Lexington council ups oversight of $150,000 in grants after audit exposed lack of rules

The Lexington council may soon require more reporting and checks and balances on up to $150,000 in grants to neighborhood groups and nonprofits.

The move comes after a June 8 audit showed council members gave grants to nonprofits and neighborhood associations but never followed up to determine how that money was spent.

“The recipient is not required to provide a final accounting of the use of the allocation or return any unspent funds,” the audit found.

The audit, which looked at council spending for 2021 and 2022, found many nonprofits did not sign agreements with the city when receiving those funds.

During a Tuesday Lexington-Fayette Urban County Council General Government and Planning Committee meeting, the committee voted unanimously to change rules upping oversight of what’s called neighborhood development funds.

Under the new rules, organizations that receive those grants will have to:

• Submit paperwork that includes justification of the use of the funds, including bids.

• The grantees must sign a legal document that outlines use of the funds and it must be signed prior to the money being issued to a neighborhood group or nonprofit. If the agreement is not signed within 10 days, the money is forfeited. The group must also deposit the money within 30 days. (In the past, some groups did not deposited checks for six months.)

• Once the money is received, the entity has six months to provide documentation of how the money was spent to the council office. The council office will then turn that documentation over to the council administrator.

For 2021 and 2022, each of the 15 council members was given $15,000. Approximately $10,000 is set aside for neighborhood development funds. The remaining $5,000 is for council spending, such as supplies, travel and food. Council members are allowed to move money from their supply and travel expenses to neighborhood grants. Many of them do.

Auditors found approximately 20% of all neighborhood development grants did not have a legal agreement signed between the city and nonprofit. Yet, money was dispersed to those entities.

The audit did not find any wrongdoing on the part of the nonprofits. However, it was impossible to say if the money was spent as intended since the council did not track it. Other money the city gives, such as larger grants to nonprofits to house the homeless or economic incentives to businesses, are tracked to determine if the money was spent as intended.

Louisville Metro Council has a similar program that allows council to direct taxpayer money to nonprofits. It has all the checks and balances — including reporting back on how the money was spent — the council committee voted to approve Tuesday.

The changes to neighborhood development funds is part of an overhaul of the council’s rules and procedures, which covers everything from how council offices are managed to how much time each council member is allotted to speak.

The full council is expected to vote on the changes in October. The new council rules would take effect in January.

For the fiscal year that begins July 1, each council member has $15,000 for neighborhood development funds.

A fight over who gets to sit where

Another controversial part of the changes to council rules includes a new seating chart for council members. The council’s dais, called the “horse shoe,” has 15 seats for council members. Council members currently pick their own seats. The mayor and vice mayor sit at the center of the horse shoe.

The council committee agreed Tuesday to discuss a possible council seating chart at a meeting in October and to remove the seating chart for now from the council rules.

In January 2023, when six new members were sworn in, there was bickering and infighting about who got to sit where.

A council subcommittee, which proposed updating the council rules and procedures, created a possible seating chart structured by council district. The two at-large members would have seats to the left and right of the vice mayor and mayor.

But during an Aug. 12 General Government and Planning Committee meeting, when the changes to council rules were first discussed, some council members raised questions about the new seating charts.

Councilman James Brown, an at-large council member, recommended the seating be designated by seniority.

Councilwoman Kathy Plomin agreed. Many governments, including Congress, use seniority to determine seating in government chambers.

Others said they also had concerns about the optics of seating council members by district.

Councilwoman Tayna Fogle, who represents the First District, said if the council sat by council district, nearly all Black and minority members would be seated on one side of the horse shoe while the white council members would be on the other side.

Fogle, 2nd District Councilwoman Shayla Lynch, 6th District Councilwoman Denise Gray, and at-large councilman Brown are Black.

“I just wanted y’all to visualize that,” Fogle said in August. “Does that mean the council will look like what the city already looks like with the segregation and racial divide?”

Vice Mayor Dan Wu said during the Aug. 12 committee meeting that codifying the seating arrangements would make it easier for whomever was vice mayor to settle inter-council disagreements.

The council will take up the seating chart issue at a Council of the Whole meeting Oct. 12.