THE MISSISSIPPI LEGISLATURE

In response to complaints from some members of the Golden Triangle Planning and Development District corporation, PEER conducted this expenditure review of the district (GTPDD). While the GTPDD is a private nonprofit corporation, PEER has the authority to review any organization that receives public funds appropriated from state or local governments. (MISS. CODE ANN. Section 5-3-57 [1972]).

PEER sought to determine:

• revenues and expenditures for the Golden Triangle Planning and Development District
• how the district determines local contribution amounts and how funds are spent in the localities;
• what monitoring and audit controls are in place at the district; and,
• whether information on the district’s financial status is available and provided to members of the corporation.

In Mississippi during the 1960s and 1970s, local governments under the nonprofit corporation act created ten planning and development districts for the purpose of assisting their member communities with planning economic development efforts throughout the state. Federal matching grant incentives were made available to the districts as well as the local governments if they met and maintained certain eligibility criteria - especially in the area of economic development.

The GTPDD was incorporated in June 1972 and was organized as a private nonprofit civic improvement corporation. According to the incorporation papers, the corporation was organized for civic improvement and economic development in Choctaw, Clay, Lowndes, Noxubee, Oktibbeha, Webster, and Winston counties.

According to the GTPDD’s bylaws, the membership of the corporation is to be composed of individuals that desire to participate from the member counties, with twelve to twenty-five individuals from each county. Each county’s membership must include two elected officials, one of whom must be a county official, and a twenty percent racial minority membership. In FY 2002, the GTPDD had 169 members. The boards of supervisors of the counties within the district select and approve these individuals.

Programs and services of the GTPDD cover two broad areas: economic development and community planning, and social service programs. This includes many different services to the community including computer technical assistance, geographic information system assistance, redistricting services, economic and community planning assistance, loan programs for small businesses, housing programs, and social service programs.

GTPDD meets Internal Revenue Service and state law requirements to operate a charitable gaming (bingo) facility that benefits the services and programs of the corporation. This facility is located in Columbus.

In Fiscal Year 2002, the GTPDD’s revenues totaled $14,161,224 and expenditures totaled $13,270,649. (The GTPDD uses the federal fiscal year beginning October 1 and ending September 30.) The district’s largest sources of revenue in FY 2002 were $8,488,964 in federal revenues (59% of total revenues) and $4,267,100 in bingo revenues (30% of the total). FY 2002 expenditures consisted primarily of grant expenditures of $9,026,311 (68% of total expenditures) and bingo-related operating expenditures, $3,671,240, or 28% of the total.

Several external entities audit and monitor the GTPDD to ensure financial and program compliance. Since GTPDD receives federal funds, GTPDD is subject to annual audits that include reviews of financial compliance in accordance with Government Auditing Standards. State and federal agencies monitor all funds from the respective sources. For example, the Mississippi Development Authority monitors economic development projects with Community Development Block Grant funds, which typically include both state and federal funds. In addition, the GTPDD charitable bingo operation is under both Gaming Commission and Secretary of State regulations.

GTPDD collects contributions from localities (counties, cities, and towns) located within the seven county district. These local contribution funds are to be used for economic development and aging programs for the district. To collect these funds, the district issues annual request letters to the localities requesting a specified contribution amount. The localities then respond to the request letters with their contributions.

While the GTPDD’s bylaws and Fiscal Operating Manual purport to set forth a method of calculating these contribution request amounts, the district does not use this or any other method that incorporates comprehensive expenditure or program data to develop its local contribution amount requests. GTPDD’s stated method does not include all appropriate factors--for example, match requirements, in-kind donations, or demographics--in arriving at the amounts it requests from localities. According to GTPDD officials, the district’s Executive Director determines local contribution request amounts.

When requesting local contributions, the GTPDD does not provide the localities with financial information or information on how the contribution will be applied to match federal dollars. As a result of the district’s failure to provide such information for FY 2002 and FY 2003, Lowndes County budgeted less than the amount the GTPDD requested for FY 2003. The county, as of May 2003, has made two quarterly payments of the annual contribution budgeted for the GTPDD by the board of supervisors.

State law requires nonprofit corporations to provide corporate information to their members. However, the GTPDD Board has restricted corporation members’ access to district information. A September 2002 resolution passed by the GTPDD Board of Directors prohibits corporation members from copying the district’s financial information. This restriction violates MISS. CODE ANN. Section 79-11-285, which allows members to inspect and copy financial information. This restriction also inhibits local efforts to make informed decisions on the use of resources.

GTPDD cash balances have steadily increased since FY 1996. However, the district has maintained or, in the case of aging programs, has increased its local contribution requests rather than reducing them. GTPDD’s total cash balance increased from $2.25 million in FY 1996 to $5.58 million in FY 2002 (148% over the six-year period). GTPDD’s unrestricted cash balances (not restricted by outside parties and available to be spent for programs or operations as determined by the staff or board) increased from $772,240 in FY 1996 to $3.1 million in FY 2002 (307% over the six-year period).

Revenues in excess of expenditures of $1,475,023 in the Operating Fund in FY 2001 and 2002 included bingo funds, Medicaid Waiver program funds, and local contributions from cities and counties. GTPDD did not expend at least $147,789 (or 37 percent of the total) in local contributions from cities and counties in FY 2001 and FY 2002.

1. The Legislature should amend MISS. CODE ANN. Section 17-19-1 (1972) to require that planning and development districts provide specified financial and program information to the boards of supervisors and the governing authorities of the municipalities that appropriate money to such districts. The information should include, but not be limited to:
   • budget request, which shows the need and the services for which the local contribution funds will be spent;
   • annual report, not limited to but including the actual number of clients served in each county by the district and the funds from each county that have been used for those services and all current and active economic development projects and amounts awarded by county;
   • annual financial audit; and,
   • any other financial statements the localities deem necessary in order to determine how appropriate the district request.

   The Legislature should require the districts to provide the above information to the localities at the time that the district makes its annual local contribution request. The law should require distribution of the information as a precondition to receiving any funds from local contributions for that fiscal year.

2. The Golden Triangle Planning and Development District should develop a methodology for calculating requests for local contributions that are to be used for aging and economic development programs within the district. Since revenues routinely exceed expenditures and contribute towards increasing cash balances, the district should develop a methodology that takes into account:
   • other sources of revenue;
   • need for the service in the locality (e.g., more clients on the waiting list for meals);
   • demographics of the localities;
   • previous years’ number of clients and service levels;
   • previous years’ expenditures; and,
   • previous years’ grant revenues, which require a local contribution.

   Subsequent to developing this methodology, the GTPDD should revise its bylaws and Fiscal Operating Manual accordingly.

3. The GTPDD Board of Directors should rescind the resolution that denies members of the corporation the right to copy district information. The GTPDD should give written notice to all members of their rights to inspect records as outlined in the MISSISSIPPI CODE.