Parsing KRS 424.220 - Financial Statements 0.04

This is the forth part of a series following after part three:

Parsing KRS 424.220 - Financial Statements 0.03


KRS 424.220(2)(b) and (3) relate to reporting the disbursement of public funds and must be read together:

The statement shall show:

(2)(b) "The total amount of funds disbursed during the fiscal year to each individual payee. The list shall include only aggregate amounts to vendors exceeding one thousand dollars ($1,000).

(3) Only the totals of amounts paid to each individual as salary or commission and public utility bills shall be shown. The amount of salaries paid to all nonelected county employees shall be shown as lump-sum expenditures by category, including but not limited to road department, jails, solid waste, public safety, and administrative personnel."

Breaking it down we can see the first sentence of KRS 424.220(2)(b) refers to "each individual payee" and the second sentence references "vendors." Nowhere is either term expressly defined. KRS 65.140 uses the word "vendor" in the context of imposing a 30 day payment requirement upon governmental units, "which receives goods or services from a vendor." KRS 65.140(1)

This is a common sense and ordinary definition of "vendor," which means a business that supplies goods or services.

Thus, all vendors are payees, but not all payees are vendors. Aggregate payments to an individual vendor are reported in the Financial Statement if the amount exceeds $1,000. All payments to non-vendors are reported regardless of the aggregate amount paid to each. Public utility bills must be shown.

For example, a $500 charitable donation to the American Red Cross paid from public funds would be included in the Financial Statement.  In this instance the American Red Cross is not a vendor, even if the American Red Cross also sometimes sells services, such as training, as a vendor. In part, the test is to determine the nature of each transaction and payment.

Payroll

1. Payroll payments to salaried or hourly non-elected employees are aggregated by category or department.

2. Payroll payments to elected officials are reported separately and individually.


Problem areas

Just as some payees can be vendors for some transactions and non-vendors for others, employees and officials also frequently receive payments other than and in addition to payroll compensation, such as:

• Uniform allowances;
• Purchase reimbursements;
• Travel allowances or reimbursements

The way KRS 424.220 reads, these payments ought to be reported separately in the Financial Statement as a non-vendor payment. That does not necessarily make any sense.

Another problem is presented by the $1,000 limit on reporting vendor payments. That amount is in KRS 424.220, which is about annual Financial Statements. KRS  424.230 gives the option of monthly or quarterly Financial Statements, but does not specifically modify the $1,000 vendor limit. Should quarterly Financial Statements include each vendor receiving $250, or more, during the quarter?

With a little bit of good faith, basic honesty and the level of transparency required by Kentucky's Open Records Act, it's not a big problem. With public officials who are cheats, liars and slobs, it doesn't make a damn bit of difference what the law requires.

Next part


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Tom Fox, J. D.
Southern Specialty Law Publishing Company
Louisville, Kentucky

A division of Accountable Kentucky Incorporated
a Kentucky Non-profit corporation
AccountableKY.org

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This is not legal advice and I am not a lawyer.