1. MANAGING THE DRUG FUND Municipal Technical Advisory Service County Technical Assistance Service Rex Barton Ralph Cross Terry Hazard Steve Walker

2. Housekeeping Registration forms AND sign-in forms Introduce yourself Fire exits? Breaks Ask Questions Questions now? Pre-test

3. 1. All revenues from drug fines are deposited in the “drug fund.” T/F 2. Revenues from the sale of vehicles forfeited to the city as a result of being used to transport or sell drugs go to the “drug fund.” T/F 3. Revenues from the sale of vehicles seized for second or subsequent offense DUI go to the “drug fund.” T/F

4. Pre-test 4. Revenues from the sale of vehicles seized for Driving on a Revoked Drivers License go to the “drug fund.” T/F 5. The “drug fund” is under the control of the city recorder/trustee. T/F 6. Funds from the “drug fund” may be appropriated to local drug treatment programs. T/F

5. Pre-test 7. The “drug fund” can be used to buy dog food and veterinary services for the drug dog. T/F 8. The “drug fund” can be used to purchase handguns for patrol officers. T/F 9. A drug agent (officer) must create a written receipt for every transaction with an informant. T/F 10. The “drug fund” budget must be approved by the District Attorney General. T/F

6. The “Drug Fund” The “drug fund” is a special revenue account. –Similar to solid waste fund account or street aid fund account. –It is under the control of the city recorder/trustee !! Confidential expenditures are made from a separate account (confidential account).

7. Sources of Revenue Fines from drug offenses –50% of the fine goes to the drug fund (special revenue account). –50% of the fine goes to the General Fund. Forfeited cash and the proceeds from the sale of forfeited property. Donations. Appropriations from governing body.

8. FINES FORFEITED CASH AND THE PROCEEDS FROM THE SALE OF FORFEITED PROPERTY DONATIONS APPROPRIATIONS SPECIAL REVENUE ACCOUNT (City Recorder/Trustee) GENERAL FUND 50%

9. LEGITIMATE EXPENDITURES Local Drug Treatment Programs Drug Education Programs Drug Enforcement –Operational expenses –Confidential expenses Non-recurring General Law Enforcement Expenditures Automated Fingerprint Machines

10. DRUG ENFORCEMENT Operational –Automobiles for Drug Investigators –Maintenance and Operational Expenditures for drug officers automobile –Telephone Charges, including cellular charges –Office Supplies and Office Equipment for Drug Investigation Officers –Drug Identification Kits For Drug Investigators and Patrol officers

11. DRUG ENFORCEMENT (cont) Operational (cont) –Drug Enforcement Training –Drug Dogs and Their Maintenance, Including Feed and Veterinary Service General Drug Enforcement Expenditures Are Not Confidential –Must follow city/county purchasing guidelines

12. NON-RECURRING GENERAL LAW ENFORCEMENT Not Drug Investigation related Expenditures: –Patrol or administrative vehicles –Blue lights, sirens, radios, and radar units –Video cameras –Handguns, but not ammunition –Fax machine or copier

13. NON-RECURRING GENERAL LAW ENFORCEMENT (cont) Expenditures (cont) –Cellular telephones for general law enforcement or administrative personnel –Patrol Dogs (non-drug dogs), but not feed or veterinary services

14. AUTOMATED FINGERPRINT MACHINES Must set aside 20% of drug fund revenues until machine is purchased or have an agreement with another agency (having a machine) After purchase or agreement, may use 20% of revenues to pay for line charges and maintenance

15. DONATIONS Any charitable donation must follow state law Cities –TCA 6-54-111 Counties –TCA 5-9-109

16. DONATIONS, Generally speaking Must be a 501(c)(4) or (6) organizations Must provide financial reports, including audit, to government Funds for non-profits other than charitable organizations may be made once notices have been published in a newspaper of general circulation, specifying amount and purpose

17. PROCEDURES

18. SPECIAL REVENUE ACCOUNT Under the control of the Recorder/Trustee Budget for drug fund approved annually Except confidential expenditures, MUST follow city/county purchasing guidelines Confidential Expenditures MUST follow Comptroller’s guidelines

19. FINES FORFEITED CASH AND THE PROCEEDS FROM THE SALE OF FORFEITED PROPERTY DONATIONS APPROPRIATIONS SPECIAL REVENUE ACCOUNT (City Recorder/Trustee) GENERAL FUND 50% CONFIDENTIAL ACCOUNT

20. SPECIAL REVENUE ACCOUNT (City Recorder/Trustee) CONFIDENTIAL ACCOUNT Expenditures Must Follow Purchasing Guidelines Must Follow Comptroller’s Guidelines

21. AND NOW…….. My friend, Ralph

22. Separate Checking Account?? Purchasing Guidelines??

23. State Street Aid Spec Rev Fund Gas Fund Solid Waste Fund Drug Fund How many checking accounts do we actually need? General Fund Water Fund

24. A “Fund” is defined as: A self balancing set of accounts; A record of all cash, revenue, and other financial resources; A record of all disbursements, expenditures, liabilities, and reserves or balances.

25. Given that definition, is a fund required to have it’s own checking account? No. Is it probably a good idea? Yes. Why?

26. Using one checking account for all funds is certainly authorized - - however - - by definition, the account groups must be kept separately - - including - - cash balances in each fund. Reconciling one checking account for all funds will be more difficult.

27. Why is the discussion of checking accounts important in the context of this class? To emphasize the point that a fund and a checking account have distinct functions and the terms are not to be used interchangeably.

28. The municipal “Drug Fund”, by statute, is under the control of the City Recorder whether it has a separate checking account or not.

29. The “Confidential Checking Account”, authorized by the Comptroller in the Procedures for Handling Cash Transactions Related to Undercover Investigative Operations of County and Municipal Drug Enforcement Programs, is under the control of the Police Chief or Sheriff.

30. Purchasing Procedures The Drug Fund, like any other fund of the municipality or county, is required to comply with municipal or county purchasing procedures.

31. Purchasing Procedures Purchasing procedures may be found in: – Municipal Charter – Purchasing Ordinances If those are silent on the issue, you fall under the 1983 Municipal Purchasing Law.

32. Purchasing Procedures Purchasing limits prescribed by the 1983 Municipal Purchasing Law: –$ 0 to $1,000 = Direct Purchase –$1,000 to $2,500 = 3 Competitive Quotes –$2,500 and above = Competitive Bidding Municipalities are authorized to lower the amount for competitive bidding below $2,500 or increase it up to $10,000.

33. Purchasing Procedures Purchases,leases or lease-purchases of less than $2,500 don’t have to be advertised. Unless specifically exempt, all purchases, leases, or lease-purchases of like or related items bought during the fiscal year totaling more than $2500 must be publicly advertised. Allowable exemptions, when bought in the open market, include fuel and fuel products and perishable goods.

34. Purchasing Procedures The 1983 Municipal Purchasing Law exempts municipalities from competitive bidding requirements when: –Purchasing real property; –Purchasing from a sole source; –Emergency purchases are required.

35. Purchasing Procedures Other General Laws on Purchasing include: –Authorization to make purchases from the State contract without bidding; –Purchasing from other governments without bidding as long as the selling entity met it’s purchasing requirements; –Purchase at public auctions.

36. Purchasing Procedures Purchasing requirements are complicated. If you don’t know what to do, ask for help.

37. And now, the county side of accounting and purchasing….

38. CONFIDENTIAL ACCOUNT

39. CONFIDENTIAL EXPENDITURES Confidential Expenditures –Payments made to an informant –Payments made to an undercover agent –Money spent to actually purchase drugs as part of an investigation –Gasoline or maintenance for undercover vehicle or informant’s vehicle Must follow Comptroller’s Guidelines

40. DOCUMENTATION Documentation for every exchange of funds Custodian: –Exchanges from or to Recorder/Trustee –Exchanges to or from agents Agents: –Every exchange of funds, and –Receipt from informant, witnessed

41. Audit Logs (Balance Ledger) Custodian: –“Custodian’s Activity Log for Confidential Transactions” Balance sheet Agent: –“Agent’s Activity Log for all Confidential Funds” Balance Sheet –“Summary Informant Log”, for each informant

42. SPECIAL REVENUE FUND City Recorder/Trustee CONFIDENTIAL ACCOUNT Chief/Sheriff/Custodian CASH Agent Informant R-1 A-2 A-4 A-5 Transaction A-4

43. SPECIAL REVENUE FUND City Recorder/Trustee CONFIDENTIAL ACCOUNT Chief/Sheriff/Custodian CASH Agent Informant R-1 A-2 A-4 A-5 Transaction A-4 A-1 A-7 R-2 R-3

44. SPECIAL REVENUE FUND City Recorder/Trustee CONFIDENTIAL ACCOUNT Chief/Sheriff/Custodian CASH Agent Informant R-1 A-2 A-4 A-5 Transaction A-4 A-1 A-7 R-2 R-3 A-3 A-6

45. SPECIAL REVENUE FUND City Recorder/Trustee CONFIDENTIAL ACCOUNT Chief/Sheriff/Custodian R-1 A-1 A-7 R-2 R-3 Custodian’s Activity Log for Confidential Funds Confidential Fund Monthly Reconciliation Report Quarterly Report

46. CONFIDENTIAL ACCOUNT Police Chief/Custodian CASH Agent Informant A-2 A-4 A-5 Transaction A-4 A-3 A-6 A-3: Agents Activity Log for Confidential Funds A-6: Summary Informant Payment Log

47. SPECIAL REVENUE FUND City Recorder/Trustee CONFIDENTIAL ACCOUNT Chief/Sheriff/Custodian CASH Agent Informant R-1 A-2 A-4 A-5 Transaction A-4 A-1 A-7 R-2 R-3 A-3 A-6

48. CONFIDENTIAL FUNDS EXERCISE

49. SPECIAL REVENUE FUND City Recorder/Trustee CONFIDENTIAL ACCOUNT Chief/Sheriff/Custodian CASH Agent Informant R-1 A-2 A-4 A-5 Transaction A-4 A-1 A-7 R-2 R-3 A-3 A-6

50. Managing informants? Best Practices

51. Managing Informants Criminal history for all informants? Update? Command approval? Documentation of informant activity history? Correlate informant activity to arrests and convictions?

52. Post-test

53. 1. All revenues from drug fines are deposited in the “drug fund.” T/F 2. Revenues from the sale of vehicles forfeited to the city as a result of being used to transport or sell drugs go to the “drug fund.” T/F 3. Revenues from the sale of vehicles seized for second or subsequent offense DUI go to the “drug fund.” T/F

54. Post-test 4. Revenues from the sale of vehicles seized for Driving on a Revoked Drivers License go to the “drug fund.” T/F 5. The “drug fund” is under the control of the city recorder. T/F 6. Funds from the “drug fund” may be appropriated to local drug treatment programs. T/F

55. Post-test 7. The “drug fund” can be used to buy dog food and veterinary services for the drug dog. T/F 8. The “drug fund” can be used to purchase handguns for patrol officers. T/F 9. A drug agent (officer) must create a written receipt for every transaction with an informant. T/F 10. The “drug fund” budget must be approved by the District Attorney General. T/F

56. RESOURCES Municipal Technical Advisory Service www.mtas.tennessee.edu Rex Barton (865) 974-0411 rex.barton@tennessee.edu Ralph Cross (615) 532-4946 ralph.cross@tennessee.edu Division of Municipal Audit (615) 401-7871

57. RESOURCES County Technical Assistance Service www.ctas.tennessee.edu Terry Hazard(615) 532-3555 thazard@tennessee.edu Steve Walker (615) 532-3555 shwalker@tennessee.edu Division of County Audit (615) 401-7841

58. COUNTY STUDENTS Be sure and get your COCTP information and forms before you leave