Committee of the Whole

Summary

Meeting Overview

The Committee of the Whole of the Lexington-Fayette Urban County Council met on February 25, 2009, at 12:30 p.m. in the Government Center Council Chambers, 2nd Floor Conference Room, located at 200 E. Main St, Lexington, Kentucky. The Mayor presided over the meeting. The committee heard one informational agenda item regarding the State Auditor's Airport Audit Report. Nine members of the public provided comments during the meeting. No motions were voted on during this session.

Attendance

The following individuals were present at the meeting on February 24, 2009:

• Rebecca P Langston
• Crit Llewellyn
• Brian Likens
• Cindy James
• Tiffany Welsh
• Robert Owens
• Tom Halbleib
• Fred Testa
• Eric Frankel
• Council Member Martin
• Council Member Ellinger
• Council Member Beard
• Council Member Feigl
• Council Member Lawless
• Council Member Stinnett
• Council Member Myers

No absences or late arrivals were recorded.

Public Comment

Council members raised multiple concerns regarding board oversight, audit scope, and accountability at the airport during this meeting.

Council Member Martin [0:15:46] questioned who is responsible for advising airport board members that their internal procedures were inadequate, emphasizing the need for board training and stronger oversight mechanisms. He later returned to this theme [0:57:08], asking whether independent auditors should be required to review internal controls and whether boards should proactively request such reviews.

Council Member Ellinger [0:19:31] inquired why the audit was limited to January 2006 to December 2008 and questioned whether prior records were lost or not reported to law enforcement.

Council Member Beard [0:24:58] asked whether budget variances were reviewed by the board and whether specific changes were formally presented, noting that spending occurred without formal budget adjustments.

Council Member James [0:27:43] sought clarity on board liability, asking whether board ignorance due to lack of information relieves members of legal responsibility and what civil or criminal accountability might apply.

Council Member Feigl [0:32:52] expressed concern about whether the audit findings would affect the airport's ability to secure funding or complete projects in preparation for the 2010 World Games.

Council Member Lawless [0:40:19] expressed concern about a culture of intimidation, citing an incident where a public safety chief was allegedly told not to report an accident, and questioned board awareness of such practices.

Council Member Stinnett [0:52:48] asked who should have caught the misconduct at the airport and what responsibilities lie with boards, auditors, and oversight bodies.

Council Member Myers [0:59:50] commented on receiving the report late and jokingly noted it would be good bedtime reading, indicating he had not yet reviewed it.

Appointments

The following appointments to Airport Management were made:

• Fred Testa was appointed to Airport Management
• Eric Frankel was appointed to Airport Management

Contested Items

The meeting featured two major areas of contention regarding financial management and governance failures at the airport.

Misuse of Airport Funds and Cover-ups

A heated discussion centered on findings from an audit that revealed systemic financial misconduct. The audit documented a culture of excessive spending, falsified records, and complicity among top management, including the former executive director and key staff. Multiple incidents were identified involving personal benefit to individuals, lack of proper documentation, and the suppression of reports—notably including the concealment of a vehicle accident. These findings raised serious concerns about accountability mechanisms and suggested that intimidation may have been used to prevent disclosure of misconduct.

Board Oversight Failure

The second major point of contention involved criticism of the board's governance role. The board faced scrutiny for maintaining inadequate policies, failing to provide necessary training to members, and not detecting or responding to red flags that should have prompted investigation. Despite the board's formal approval of budgets and salaries, members were found to be unaware of the widespread financial misconduct occurring within the organization. This gap between formal approval authority and actual knowledge raised questions about the board's legal and ethical responsibilities for oversight and fiduciary duty.

State Auditor's Airport Audit Report

State Auditor Crit Llewellyn presented a special audit of Lexington Bluegrass Airport covering the period from January 2006 through December 2008. 2:03

Audit Findings

The audit revealed significant financial irregularities totaling over $500,000 in questionable expenditures. The report documented:

• Lavish personal spending
• Falsified records
• Excessive salary increases

Recommendations

The audit included 22 findings and over 100 recommendations for improving airport operations and governance, focusing on:

• Strengthened oversight mechanisms
• Establishment of internal audit functions
• Implementation of whistleblower policies
• Rotating external auditors

Airport Board Response

The airport board's response was presented during the meeting, demonstrating commitment to implementing the recommended changes and addressing the audit's findings.

Key Participants

In addition to State Auditor Crit Llewellyn, the discussion involved Brian Likens, Cindy James, Tiffany Welsh, Robert Owens, Tom Halbleib, Fred Testa, and Eric Frankel.

Outcome

The presentation was informational in nature, providing the board and public with details of the audit results and the airport's planned response to the identified issues.