In order to correct a misuse of public, educational and government access channel funds, Missouri City City Council approved a budget amendment at its Jan. 4 meeting to transfer $500,000 from the general fund to the PEG fund account. This transfer was necessary to correct expenses incorrectly paid for out of the PEG fund, according to city officials.

An internal control review conducted by public accounting firm BDO found some PEG funds—which are to be spent on capital expenditures, as dictated in federal statute—were instead spent on operational expenses.

“Properly identifying allowable costs for PEG funds is a common issue of many jurisdictions,” said Allena Portis, Missouri City’s director of financial services. “The interpretation of allowable issues of these funds have varied throughout the years with the different administrations within the city. Despite the varying interpretations, the budgets for PEG funds have always gone through the typical budgetary process, including presentation of the city manager’s proposed budget and approval by City Council.”

Portis said the unallowable expenditures, which total $484,799.32, include a city website redesign in fiscal year 2016-17 as well as website maintenance, streaming services, training, graphic design services, contractual services, photography, event coverage and more.

Furthermore, the amount of unallowable funds spent varied each year; FY 2016-17 saw the largest amount, at $144,795.56. Missouri City’s budget amendment accounts for the incorrect use of funds from FY 2011-12 to the present. Portis said any previous use of PEG funds is unavailable due to a software conversion in 2012.

“This has been a common practice seemingly since 2012 to use PEG funds for whatever expenditures that were unallowable,” Council Member Jeffrey Boney said. “Clearly, this was going on for some time now. ... Did we not know that this was unallowable?”

In September, City Manager Odis Jones informed the City Council that he had turned over documents and information related to the misuse of PEG funds to the Fort Bend County District Attorney’s Office. Jones said he has not heard back from the office at this time.

Jones said the mismanagement of funds ultimately comes down to a bad city policy. To correct this, council adopted an updated comprehensive financial policy that, in part, spells out what PEG funds can be used for.

Jones said he has been focused on fixing the issue, establishing sound financial policy and setting up internal reviews to ensure PEG funds are not misused in the future.

“This has been a learning lesson for the city,” Jones said.