Document Chattanooga's office of internal audit View

Librarian of the Year Corinne Hill poses for a portrait at the Public Library.

A city auditor's investigation of Chattanooga Public Library leaders reveals cracks in the foundation of a two-year renaissance that has put the library at the forefront in the world of public libraries.

City Auditor Stan Sewell's report released to city officials Wednesday criticizes Chattanooga Public Library Director Corinne Hill for excess reimbursements for worldwide trips, including extra hotel nights on personal time, and states that her top two employees have been reported to the state for suspected fraud.

Assistant Library Director Nate Hill and System Administrator Meg Backus were reported to the state comptroller's office after auditors found they took multiple paid speaking and consultant jobs on library time. The total excess reimbursements that Corinne Hill and her staffers received and the amount of mismanaged funds are estimated in the auditor findings at nearly $3,000.

Sewell also found that the library lacks substantive travel policies and procedures and that the library's governing board - formed in 2011 when the library came fully under city control - lacks checks and balances and doesn't have any bylaws on the books.

Library board Chairman James Kennedy said Thursday the board will take each allegation seriously. At next Friday's meeting, he said, members will go line by line through the findings to see what actions if any, need to be taken. But he said the audit findings shouldn't take away from all that Corinne Hill has accomplished in her two years in Chattanooga.

"We will get to the bottom of it and get it right without any hesitation. Corinne is right there with us. She's world class," he said.

Since Chattanooga hired Corinne Hill in 2012 for $120,000 - one of the top 10 salaries among city employees - she has made sweeping changes to the downtown library that include revamping the forgotten fourth floor into a creative lab with 3-D printers and program tutorials. She introduced children's reading programs and teen activities and her model has been copied in libraries across the country, earning her the 2014 national Librarian of the Year award.

Corinne Hill declined to comment Thursday, referring questions to the board. But in the past she has credited her success to support from inside and outside the library and said her staff nominated her for the national award.

However, Sewell said in his report that he launched the investigation after several library employees reported concerns of wasteful activity and abuse to the city's hotline.

Sewell found enough evidence to validate multiple claims. He said Backus made false statements to auditors and deleted relevant documents, then later admitted she lied about her hours on several time sheets. Nate Hill, who was Backus' supervisor, also did not report substantial amounts of leave that he took, including three weeks of unreported vacation.

The state comptroller's office has the authority to investigate the library, which is a city entity, but cases are considered confidential and officials couldn't say whether they are investigating Nate Hill or Backus.

While Corinne Hill wasn't reported to the comptroller for suspected fraud, the audit findings showed she took more than a week of unreported vacation and was overpaid hundreds of dollars in travel reimbursements for library speaking events or conferences across the world.

One finding showed that Corinne Hill had been doubly reimbursed for a trip to Denmark and was overpaid $972. On a trip to Chicago, Nate Hill had a duplicate reimbursement for airfare and was overpaid $400. And while both were alerted to the errors in February, the auditors couldn't find evidence that the money had been repaid to the library.

Sewell has recommended the library board revamp its policies and come in line with Chattanooga's personnel policies as well as set up requirements for hotel expenses and travel reimbursements.

Both the mayor's office and City Council - which appoints library board members - said they will wait and see what action the library board takes next week.

"We expect them to do what they need to do to create bylaws and have proper internal controls and to make sure they are spending taxpayers' dollars wisely," said Brent Goldberg, the mayor's chief operating officer.

But a member of the city's internal audit board asked Sewell at a board meeting Thursday whether that would be enough action in light of the allegations for top library employees.

"Adopting policies and procedures in the future is one thing, but we've got individuals who didn't feel they needed to be completely truthful and I'm not sure I'm comfortable walking away from that," said board member David DiStefano.

Staff writer Ellis Smith contributed to this article.

Contact staff writer Joy Lukachick at jlukachick@timesfreepress.com or 423-757-6659