Obscure board in charge of preventing flooding voted to overpay themselves for years
TUPELO, Miss. – Today at a press conference State Auditor Shad White announced he has issued demand letters to each current member of the Town Creek Master Water Management District Board of Commissioners for approving unlawful per diem payments to themselves. The total of all demands is $523,388.76 and includes interest and cost of recovery. The names of the commissioners including one deceased individual and the corresponding demand amounts are:
James Robinson - $85,877.68
Jim Bucy - $88,100.56
Jim Long - $11,797.71
The late John Morgan - $103,122.60
Kenneth Oswalt - $95,748.05
Luther Oswalt - $23,565.43
Michael Pannell - $90,853.43
Teressa Winters - $24,323.30
The Town Creek Master Water Management District was created by court order in 1961 to provide flood management and improve water drainage in Lee, Pontotoc, Prentiss, and Union Counties. Water management districts were once popular in the United States, but Town Creek District is now one of four master water management districts remaining in the nation and the only one in Mississippi.
The Town Creek Board collects revenue by assessing a tax on property located within the special district. The tax is collected as part of property owners’ property taxes paid to their county tax collector. Nearly 4,700 parcels of land—which includes homes and commercial property like Barnes Crossing Mall—are located in the district. Over 4,400 of those parcels are in Lee County.
Using their taxing authority, the Board paid for retention ponds and drainage ditches over the past half-century. In addition, the Board accumulated a bank account balance of approximately $1.3 million.
As that balance increased, the Board increased their own pay from the district’s bank accounts. The Board has legal authority to receive maximum per diem payments of $12.50 for time spent conducting the district’s business. They are also reimbursed for actual expenses incurred for their work. Seventeen years ago, the Board began steadily increasing the per diem payments over the legal limit. By 2014, Board members were paying themselves $600 per meeting.
Auditor White said, “This is an example of a small, tucked-away board that very few people know about, using its power to overpay itself. This is the danger of hidden boards and small government offices. A lack of transparency opens the door to big losses for taxpayers.”
The illegal overpayments caused a loss of over $350,000 to local landowners. Board members will be personally responsible for paying back these losses plus interest and investigative costs.
“I am committed to recovering this money for property owners in Lee, Pontotoc, Prentiss, and Union Counties,” said White. “They took a loss—and many of them may not have even known they were paying a tax to this Board—and deserve to be made whole.”
Each Board member is covered by a surety bond. A bond is a type of insurance policy for taxpayers which helps ensure misspent public funds are recovered.
Public corruption can be reported to the Office of the State Auditor online any time by clicking the red “Report Fraud” button at www.osa.ms.gov or via telephone during normal business hours at 1-(800)-321-1275.
Shad White State Auditor
Town Creek Master Water Management District Memo
Case Facts
• The current Board of Commissioners for the Town Creek Master Water Management District approved illegal, excessive per diem payments to themselves. These payments are legally capped at $12.50 plus expenses, but investigators determined the Board has approved excessive payments since 1999. Since 2014, board members made per diem payments of up to $600 to themselves.
District Background
• The Town Creek Master Water District was created by a Lee County Chancery Court order in 1961. It was among many drainage districts created across the nation to improve drainage and flood control systems. The work of the district mainly consists of digging retention ponds, creating drainage ditches, and controlling the beaver population.
• Today, only four districts of this type remain in the United States. Town Creek is the only district of its kind in Mississippi.
• The special district is governed by a board of commissioners appointed by Chancery Court order.
• The district spans four counties. Lee County contains 4,457 parcels of affected land; Union County contains 202 parcels; Pontotoc County contains 28 parcels; and Prentiss County contains 4 parcels.
• In most cases, parcels located only partially within the district are taxed as being located completely therein. For example, if one acre of a 100 acre estate is located within the district, all 100 acres are taxed.
• Auditors were unable to determine how the district’s lines were drawn and why some property was included and other property was excluded.
Funding Mechanisms
• When the district was started, the district’s board was given the authority to collect revenue from bond issuances and tax assessments. The bonds and tax assessments must be approved by a Chancery Court.
• The special district received a $1.3 million loan from the Farmer’s Home Administration (FHA) in 1967 to fund new projects. At that time, a Chancery Court granted the right for the district to assess property taxes. The revenue from that tax was designed only “to be sufficient to pay the annual principal and interest” of the FHA loan and an additional “10% for contingencies.”
• Over time, tax collections for the district have increased as the value of property in the counties has increased. By 2008, the taxes paid by landowners in the district far outstripped what was needed to pay off the FHA loan. Payments for the loan that year totaled around $63,000, but the district collected over $400,000 in taxes.
• Since the FHA loan was repaid in full in 2008, the district has continued to collect property taxes as revenue. This has resulted in the accumulation of significant capital. Today the district collects over $700,000 in revenue each year and has amassed a $1.3 million bank account. To put this revenue in context, Lee County spent $1.3 million on road maintenance in FY 2018.
