USA: Tourism Commission To Have New Boss Soon

A state official helping the Nebraska Tourism Commission search for its new executive director says she hopes a replacement for fired director Kathy McKillip can be hired within 60 days.

State Personnel Director Margie Bell gave tourism commissioners the timeline during a Friday morning meeting in a conference room at the Lincoln Community Foundation building.

McKillip was fired May 26 after an examination by state Auditor Charlie Janssen's office uncovered various questionable expenses and business practices by the commission under her leadership. The agency has been without a permanent director since.

Many of the audit findings centered on costs associated with the "Nebraska Nice" campaign, which was crafted by advertising firm Bailey Lauerman under McKillip's guidance.

Some in the travel industry have said they hope McKillip's firing leads to a new tourism campaign with a different slogan.

Bailey Lauerman is continuing to work on phase two of "Nebraska Nice" under an existing contract, staff from the firm told commissioners Friday.

Also Friday, commissioners appointed Deputy Director Heather Hogue to serve as interim director of the independent state agency until a permanent leader is hired.

Bell's timeline for the search is aggressive, said Commission Chairman John Chapo.

"I think it's important," he said. "And I think it's our highest priority."

Bell will help a seven-person subcommittee with the executive director search. The committee is led by Commissioner Deb Loseke of Columbus and includes commissioners Lisa Burke of North Platte, Roger Kuhn of Lincoln and Roger Dixon of Omaha, along with noncommissioners Jeff Maul of the Lincoln Convention and Visitors Bureau, Keith Backsen of the Omaha Convention and Visitors Bureau and Mike Kesselring, a former commissioner from Crawford.

Nebraska Tourism Commission Spending Questioned

A state audit of the Nebraska Tourism Commission finds a host of 'significant issues' regarding the commission's spending of taxpayer dollars that in some cases, may have violated state law.

Nebraska State Auditor Charlie Janssen released the 79-page report late Friday, detailing a host of findings that include expensive meals, reimbursement for alcohol and cigarettes, and inadequate record keeping that often left spending unchecked.

Among the auditor's findings:

Questionable expenses for a photo shoot across Nebraska in June, 2015 that included alcohol, cigarettes, and mileage reimbursements for trips where gasoline was also billed to the state. The photo shoot also paid $550 to the daughter of Tourism Commission director Kathy McKillip to be one of the models.

$44,00 paid to one speaker at the 2015 State tourism conference. The state also paid for extra meals, and chair massages.
No procedures to review purchase orders against contracts, which resulted in expenses $4.4 million over the contracted amount with the advertising firm Bailey Lauerman over the course of three years.

Gifts including thousands of dollars meals and alcohol often provided by Bailey Lauerman, which were given to Commission director McKillip, Commission employees, commissioners, and their spouses. Many of the meals were paid for by the advertising firm Bailey Lauerman, which received
$18,511 spent to relocate an existing Commission employee from Sidney, Nebraska to Kearney.

Over-spending: The Commission exceeded its appropriation for the State Visitors Promotion Cash fund by more than $700,000 in fiscal year 2015, and failed to meet earmarks set by the Nebrsaka legislature for certain State Aid appropriation amounts.

“I thought it was, in many cases, irresponsible money spent,” Nebraska Auditor of Public Accounts Charlie Janssen said, “my tax money spent and your tax money spent.”

McKillip says the more than $350 spent on alcohol and cigarettes during the June photo shoot was never supposed to be submitted.

“We don’t know whether they fell through the cracks, but we know very good and well those are not reimbursable items as a state agency,” McKillip said.

As for paying $44,000 for their 2015 conference speaker, McKillip says the Commission works hard to bring in high-quality people to motivate their employees.

“That’s not an uncommon pay range for a nationally-known speaker,” McKillip said, “this speaker had spoken at several national tourism conferences in 2015.”

The auditor's report outlines a pattern of poor record-keeping, and undocumented travel expenses the auditor called "unreasonable" or not in compliance with state law. The report also found the Commission had failed to adopt rules and regulations set forth in state law, and outsourced its strategic plan, also in violation of state statute.

The Legislature made the Commission a stand-alone state agency in 2012.
Governor Pete Ricketts spoke to KETV Newswatch 7 Monday after signing a bike-riding proclamation. He says the audit is concerning, but there’s not much he can do.

“I think what this demonstrates is the problem when you create commissions that aren’t under the governor’s control, that there’s a difficulty in accountability here,” Gov. Ricketts said.

McKillip says many of the mismanaged funds have been reimbursed, and that the agency is working with the Department of Administrative Services to create a policies and procedures manual.

“Correct the errors, move forward, and do better,” McKillip said.

The 10-member tourism commission meets Tuesday afternoon at Omaha's Henry Doorly Zoo and Aquarium. A representative from the state auditor’s office will be there to answer questions.

Nebraska Tourism Commission Suspends Executive Directorer With Pay

Nebraska Tourism Commission Director Kathy McKillip has been suspended with pay in the wake of an audit that found "significant issues" with agency expenditures.

The commission met in an emergency session Friday and voted to suspend McKillip pending the results of an investigation.

Nebraska State Auditor Charlie Janssen released the 79-page audit earlier this month.

It detailed findings that included expensive meals, reimbursement for alcohol and cigarettes, and inadequate record keeping that often left spending unchecked.

The board voted unanimously for the suspension, with the chair abstaining.

McKillip left the meeting without speaking to reporters.

Andy Pollock, of the Nebraska Travel Association called the suspension a step in the right direction, and said McKillip should resign.

"If Kathy has a genuine concern, if she genuinely cares about tourism in Nebraska she'll apologize for the black cloud that she has created for the state and she'll resign," Pollock said.

During the meeting, one person defended McKillip. Hannah Hoch vouched for McKillip’s character and asked the board to stand up to outside pressure.

"Kathy is doing an incredible job. She has done nothing illegal, nothing unethical," Hoch said.

McKillip has previously called the issues mistakes, and said many of the mismanaged funds have been reimbursed.

She also said that the agency is working with the Department of Administrative Services to create a policies and procedures manual.

The board chair had little to say about who would be performing the investigation and how long McKillip's paid leave should be.

"I really cannot go into further detail and discussion because it is a personal issue," Commission Chair John Chapo said.

Commissioners also voted to require board approval for expenditures over $1,000 and involving personal expenses. In one case, the commission paid $44,000 to one speaker and in another reimbursed an employee more than $18,000 to relocate.

"There were errors. The errors have been corrected," McKillip said.

McKillip's salary is $86,000 a year.

USA: Nebraska Tourism Should Stay Independent,State Tourism Director Kathy McKillip Says.

The Nebraska Tourism Commission should stay independent despite a damning financial audit released late last month, State Tourism Director Kathy McKillip says.

Lawmakers decoupled Tourism from the state Department of Economic Development in 2012, eliminating the governor's direct control over the agency and assigning its supervision to a nine-member industry board.

The change received overwhelming support at the time, but the new state audit criticizing dozens of the commission's expenditures led Gov. Pete Ricketts, former Gov. Dave Heineman and others to publicly question the decision in recent days.

"Despite this past week, I believe it's the right move," McKillip said Friday. "We've really made some amazing strides."

Nebraska's main travel groups also defended the arrangement.

In a five-page letter Friday, the Nebraska Travel Association and the Nebraska Association of Convention and Visitors Bureaus blamed McKillip's leadership of the agency — not the commission's structure — for the problems revealed by the audit.

Those included $4.4 million in poorly documented cost overruns on contracts with the agency's main advertising firm, Bailey Lauerman, as well as various questionable expenditures that included paying $18,511 to help a staffer move 219 miles from Sidney to Kearney.

Ricketts and Heineman, who was governor when the Tourism Commission was formed in 2012, have both called for McKillip to be fired, and said putting Tourism back under Economic Development would make the entity more accountable to taxpayers.

But former Economic Development Director Cathy Lang said splitting Tourism from her agency had benefits.

"They were no longer having to compete within the agency against the other two major efforts of Economic Development," she said.

Those efforts, community and business development, tended to steal focus from tourism, Lang said, and businesses that rely on travel probably "elevated their voice" when the Tourism Commission was formed.

McKillip pointed to steady gains in Nebraska's state lodging tax revenue as a sign of success. Receipts grew 7.1 percent last year, and 8.2 percent in 2014.

Yet those increases aren't strikingly different than in years before Tourism became independent.

For example, lodging tax collections swelled by more than 10 percent in 2007, according to data from the Nebraska Department of Revenue.



Tourism can thrive under a governor's leadership as long as the governor is willing to make it a focus, said Stan Matzke, another former Economic Development director.

Matzke led the department under Gov. J. James Exon from 1971 to 1973 — boom time for Nebraska's tourism legacy. That's when visitors' centers popped at highway rest areas across the state, the Arbor Day Foundation was born and "The Good Life" became the state slogan.

Exon was key in those developments, Matzke said, as was John Rosenow, who was tourism director when he started the Arbor Day Foundation in 1972.

Matzke said McKillip should be held accountable for the Tourism Commission's recent financial issues.

McKillip has blamed growing pains for the documentation errors and questionable expenses cited in the audit, saying she and her 11 staffers weren't prepared or equipped for the diligence necessary when the commission was formed.

Lang said she can sympathize with McKillip, whom she described as a friend.

In 1998, Lang led Nebraska's Property Assessment Division when it split from the Nebraska Department of Revenue. That process was challenging, and would have been even more difficult without guidance from the Department of Administrative Services, which provides finance and purchasing assistance for state agencies.

"The Department of Tourism didn't have that same benefit," Lang said.

Tourism lost its automatic ties to Administrative Services when it became independent, leaving it up to McKillip and her team to fend for themselves.

Matzke said that's no excuse.

"Bull---t," he said. "She didn't start a new agency."

McKillip transitioned an existing Tourism team to a different leadership model, and any holes in its operations should have been obvious to an experienced director making in excess of $80,000 per year, Matzke said.

"If you don't know what you're doing, then you ought to ask people," he said. "A good leader does that."