LINCOLN — The village of Litchfield in central Nebraska “boasts a whopping 280 people,” according to its website, which goes on to say that the small-town atmosphere contributes to a high quality of life.  

But a Nebraska State Auditor’s Office probe into village operations has disrupted the calm, revealing apparent misappropriation of public funds, inaccurate utility billings and lack of documentation.

An upshot was the resignation a week ago of the village clerk, whose “improper pecuniary benefits” were a focus of the report released Wednesday.

Auditor Mike Foley, when releasing results, zeroed in on fiduciary responsibilities despite the size of a municipality. He said that “for various reasons” proper financial controls can sometimes be “less vigorous” among smaller political subdivisions.

“But the consequences of such insufficient fiscal oversight may be just as devastating, if not more so, to those less-populous communities and their local taxpayers as to their larger counterparts,” Foley said in a media release.

Clerk and hair salon owner

A 21-page letter to the Litchfield village board detailed findings of the state auditor’s team, which looked into the village’s finances following complaints of alleged financial improprieties by the village clerk, identified in the report as Julie Miller.

Hired as clerk in November 2022, Miller was empowered with oversight and control over village financial and utility billing processes, including processing payroll payments for herself and other employees of the village.

The report said Miller also owns a hair salon next to the village office. She was hired initially to work 20 hours a week as clerk but was authorized two months later to begin working additional hours, which were recorded as “overtime” for which she received twice her regular $15-an-hour wage.

The audit team said that change was made after Miller said her clerk duties were taking more than the agreed upon 20 hours a week and causing her to lose wages at her salon business. To account for those lost wages, the village board voted to pay her twice the normal rate for time worked past 20 hours.

It was meant to be temporary until she had received training, according to the report. But, the auditors said she was still getting the overtime rate some eight months later, even after an assistant clerk was hired.

Miller reportedly received $18,524 in “overtime” pay in eight months. One check showed she was paid $525 for one hour of overtime, the report said, noting that she did not provide an explanation.

The team reported that Miller submitted conflicting timesheets, leaving the team unable to determine when she was working and if she was paid the correct amount.

For the period examined, the Litchfield municipality was unable to provide all timesheets or other documentation to support all hours “supposedly” worked by its employees, including Miller, the team said. 

The village board did not appear to be approving payroll wages during its monthly meetings, the report said.

“Much of the blame for these problematic expenditures,” Foley said, “lies with the failure of the Village to implement proper payroll procedures.…”

Walmart purchase

The audit team also was critical of Miller’s $97.89 purchase at a Walmart on July 4, 2023, with a city purchasing card. The audit team was able to obtain, through a “receipt lookup” website, a listing of items purchased (including clothing, charcoal and a kiddie pool) that did not jibe with what she said she had bought.

According to the report, that situation pointed to apparent unauthorized expenditure of village funds for personal benefit. The audit team said the village lacked a written policy regarding purchasing cards.

“Though troubling, the problems found with the Village’s purchasing card could have been much worse, but they serve as a cautionary tale nonetheless,” Foley said.

The report noted additional deficiencies in village operations, including a lack of supporting documentation for other expenses, inaccurate utility customer billings, payment of late fees and failure to provide timely responses to the auditor’s requests for information.

A response by the Village Board, included in the audit letter, said that in addition to accepting Miller’s resignation, the governing board proposed to implement a host of changes that respond to the auditor team’s findings.

Those include a time clock to better track employee hours, a different review process for payroll, a more stringent oversight of purchasing cards and reimbursement of expenses and more.

Foley said he believes Litchfield can “right the ship,”

“I have no doubt that it can be done, much to the benefit of the municipality as a whole and the taxpayers who pay for its operations.…”