Auditors painted an ugly picture of mismanagement at LUS Fiber and dug deeper into problems found under former M-P Josh Guillory’s administration in Lafayette Consolidated Government’s 2023 financial report released Tuesday.
The anticipated follow up to last year’s disastrous audit of LCG includes a trio of new findings that highlighted poor internal control over inventory, assets and billing for services at the city-owned telecom between November 2022 and October 2023.
The latest audit also shows a change in tune at City-Parish Hall to issues found under the Guillory administration as new M-P Monique Blanco Boulet’s staff reversed Guillory’s refutations of many of the auditors’ major findings from last year.
Fiber needs fixing
Kolder, Slaven & Company auditors reported finding three new material weaknesses at LUS Fiber that suggest its management was playing fast and loose with its assets and its billings.
LUS Fiber was providing free services to some customers and under-billing others, auditors found, though their report did not identify who those customers were or how many accounts were included. Giving away free services could amount to a violation of the Louisiana Constitution’s prohibition on donation of public goods, auditors wrote. Their report leaves unclear the value of the services given away and how long the scheme went on before being identified. The Current’s requests for additional information are pending.
Fiber is also missing a PlayStation 5 and a network amplifier, according to a random sample of assets checked by auditors, and it can’t find dozens of Amazon Fire Sticks, which are used by employees to test services. Out of 84 Fire Sticks, just five could be accounted for. Notably, their widespread absence was only discovered after auditors checked for a sample of 25 Fire Sticks, none of which could be accounted for.
Why would Fiber even own a PlayStation 5? Boulet’s staff said Wednesday the decision was made prior to her administration and an answer wasn’t available.
Boulet’s administration wrote in response to the findings that new internal controls would be put in place at Fiber to ensure the same issues don’t happen again, though the nature of the audit’s random asset sampling and the prevalence of missing inventory when samples were probed further suggests the audit’s findings could be the tip of the iceberg.
The audit paints a messy picture of Fiber under former Director Ryan Meche, who Boulet pushed out in January despite working closely with him on multiple grant projects in recent years during her time atop the Acadiana Planning Commission. Meche’s permanent replacement, longtime Comcast exec Michael Soileau, starts next week, and he appears to have his work cut out for him.
Despite the problems identified at Fiber, Soileau will take over during a period of relative financial health for the city-owned telecom, as widespread vacancies helped it add to a budget surplus last year, according to its annual Consulting Engineer’s Report, also released Tuesday, that should aid its plans to expand to rural parts of Acadiana with state and federal grant funds. That will be important, as last year saw miniscule growth in new customers for Fiber with an increase of just 0.1% compared to 2-4% in prior years.
Changing audit attitudes
Aside from problems at Fiber, the bulk of new findings in LCG’s latest audit actually related to issues found last year that were by and large disputed by Guillory’s administration in a defiant rebuttal presented to the City and Parish councils last spring. The Boulet administration’s attitude was notably different as it accepted the auditors’ findings and recommendations while outlining steps to prevent future issues.
Still, Boulet’s team was light-handed in blaming her predecessor for the findings repeated in this year’s audit, referring a handful of times to decisions made by the prior administration but only making one direct accusation of wrongdoing.
That came in response to auditors’ criticism of LCG’s decision to fix an emergency tire pit fire in Scott by digging out a detention pond nearby and dumping the dirt on top of the fire in an “as-needed excavation” contract that was previously awarded to Rigid Constructors.
Auditors noted last year that invoices submitted by the contractor didn’t sufficiently delineate work between the two projects, and this year they went further by criticizing Guillory’s administration for not getting cost estimates for either project, which prevented them from determining whether the detention pond work should have been publicly bid in a situation similar to that of the “as-needed excavation” contract used to pay Rigid $3.7 million to remove spoil banks along the Vermilion River.
In response, Boulet’s administration wrote that existing policies at LCG should have prevented that from happening and that the project at issue “was not handled under the supervision of [LCG’s] Purchasing [Division], and as a result, compliance with bid law could not be monitored and documented,” effectively accusing the prior administration of running roughshod over LCG’s internal payment rules and accounting best practices.
Costs out of control
Other repeated findings centered around projects or practices that already caught the auditors’ attention, including Guillory’s signature Bayou Vermilion Flood Control project, which used city tax dollars to paper over a multi-million dollar hole in funding from the state even though the project lies outside city limits.
Kolder, Slaven auditors initially flagged that issue last year, and though Guillory’s admin met it with a rare instance of agreement, the issue wasn’t fully resolved, resulting in a similar finding this year that the practice had cost the city interest earnings on several million dollars. Fixing that will mean creating separate funds for state grants given to city and parish projects, Boulet’s CFO Karen Fontenot wrote in response to the finding, which she added would take effect immediately.
Auditors also dug into more issues with LCG’s continued use of Construction Management at Risk (CMAR) contracts, similar to the previously maligned contract given to Rigid Constructors for the Bayou Vermilion Flood Control detention ponds, a project that cost north of $70 million. LCG initiated two new CMAR contracts last year, but didn’t have documentation to prove that it had properly explored their costs in compliance with Louisiana Public Bid Law. The report did not specify the two projects at issue, but the timing is consistent with contracts to overhaul Brown and Moore parks, which already face separate challenges over funding.
The examination repeated criticism of LCG’s use of city sales tax funds for a number of projects that may not have complied with ballot language that dedicates that money to capital improvements for the city.
Boulet’s administration agreed and said a legal review is ongoing to determine what kinds of projects the sales tax funds may be used for and whether those projects must be within city limits.
What comes next?
Boulet’s time in office has so far been dominated by responding to problems she inherited from Guillory, including many projects that didn’t land themselves in this year’s audit report. The new M-P announced Wednesday that she will hold a press conference on her first 100 days on the job Thursday afternoon. The timing suggests the revelations and continued problems noted in this year’s audit will be a key topic for her first major public address since her January inauguration.