Park Board bonuses raise questions

In 2013, the two top public officials overseeing Cincinnati parks reached a well-publicized but partially confidential settlement with the Ohio Ethics Commission for receiving nearly $100,000 in improper bonuses between 2004 and 2010 from the Cincinnati Parks Foundation, a private, nonprofit organization.

A new Enquirer investigation, however, finds the nonprofit paid an additional $104,000 worth of bonuses in 2010 and 2011 to one of those officials, Cincinnati Parks Executive Director Willie Carden. The money was funneled from public sources into the private entity's account at a time Carden was running both the public parks department and the private nonprofit.

That money came from endowments left to the Park Board in wills by private citizens and was sent through the Parks Foundation for processing. The Park Board discussed those payments to Carden behind closed doors and didn't detail them publicly, meeting minutes show.

Concerns about the relationship and flow of money between the public Park Board and the private Parks Foundation were initially raised in an internal city audit, which was never finished nor publicized. They have arisen anew as Mayor John Cranley and business and political leaders are asking voters to approve a ballot initiative that would create a permanent property tax to raise $8 million a year for future parks projects and maintenance of existing parks.

“I have faith in the people who run the parks department, which is recognized as one of the best in the country,” Cranley said Wednesday in an interview with The Enquirer. “This new tax money that would come in would be under the same regulations as all the other departments in regards to disbursement and purchasing and vendors and open records."

Added the mayor: “To suggest that these tax dollars are going to be treated loosey-goosey is completely unfair."

Cranley, however, said he is recommending that City Council pay for a separate independent audit of Cincinnati Parks in the coming month, even given his full confidence in parks officials and the fact that the city and state already audit the department annually.

“I want this to be completely transparent and above board,” Cranley said. “I’ve already had discussions with the city manager about this to get it started as soon as possible.”

Opponents of the parks measure say details of the various payments to Carden and his second in command, Marijane Klug, raise questions about who would handle the new monies if the ballot measure were to pass.

Tim Mara, who leads the main group opposing the initiative, said the Park Board has “a bad attitude about money.”

"Somehow the parks director has come to view the donations made to the Park Board as money he can spend in whatever way he wants,” Mara said. “They are playing a shell game with all this money. That's not the way things should be."

Added Mara: "And the Park Board has either acquiesced or failed to oversee his actions, which is its responsibility. Sadly, I believe the only way to restore confidence in the Park Board is for Mr. Carden and Board Chairman Otto Budig to resign their posts."

Carden said Wednesday he didn't ask for the bonuses he received.

“I know it was wrong now to take the money directly from the foundation, but it was nice to have someone say ‘thank you,’” he said. That gratefulness also applies for the money he received from the Park Board, he said.

In a previous interview, Klug said the Park Board and Parks Foundation are distinctly different organizations.

Board funds and foundation funds "are totally separate," Klug said. "No funds are co-mingled.”

Cincinnati City Councilman Kevin Flynn, who oversees the councils and rules committee and has endorsed the ballot tax initiative, said more scrutiny is needed.

“If parks has not had an audit completed, it should," he said Wednesday.

“It seems like people don’t want to look,” said Flynn, whose committee oversees the audit department. “Other than setting the budget, the most important role council should provide is the check and balance on the administration to make sure the money is spent in the most productive way as intended by the policy makers.”



Sorting out the history of bonuses paid to Carden and Klug, and the relationship between the public Park Board and private Parks Foundation, is no simple thing.

The Board of Park Commissioners is a public body that includes five members, all appointed by the mayor. The board has the power to hire or fire all parks department employees.

Members of the board for the private Parks Foundation nominate their own members, but final approval is given by the public Park Board. The nonprofit’s offices were located in Park Board offices for years. They moved recently to another building, also owned by the Park Board.

In the previously publicized ethics case, Carden and Klug were cited in 2013 by the Ethics Commission for accepting bonuses directly from the Parks Foundation between 2004 and 2010. They paid the money back and quit their roles with the foundation.

The ethics settlement stated that Carden received a total of $61,073 between January 2005 and December 2010, while Klug received $37,174 between December 2004 and December 2010. Carden paid back $30,536 and Klug returned $18,587, or the net amount they received after taxes.

But other details about the situation were kept confidential per the settlement agreement and Ohio law. No criminal charges were filed.

Ethics Commission executive director Paul Nick declined comment this week on that investigation.

Carden currently earns $139,705 annually and Klug earns $107,620 a year. On Wednesday, both Klug and Carden described themselves as “paid volunteers” for the foundation when they had roles there.

Klug stated on her city financial disclosure form in 2011 that she received a “one-time stipend” for her work with the foundation. That disclosure was not on her 2010 form, even though she received bonuses from the foundation that year.

Not addressed by the Ethics Commission were the bonuses that came to Carden from the Park Board by way of the Parks Foundation in 2010 and 2011, documents show.

Budig said a new bonus system was put into place by the Park Board in 2010 to reward Carden “for his incredible hard work.”

“We felt as a board that it was the right thing to do,” Budig said when asked why the funds weren’t used for other park expenses.

Because giving Carden a bonus would have required going through the city's budgetary process, the public Park Board used the private Parks Foundation to channel the payments to him, Budig said.

The foundation disclosed on its 2011 tax return that it served as a pass-through agent for payments to Carden. On that document, the Parks Foundation stated that it acted only as “a payroll processing agent for this transaction."

All of the “additional compensation was reimbursed through a private endowment,” the form said. “No foundation funds were utilized to pay this expenditure.”

That mention is not made on the foundation's 2010 tax return, even though Carden received the bonuses that year, too.

Budig and Cranley said the second round of bonuses paid to Carden were fully disclosed and transparent when they began in 2010. But the Park Board discussion of the 2010 bonus took place in a closed-door session. There is no description of what the payments were intended for in the meeting minutes describing how the board emerged and approved them.

According to the meeting minutes from June 17, 2010: “Commissioner (Robert) Anning moved to enter into Executive Session to discuss a personnel matter, and Commissioner (Roscoe) Fultz seconded. The motion was passed by vote. After discussion, Commissioner (Otto) Budig moved to approve a Private Endowment adjustment of $52,000.”

That amount equaled Carden’s bonus, but nowhere is this indicated in the minutes. Budig said he could not recall why the board went into executive session instead of discussing it in an open meeting. The full amount of the withdrawal from the endowment fund was more than $60,000; in an interview Wednesday, Klug said this was because the foundation also needed to be reimbursed for any payroll taxes incurred.

A year later, the 2011 bonus was put into the overall budget and never was discussed publicly by the board, minutes show.

Once the payment was approved by the Park Board, the funds were sent to the Parks Foundation, which then cut quarterly checks to Carden. State rules prohibit payments from private entities to public employees for work done as a public employee.

Nonetheless, Cranley said, “the ethics commission knew about this, and didn’t make it an issue.”

“There was no wrongdoing here,” the mayor said.

A year before the state ethics probe opened, the city audit began of the Park Board and its interactions with the nonprofit foundation. The audit also examined handling of money. Copies of that draft audit as well as accompanying interview notes show city officials were concerned about what they saw as a cozy relationship between the two organizations.

“When asked about the (Parks) Foundation (city accounts and audits manager) Chris (Bigham) said he believes it is high risk of fraud, no controls in place,” notes from one meeting about the audit held on Aug. 31, 2010, state.

The audit process was put on hiatus after the Ethics Commission started its investigation in 2011 and was never completed.

In 2012, the Park Board also approved paying about $25,000 in legal fees to a private law firm for an undisclosed purpose after meeting in executive session, according to minutes. That money also was appropriated out of the endowments and paid by the park board separate checking account.

Budig said Wednesday that helped defray the legal costs the foundation incurred during the ethics investigation. According to its 2012 tax return, the Parks Foundation was worth $22.7 million at the time.

The draft audit also laid out several possible recommendations for the Park Board, including changing the department’s cash handling policies as well as separating Carden and Klug from the nonprofit foundation, which happened in the wake of the ethics settlement.

Yet Park Board officials say they hadn’t seen the draft audit until this week, when The Enquirer asked about it. They nonetheless said they had already put into place several measures regarding the oversight of finances, although there were at least two audit recommendations they said they did not know were concerns.

In statements to city lawyers, the two people in charge of the audit said that either they moved departments before they could resume the investigation or that they didn’t know why the audit wasn’t resumed.

That included former formal internal audit manager Mark Ashworth, who stated he transferred to the finance department before he could resume the probe. And the woman in charge of the audit, Lauren Sundararajan, told city lawyers that she forwarded her draft up the chain but didn’t know why it wasn’t restarted.

In the end, the bonuses ceased in 2012 at Carden's request, Budig said.

“He wanted to make sure everything was transparent, especially with the ethics commission going on,” Budig said.

The endowments that funded Carden’s second set of bonuses were donated to the Park Board by private citizens in their wills. Under the agreements, the parks department is only allowed to use 3.5 percent of each fund annually.

The endowments involved included the Fleischmann Fund, devoted to upkeep of Fleischmann Park in Avondale and other urban parks as needed.

Parks officials previously stated on several occasions that the Fleischmann endowment was restricted solely for the Fleischmann Park. But Wednesday, Carden and Klug said the original will had been amended prior to 2000 to allow for other uses once Fleischmann Park's needs were addressed.

The other endowment used for the bonus payments was bequeathed to the Park Board for the “beautification of the parks,” according to the will of Lillian Edwards, who died and left millions to the parks in the 1930s. According to legal experts, this money is considered public even though it was donated from a private source.

“There is no question this is city money,” Cranley said.

But Cranley and park officials acknowledged Wednesday the process for pulling money out of the endowments and spending that money is outside of normal city processes.

The Park Board tapped the endowments to pay for other expenses other than parks upkeep and maintenance over the last five years, including to pay the Parks Foundation $1,500 for a charitable golf outing, another $2,500 for tickets to a fundraising night at the theater and even nearly $600 in postage for the nonprofit.

The endowment funds were also used to pay for a $10,000 trip to Las Vegas taken by Carden and Klug and two other parks employees in late 2013. Carden said at the time the trip was to help prepare for the barbecue contest and festival held on Sawyer Point over the last two autumns. It also included a $1,500 helicopter ride over the Las Vegas area, according to documents obtained by The Enquirer.

Park Board chairman Budig said at the time that the trip "would prove to be money well spent" but also acknowledged that the helicopter ride “was over the top.”

Last year, the Park Board earned a net profit of $85,000 for the first River Grill Before the Big Chill. This year, the event netted $78,000 for the parks department, Carden said.

Carden said Wednesday he took the helicopter ride to interview the pilot and owner of a helipad in Las Vegas to determine whether a helipad and helicopter tours would be a good idea for Smale Riverfront Park.

“He told us we would be crazy to do it,” Carden said. “I’m glad we took that ride because we wound up not making a big mistake.”

Earlier this month, Klug said that the endowments were a limited resource and shouldn’t be depleted.

“If we had enough money then we wouldn’t have to depend on tax dollars. That would be great, but it’s not (enough),” she said.

Flynn said he has had issues determining just what constitutes a Park Board restricted fund and what they can be used for. Just last week, he questioned whether a $750,000 allocation out of the Sawyer Point Fund could be used for a separate improvement project for Yeatman’s Cove.

“I have had concerns … I was told really Sawyer’s Point was for the whole riverfront,” Flynn said to The Enquirer Wednesday. “I said no, it’s really for Sawyer Point. They insisted it was a paperwork error.

“We need to look at all of the funds that relate to the parks and if they really need to be restricted or should they be put into general capital,” Flynn said.

Enquirer reporters Sharon Coolidge and Carrie Blackmore Smith contributed.