Charlottesville city councilors could see the monthly limit on their city-issued credit cards lowered by as much as a factor of 20 if the panel adopts a policy proposal by City Manager Tarron Richardson.
Richardson soon will institute a stricter credit card policy for city employees, which he says would have prevented a recent Charlottesville embezzlement case and another ongoing scandal rocking DeSoto, Texas — his former employer.
The policy would move Charlottesville from a locality with one of the highest credit card spending limits in the state to one of the lowest.
The existing credit card policy, last revised in 2015, sets a single-purchase limit of $5,000 and monthly limit of $20,000.
Richardson’s proposal, which was in place for employees when he was city manager in DeSoto, would set the single-purchase limit at $1,000. The monthly limit would vary by position, from as low as $1,000 to a maximum of $9,999.99.
Mayor Nikuyah Walker and Councilors Mike Signer, Wes Bellamy and Kathy Galvin have city-issued cards. In statements The Daily Progress has obtained for the cards from June 28, 2017, and June 27, 2019, councilors have spent a combined $29,876.
In the first half of 2019, city officials have charged a total of more than $480,000 to credit cards, based on documents obtained through the Virginia Freedom of Information Act.
At a July retreat, councilors directed Richardson to study other localities and determine common budgets for council travel and spending. Officials said that their spending isn’t transparent and people only know about it from reporting in the Progress.
The consensus at July’s meeting was to set a limit of about $5,000 a month, with a slightly higher cap for the mayor.
The lower spending limit makes it easier for officials to review the charges, Richardson said.
“We can control what’s being spent. It’s not such a large number,” he said. “A smaller number we can handle more. A larger number like that, that’s a lot of money.”
Richardson’s policy is designed to increase accountability and plug holes in the existing system that could allow misuse to slip through.
“It’s of paramount importance [to accountability]. It holds folks accountable for the use of taxpayer dollars,” he said. “There were so many different levels of checks and balances that it’s hard to do it. You wouldn’t be able to do it.”
The current policy has a five-stage review process and allows for departmental credit cards that aren’t issued to specific employees.
To use a card, the cardholder must first make sure the purchase is in line with the city’s policy.
Next, the department head reviews the statements and receipts before they are passed on to the accounts payable and receivable office in the finance department.
The finance director then signs off on the expenditure. An auditor reviews a random sample of transactions during the annual audit.
Richardson said the policy doesn’t contain enough accountability measures or consequences. The section of the existing policy titled “Consequences Of Violation Of Policy” doesn’t have any subpoints.
The policy is also vague in examples of misuse, only saying that spending must “meet a public purpose,” and gives employees five working days to report a lost card.
In DeSoto’s policy, which was instituted in 2013, several lines reinforce that the credit card is “not a personal line of credit.”
It gives more specific examples of appropriate uses, such as travel and retail purchases.
The policy requires departments to designate specific employees as purchasers who will have cards in their names. That person is selected by the program administrator in conjunction with department heads and must keep a purchasing log.
The director, or a designee, must sign off on online statements, usually bi-weekly, and approve a monthly hard copy with attached receipts.
The program administrator doesn’t have approval power but reviews statements and reports possible infractions to the department head and finance director.
To obtain a card, department directors must request one from the program administrator. The designated cardholder must then undergo training before a card is issued. Department heads or designees must also receive training.
Charlottesville’s existing policy does not require training. Employees only sign off that they have read the policy.
The DeSoto policy establishes three spending tiers, which each have a $1,000 limit on single purchases.
For the city manager and department heads, the monthly limit is $9,999. For division managers and supervisors, it is $2,999, and for all other employees, it is $1,000.
Department heads can set lower limits. If spending caps are exceeded, employees have to use a purchase order or request a temporary increase in limits.
Richardson said members of DeSoto’s City Council would fall under the spending category for employees.
If a card is lost or stolen, it must be immediately reported.
Richardson or a deputy city manager would check department heads’ statements. Richardson’s spending then would be reviewed by the finance director.
Richardson said he signed off on the DeSoto mayor’s statements. She was the only elected official with a card.
Spending limits for government employees vary between localities across the state.
Some localities have more flexibility in determining limits. The city of Roanoke has a $5,000 single-item limit, but the monthly spending cap is determined by each department. Both limits are determined at the department level in Manassas.
Richarsdon’s policy would be included in the update to Charlottesville’s employee policy and procedures manual. He’s not sure when that will be completed.
Whenever the manual is updated, he plans to show the policy to the City Council and recommend the panel adopt it for councilors.
Richardson said his policy would have prevented former Charlottesville Clerk of Council/Chief of Staff Paige Rice from buying an Apple Watch and iPhone X with city funds without anyone’s knowledge.
In July, Rice pleaded guilty to misdemeanor embezzlement and received a six-month suspended sentence because she kept the devices after leaving her job last fall.
Unlike other department heads, Rice was the approved buyer for her department, meaning her purchases did not have to be approved by another city employee, according to the existing policy.
Under Richardson’s policy, he said, “there would have been more controls.”
“They would have had a person review her expenditures on a monthly basis,” he said.
Another scandal Richardson says could have been avoided is embroiling his former place of employment: DeSoto, Texas.
Jeremiah Quarles, the former director of the DeSoto Economic Development Corporation, pleaded guilty in April to stealing more than $9,000 in city money through illegal credit card purchases from 2013 to 2016. About a third of that was used to benefit his wife, City Councilor Candice Quarles, according to records obtained under the Texas Public Information Act and reports by The Dallas Morning News.
Officials have recently said he may have improperly spent more than $26,000 in city funds, according to the News.
The corporation is a connected but separate entity from the city, similar to the Charlottesville Redevelopment and Housing Authority. It receives funding from the city but is overseen by a board of directors appointed by the City Council.
The News reported that Police Chief Joe Costa recently told several residents about the higher figure, but the charges couldn’t be verified as illegal. He said further prosecution would have been difficult because of “poor accountability by the board,” The News reported.
Richardson’s spending rules were adopted by DeSoto in 2013, but the EDC “didn’t want to adopt them,” he said.
DeSoto issued a statement in July that said the EDC adopted the city’s “stringent policies concerning purchasing card usage” after the scandal came to light.
Experts have criticized the handling of the case by the town, police department and District Attorney’s office. Since The News first published a report on Councilor Quarles’ benefit from the stolen funds, residents have called for her resignation and are starting a recall effort.
Richardson was DeSoto’s city manager from 2011 until May, when he took the top job in Charlottesville.
Once Richardson learned of the improper expenditures, he asked Jeremiah Quarles to resign.
“Although I was the city manager, not over the corporation, I asked him to resign because it reflected bad on our city,” he said.
According to The News, the city’s mayor and the EDC board of directors opposed a formal audit of the agency’s expenditures to determine any other improper spending.
According to a DeSoto spokesman, the EDC voted on Monday to conduct an audit covering spending between 2012 and 2018. The city will also hold a town hall and community meeting in September to discuss the case and “clear up any misconceptions.”
Richardson said the district attorney’s office told town officials to stay silent about the case, but he urged the mayor to tell the public about it.
Richardson’s only criticism of how the situation was handled was that “it just should have been brought to the public’s attention when it first happened.”
Richardson also told DeSoto’s community relations and public information manager to post a story by the DeSoto Focus Daily News about the case on the city’s Twitter page.
“I wanted the public to know it was a totally separate entity from the city and we, on our side as a city, we had the necessary policies and procedures in place where if they had adopted them early on, it would have never happened because there would have been some checks and balances on his expenditures,” Richardson said.
Richardson didn’t have any power over Councilor Quarles, but said the case exposed a need to change the city’s charter because of the Quarles’ relationship.
“She should have never took office,” he said. “We should have had some policies in place in our charter that said, even if it’s a separate entity of the city, you shouldn’t have that type of relationship.”