Shelby County Clerk's office: All the issues the Tennessee Comptroller found
The Tennessee Comptroller of the Treasury provided a report outlining various mistakes auditors found during their time at the Shelby County's Clerk Office. The report included ways Clerk Wanda Halbert would be able to fix numerous issues in the office.
“While I’m pleased with the results of our work, I recognize there are still many operational deficiencies within the clerk’s office,” Comptroller Jason Mumpower said in a press release. “The Shelby County Clerk must improve operations to gain the confidence of citizens. I hope the Clerk will be receptive to additional training that will only improve the function of this important government office.”
In a letter to Shelby County Lee Harris, Mumpower said unless additional training or intervention is taken by Halbert, his office "lacks confidence the clerk’s office will be able to accurately report revenue figures in future months."
One major issue, which partially spurred the visit from the auditors, was the separation of the wheel tax revenue. The report states that Halbert was unaware of the wheel tax increase until July 17.
The wheel tax was supposed to be implemented starting July 1.
"...the County Clerk’s Office did not officially implement these changes until August 1, 2023," the report said.
Even after the wheel tax was implemented, some customers were still not charged the increased amount. The report stated that the amount of non-charged increases was "nominal," and that the number of registrations being processed at the lower rate seemed to be decreasing over time.
"Based on the sample tested, any potential errors would be considered nominal considering the volume of title application and renewal transactions performed in the office," the report said.
The issue of separating the taxes out is in the process of being resolved through internal changes the clerk will have to make with a software system known as the Business Information System. There will need to be an update to the system to allow for the funds raised by the tax to be separated out, and the clerk is in the process of completing that update, according to the report.
"Once that (update) is completed, the County Clerk’s system will automatically separate the $25 amount into a different account. LGA provided the county clerk with a template that can be used to separate the amounts for March, if necessary," the report said.
What else did the state auditors find?
Auditors also completed revenue reconciliations for the months that had been previously misreported from July 2023 until February 2024. The audit team provided the Shelby County Clerk with a revenue report template that can be used to ensure accurate reports are submitted to the County Trustee in the short term "until a more appropriate long-term solution can be implemented."
The team of Local Government Auditors also reviewed the County Clerk’s deposit and disbursement bank accounts. When doing a test of a sample of daily collection reports in September 2023 and December 2023 the auditors had to "rely on paperwork maintained by the Clerk’s staff to match the collections to the deposits on the bank statements."
"LGA was unable to reconcile the deposits between the BIS general ledger and the bank statements because the County Clerk’s Office generally checks out their daily collections by collection site," the report said.
They also found that disembarrassments in the office are not being processed in the BIS software and are instead handled through a different software.
"The office also utilizes a positive pay service through their bank, which allows them to submit a list of checks issued to the bank. Any checks presented for payment against the bank account that do not match the provided list would have to be approved for payment," the report said. "LGA asked employees of the County Clerk’s Office if they reconciled this check list, and it does not appear anyone has attempted to reconcile the list in several years."
Auditors also attempted to reconcile all activity in the clearing fund for the office until February and found an unidentified balance of approximately $3.5 million.
"This balance likely represents a combination of revenues that were collected in prior years but have yet to be reported and allocated correctly along with posting errors that have gone undetected due to the lack of reconciliations," the report said.
Various recommendations to the clerk were also outlined in the report. The Comptroller reiterated that the revenue reports for each month are due on the 10th. The clerk has claimed in the past that the Trustee needing the reports by that date is a violation of state law.
Halbert has repeatedly sent "pending" revenue reports days late, sometimes even sending them months later.
More: Shelby Co. Clerk Wanda Halbert asks to delay county commission appearance amid investigation
Other recommendations include Halbert no longer using a stamp to sign checks and to destroy the stamp, no longer allowing employees to delete their own transactions without authorization and developing a way to properly track how much money is owed the county after bad checks are written by customers.
"The Shelby County Clerk’s Office has several operational and internal control deficiencies. LGA recommends the County Clerk seek assistance and training to improve the service being provided to the citizens of Shelby County while ensuring the integrity and accuracy of all funds being collected and disbursed by the office," the report said.
Halbert facing intense criticism, scrutiny
Halbert, who previously served on both the Memphis City Council and the school board, has become a polarizing figure since taking office as county clerk in 2018.
She’s faced criticism for long lines at clerk offices, for license plate backlogs, for expiring leases at offices and for traveling to Jamaica during a closure of her offices to handle a backlog.
Criticism of Halbert has only continued since the announcement and investigation, which is being carried out by Hamilton County District Attorney Coty Wamp. Halbert has come under fire for lease expirations and late and incorrect revenue reports. The Poplar Plaza Clerk's Office location had to shut its doors in November after months of unpaid rent.
The Tennessee Comptroller's Office announced in late February that they would be sending a team to Shelby County to "perform the necessary reconciliations and reporting the Clerk's Office has failed to accurately provide despite repeated requests."
This came after it was reported by The Commercial Appeal that the revenue reports continued to be inaccurate, and payments to the suburban schools were behind because of it. According to documents from the Shelby County Trustee's Office, Halbert has not submitted a completed revenue report on time dating back to at least July 2021.
During the investigation, the Shelby County Board of Commissioners asked Wamp's office for an update regarding the investigation. Wamp responded with a letter saying that her office had yet to receive any formal letter of complaint.
Commissioner Mick Wright, who negotiated during the previous budget season to have Halbert investigated, penned a formal complaint letter to Wamp's office in response to the lack of any formal complaint letters.
Wright has requested Halbert step down from office numerous times and renewed his request after the closure of the East Memphis office.
Revenue report woes
The November 2023 report was sent to the trustee on Jan. 5, almost two months later than required by state law. The December 2023 report was also sent three days later than required by state law. These two reports, along with 14 others, were not complete reports, and marked "pending" by the clerk.
Previous reporting: Current state of affairs in the Shelby Co. Clerks office, Halbert response to investigation
When it was reported payments to schools were behind, Halbert resubmitted the revenue reports only for them to still be inaccurate according to Shelby County Trustee Regina Newman. Newman said that she had notified the Comptroller regarding the late, missing and inaccurate revenue reports.
In late February, the Tennessee Comptroller of the Treasury sent an audit team to assist Halbert and her office in submitting on-time and accurate revenue reports. After a week of the team being in the office, revised audit reports were submitted and reposted to the trustee's website.
In November, Newman said that there is no way to know how much revenue the clerk's office is bringing in because reports are "pending" or often are identical down to the penny of the previous month.
"The only person that knows what the revenue (for the clerk's office) is her," Newman said.
When Halbert was asked about her late revenue reports during a news conference after the closure of the Poplar Plaza office, she said that the reports were sent late because she did not want to be accused of missing "one cent" and that previous financials had been "off." Halbert did not explain why the clerk's finances have been "off."
Other issues within the office
Documents revealed the office is answering only 17% of calls fielded to her office from the county's main phone line in 2022. The clerk's office received 287,317 phone calls and answered only 50,380. Of those 280,000 phone calls, 211,718 were terminated. These calls do not represent calls made directly to the clerk's offices.
Other offices that receive transferred phone calls from the county's main line all answered well over 50% of the calls fielded to their respective offices. While Halbert's office received almost 290,000 calls in 2022, the documents do not include calls placed to direct office lines. The trustee's office receives over 200,000 calls a year and answers almost 99% of them.
Newman revealed in February that the Chief Financial Officer from the clerk's office had retired in January, and they were currently looking for a replacement.
Jay Price, spokesperson for the District Attorney's Office in Hamilton County, said the closure of the East Memphis clerk's office has "helped" with the special investigation into Halbert. Before the closure of the East Memphis office, Price said it was difficult to get ahold of officials but there has been renewed interest in the outcome of the investigation.
Since the beginning of the investigation, no one has spoken with Halbert, but Price said that is not alarming because the main role of the investigation is to collect interviews and evidence that could lead to ouster proceedings. The DA's office did meet with Halbert when they visited Memphis in December.
Price said initially they expected to complete the investigation by mid-December. The timeline for the completion of the investigation was pushed back multiple times.
Halbert was not able to be reached for comment.
Brooke Muckerman covers Shelby County Government for the Commercial Appeal. She can be reached at (901) 484-6225, Brooke.Muckerman@commercialappeal.com and followed on X, formerly known as Twitter @BrookeMuckerman.
This article originally appeared on Memphis Commercial Appeal: TN comptroller outlines problems in Shelby Co. Clerk's office: What it found
