it is his responsibility to audit all claims for money against the county and audit and settle accounts of the county trustee, and those of any other collector or receiver of county revenue, taxes or incomes, payable into the county treasury, and those of any persons entrusted to receive or expend any money of the county.

CTAS guidelines regarding charitable contributions state, “A nonprofit organization requesting assistance must submit financial reports to the county clerk and these are available for public inspection. To satisfy this requirement, nonprofits may submit a copy of their annual audit or an annual report detailing all receipts and expenditures in a form prescribed by the comptroller. The county legislative body is mandated to provide guidelines for the expenditure of these funds.”

Tennessee Code Annotated 5-6-108 states, “The county mayor audits all claims for money against the county. In counties not providing otherwise, the county mayor serves as the chief accounting officer for the county and maintains the general fund accounts.”

Tennessee Code Annotated 5-9-109 titled “Charitable and civic organizations” states, “Each county legislative body shall devise guidelines directing for what purposes the appropriated money may be spent. These guidelines shall provide generally that any funds appropriated shall be used to promote the general welfare of the residents of the county. Any funds appropriated under this section shall be used and expended under the direction and control of the county legislative bodies.”

TCA 5-9-109 further states, “Financial reports shall be available to fiscal officers of the county and shall be subject to audit. Appropriations to nonprofit organizations other than charitable organizations may be made only when notices have been published in a newspaper of general circulation in the county of the intent to make an appropriation to a nonprofit but not charitable organization, specifying the intended amount of the appropriation and the purposes for which the appropriation will be spent.”

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