In June, the State Auditor and Inspector’s Office released its final audit report for a citizen-petition requested audit of the City of Pauls Valley and issues surrounding the 2018 closure of Pauls Valley’s hospital.
Though the audit report’s findings were minimal, with auditors concluding financing arrangements and bid processes had been properly managed and the city ultimately paid hospital employees what they were owed, the report did note multiple Open Meeting Act (OMA) violations, as well as a handful of Open Records requests that were not fulfilled in a timely manner.
While city officials have said they are pleased with the audit results overall, the city’s official written response to the audit report, released upon request to local media last month by City Attorney James Carlton, voices the city’s disagreement with some of the audit’s findings, particularly those related to OMA violations.
“The mistakes noted by the auditors in the recent report were of a technical nature and did not result in any loss of money or property by the city, nor any liability of the City. In the auditors’ press release, all issues were described as ‘minor.’ Nevertheless, the City respectfully disagrees with any implication or statement by the auditors that there were violations of the Open Meetings Act,” the statement said.
In a follow-up interview with the News Star in early July, State Auditor Cindy Byrd addressed the use of the word “minor” in the headline of a press release issued with the audit report.
“Whenever we talk about minor violations, you have to understand that we are typically conducting investigative audits that reveal hundreds of thousands of dollars in either misappropriated, embezzled or just misused funds. And while we did not find that here, the most concerning issue, I believe, in this report that citizens there should be aware of was that we did not feel like the Open Meeting Act had been followed,” Byrd said.
Oklahoma’s Open Meeting Act and Open Records Act are what are commonly known as sunshine laws, which are intended to foster public trust and accountability by allowing citizens to see how their elected officials are making decisions and using public resources.
Oklahoma’s Open Meeting Act applies to all “public bodies,” including municipalities, county commissions, public school boards and state agencies.
The OMA requires those public bodies to give advance notice of all meetings. The notice must include time, place and subject matter to be discussed in a specific agenda that gives a true picture of any actions that are to be contemplated. The law limits what public bodies can discuss behind closed doors in executive sessions and requires all action or votes be taken publicly in open session. It also requires minutes of meetings be kept and made available to public inspection.
“What we found was that items were being discussed and decided in a meeting that was not properly posted on an agenda,” Byrd said.
According to the audit report, “the city, the Pauls Valley Hospital Authority and the Pauls Valley Municipal Authority improperly addressed items under ‘new business’ 32 times contrary to the Open Meeting Act.” The finding was based on a sampling of minutes and agendas for meetings that were held between July 2014 and June 2020.
The OMA allows for new business to be taken up at regular meetings, stating the requirement for a public body to post an agenda for a regular meeting 24 hours prior to the meeting, excluding weekends and legal holidays, “shall not preclude a public body from considering at its regularly scheduled meeting any new business.”
The OMA goes on to define new business as, “any matter not known about, or which could not have been reasonably foreseen prior to the time of the posting,” of the agenda.
According to the audit report’s findings, PVHA trustees violated the OMA 27 times by discussing or approving items under new business that did not meet the definition of new business.
Those items included:
- Approving the hospital audits for FYE 2015 and FYE 2016;
- Approving new hospital bylaws;
- Approving the opening or closing of checking accounts;
- Adding or removing authorized signers from bank accounts;
- Approving contracts with physicians and vendors;
- Approving sick leave and PTO plans for employees;
- Approving special meeting minutes;
- Approving the disposal of surplus items;
- Approving appointment of six members to PVGH Advisory Committee;
- Approving the sale of the Valley Hospice license for $100,000.
The audit report contends these items should have been known about or foreseen at least 24 hours in advance of the meeting and therefore were not appropriate under new business.
The city’s written response to the audit report rebuffs the audit’s finding that items were inappropriately handled under new business.
“In auditing the City and its related entities, the auditors had no evidence as to whether items considered under ‘new business’ were of sufficient nature to legally qualify for action under that category, instead they appear to take the position … that any action taken under ‘new business’ is ‘improper’ … and/or constitutes a ‘violation of the Open Meeting Act,’” the statement reads.
The response goes on to say, “The City believes that actions taken under ‘new business’ were legal and appropriate given the exigent circumstances of trying to keep open the Pauls Valley General Hospital and the dire need to do so for the lives and wellbeing of City residents while dealing with ever-emerging crises and constantly changing hospital management companies.”
The audit report notes the spirit of Oklahoma’s Open Meeting Act is to allow the public reasonable access to their government’s actions.
“By conducting business without appropriate notice to the public,” the audit report states, “the governing body is operating without regard for the public’s right to transparency.”
Byrd pointed out the OMA has a provision that allows public bodies to call emergency meetings in situations where the “time requirements for public notice of a special meeting would make such procedure impractical and increase the likelihood of injury or damage or immediate financial loss.”
Emergency meetings allow a lot of leeway for public notice, Byrd said, providing an avenue for public bodies to comply with the OMA, meet the business needs of the public body, and still put a priority on the public’s need to understand the nature of that business.
“I also want to point out that while the response does say they had to allow these conversations because it had to do with the hospital and there were lives at stake and things that need to be taken care of, we found other situations where business was being conducted under new business or public comments that should have been properly posted as an agenda item, such as approving a contract change order for a public construction contract and other items that have nothing to do with the hospital,” Byrd said.
According to the report, auditors found that in at least 12 meetings, the city council and the PVMA trustees, along with the city manager and city attorney, discussed items not specifically listed on the agenda under open comment portions of the agenda, which included the trust manager, trust attorney and trustee comment sections.
According to the audit report, one of those instances was a meeting in which the city manager presented a utility rate increase proposal to trustees under “Trust Manager comments,” and a discussion was held on why the increase was needed and how it would be implemented.
In another meeting, the city manager used the same comment item to request and receive approval to seek bids on 22-acres of property on the backside of the city’s lagoon.
Auditors also found the Pauls Valley Hospital Authority did not properly disclose the specific purpose for an executive session and discussed business in the executive session that did not meet statutory requirements.
The OMA provides a very specific list of circumstances for which public bodies are allowed to enter into executive session for discussion. Those include discussion of the hiring, appointment, promotion, demotion, disciplining or resignation of an individual salaried public officer or employee; discussing the purchase or appraisal by the public body of real property; confidential communications with the public body’s attorney concerning a pending investigation, claim or action; discussion of matters where disclosure would violate confidentiality requirements of state or federal law; and discussion of negotiations concerning employee groups.
Public bodies are required to reconvene in open session before taking any action or casting votes on items discussed in executive session.
In addition, according to the OMA, if a public body proposes to conduct an executive session, the agenda must contain sufficient information for the public to ascertain that an executive session will be proposed, identify the items of business and purposes of the executive session, and state specifically the provision of the statute authorizing the executive session.
According to the audit report, the reason for executive sessions for the city, PVHA and PVMA were not specifically noted on agendas. Instead, every agenda listed a summary of three possible purposes for an executive session, whether an executive session was to be held or not.
In the specific instance cited in the audit report, “the PVHA held a special meeting on September 5, 2018, to discuss the hospital closure. Per the city clerk, the hospital was struggling to fund payroll, and Frank Avignone, the hospital administrator, was requesting financial support. The minutes indicated that no action was taken on the agenda item of ceasing general operations of the hospital; the trustees then entered an executive session with Avignone and other hospital- related personnel. The minutes did not indicate the specific purpose of the executive session, which is required by statute.”
The report goes on to say the discussion of ceasing the general operations of the hospital does not appear to comply with any of the statutorily defined purposes for an executive session.
In its written response, the city maintains all executive sessions were properly listed on agendas.
“Similarly, the City believes that any statement or implication of impropriety of executive sessions is likewise misplaced. … Legal reasons for executive sessions include discussions regarding the termination of employees, and discussions with counsel of threatened or pending litigation. As noted above, the dire state of the hospital created a situation for the City where over 100 jobs were going to be terminated upon closing of the hospital. Discussions of having to terminate over 100 employees, and if so, how to do it, are most certainly proper discussion topics for executive sessions.
“The reasons such discussions are allowed to be held in executive sessions are obvious. First, it preserves the privacy of employees to not have their possible termination, and the reasons for termination, discussed in public. In addition, in a situation where a hospital is trying to be saved, regular, open discussions of such terminations would create a situation of a self-fulfilling concern. What employees would stay with the hospital if their possible termination— due to closure—were constantly discussed in public?
“In addition, the employee termination issues, and the dire financial situation of the hospital spawned numerous lawsuits some of which were already pending during the noted executive sessions, and many more threatened. Discussion of pending or threatened litigation is also a legitimate ground for executive sessions. The City believes that all executive-session discussions complied with the spirit and letter of the applicable law.”
In the June press release issued by the SAI’s office along with the audit report, Byrd is quoted as saying, “The people of Pauls Valley clearly wanted to do all they could to keep the hospital open and were willing to tax themselves to do so. However, due to the City’s lack of compliance with the Open Meeting Act, it appears the true status of the hospital's financial situation was hidden from the voters.”
During the News Star’s July interview with Byrd, she added, “The city had a responsibility to place items on the agenda in enough detail so that the citizens understood this hospital was in financial distress. Without a properly worded agenda item, how could any citizen have known the true status of the finances?”
The city’s written response takes “particular exception” to Byrd’s press release statement that the true status of the hospital’s financial situation was hidden from voters and says nothing could be further from the truth.
“Over more than 10 years of the hospital’s financial crises, there were numerous agenda items related to all aspects of the hospital, the hospital’s financial status was clearly set forth in public filings when the hospital authority filed for bankruptcy in 2013, and there were numerous news stories published about the hospital’s dire financial condition,” the statement said. “Toward the latter days of the hospital’s operation as a publicly owned hospital, there were even public fundraisers held by concerned citizens attempting to raise funds for the hospital, and a number of private donors donated monies trying to save the hospital. No conscious citizen of Pauls Valley could have been unaware of the dire financial condition of the hospital, which had been ongoing for years.”