By Tiffany Flournoy
HOMER , La. — A state investigative audit of the Town of Homer’s finances found that utility customer deposits were used to pay employee wages, more than a quarter-million dollars in payroll taxes went unpaid and more than $1 million in federal relief funds was spent without a Town Council-approved budget — among seven findings documenting problems with the town’s handling of public money.
The Louisiana Legislative Auditor’s report, issued Nov. 4, examines financial practices under Mayor Xanthe Seals and identifies transactions and decisions that auditors said may have violated state law. The findings involve utility collections, customer deposits, employee compensation, federal relief funds and unpaid payroll taxes.
The report also details concerns involving Town Treasurer Harris, who has served in that position since 1998, and actions taken during Seals’ administration. In Monday’s town council meeting, David Greer, who was appointed fiscal administrator sometime after mid-2024, said most of the findings had already been fixed.
Utility collections and personal account deposits
Auditors identified $16,769 in utility payments collected from customers that were not deposited into the Town’s bank accounts. The report documented 19 instances in which cash collections were not accounted for in the Town’s deposit records.
Harris received daily cash and check collections and was responsible for preparing deposits. She told auditors she had been ill during 2023 and 2024 but continued working and preparing deposits because she was the only person who could perform the task.
According to the report, Harris denied taking the missing money. She said she understood how the missing funds could appear to have been taken and acknowledged that suspicion would fall on her because she handled the collections and deposits. She also told auditors she did not believe other Town employees would take the money.
Auditors reviewed Harris’ personal financial account records and identified 12 cash deposits totaling $3,860 between May and August 2024.
Among the transactions, two cash deposits totaling $1,000 were made May 22. Town records showed $1,146.15 in collections that day that were not deposited into the Town’s account.
Auditors also identified three cash deposits totaling $1,080 between July 30 and Aug. 2. Town records showed $1,358.41 collected July 30 that was not deposited.
The Town did not have Daily Drawer Reconciliation forms for any of the 19 instances identified by auditors.
Based on the missing collections, Harris’ responsibility for handling the money and the deposits of similar amounts into her personal account, auditors said her actions may have violated state law.
The report also identified a separate series of 11 credits totaling $4,475 applied to the personal and business utility accounts of Harris’ landlord between July 2022 and March 2024. Town records did not show corresponding deposits from Harris or the landlord.
The landlord told auditors Harris rented from him and sometimes asked him to credit his utility account for her $500 rent payment rather than pay him directly.
Harris told auditors she made entries to show the landlord’s accounts as paid. When asked whether she used personal funds to pay the utility bills on his behalf, she said she did not understand the question but would not have posted a credit without payment.
Auditors said the transactions appeared to provide Harris a personal benefit and may have violated state law.
Customer deposits used to pay employee wages
The audit found that $81,869 in utility customer deposits was used to pay employee wages in December 2021 and June 2022.
The Town collected deposits of $100 from property owners and $50 from renters. Those funds were intended to be held for unpaid utility balances or returned when customers terminated service, depending on the account.
Auditors found that the deposits were instead transferred and used for payroll expenses.
Seals told auditors she did not remember the specific conversation surrounding the transfers but recalled saying transfers could be made. Harris told auditors she and Seals had discussed moving the funds.
The report said Seals directed the use of the customer deposits and that her actions may have violated state law. Auditors recommended the Town repay the funds.
Utility rates increased without council approval
Auditors also found that the Town increased water and sewer rates without holding a public hearing or obtaining approval from the Town Council.
The rate changes resulted in customers being invoiced an additional $100,935 between May and August 2024.
Seals told auditors she believed the increases were permitted because previous administrations had handled rate changes similarly and the Town needed additional revenue to make bond payments.
Auditors said they found no meeting minutes or ordinances documenting council approval of the increases.
The report recommended that the Town consult legal counsel to determine whether customers should receive refunds or credits for the additional amounts charged.
Treasurer received $88,056 above approved compensation
The audit found that Harris received $88,056 above the compensation approved by the Town Council between Jan. 17, 2019, and Nov. 26, 2024.
The amount included $58,358 in salary increases and $29,698 in overtime payments. The Claiborne Parish Journal was unable to confirm Harris’ council-approved salary as of the time of publication.
Auditors identified salary increases in 2019, 2021 and 2023 but found no documentation showing the council authorized the additional compensation.
Seals told auditors she approved one of the increases and Harris’ timesheets.
However, the Town Charter gives the council authority to set the treasurer’s compensation. Auditors said the additional payments may have violated the charter and state law.
More than $1 million in federal relief funds spent without approved budget
Auditors found that the Town used $1,049,639 in American Rescue Plan Act funds without a budget approved by the Town Council.
The report said Seals directed or authorized expenditures without first obtaining council approval of a budget for the federal funds.
Among the expenditures were $18,000 in salary incentives paid to elected officials and Town employees without the required authorization.
The Town also transferred $300,000 into its enterprise fund, where the money was used to make bond payments. Auditors said the transfer and use of the federal funds were prohibited under U.S. Treasury requirements.
The report referenced attorney general opinions addressing retroactive premium pay and said Seals’ actions may have violated state law and the Louisiana Constitution.
More than $253,000 in payroll taxes not remitted
The audit found that the Town withheld federal and state payroll taxes from employees’ paychecks during 2023 and 2024 but did not remit $253,086 to the Internal Revenue Service and the Louisiana Department of Revenue.
The unpaid amount had accrued an additional $96,806 in interest and penalties.
Harris told auditors she processed payroll and sometimes transferred money from enterprise and utility accounts to payroll when departmental accounts did not have enough money. She said some transfers covered employees’ net pay but did not cover the taxes withheld from their checks.
Harris also told auditors she did not make financial decisions without speaking with Seals and that the mayor directed all financial decisions.
Auditors said Seals’ actions may have violated state and federal laws.
Councilman calls for repayment, corrective action
Town Councilman Jimmy Hand said the report was difficult to read for residents who care about Homer and that the community deserves straightforward answers.
“This report is hard reading for everyone who loves Homer, and our residents deserve straight answers,” Hand said in a written response. “I take the auditor’s findings seriously. I’m grateful to the Legislative Auditor’s office and to our fiscal administrator for bringing them to light.”
Hand said one of his goals when he ran for council was to help bring a fiscal administrator to Homer and establish a path toward a fiscal reset. He said he was proud to have been part of that effort.
“Questions of individual responsibility belong to the proper authorities, and I won’t prejudge anyone,” Hand said. “My job as a council member is to make sure that safeguards are in place and followed so this never happens again,” Hand added.
Hand said that should include ensuring every dollar is deposited, every raise and rate change comes before the council in public and every budget is approved before money is spent.
He also said he would push for full repayment of improper payments and for the council to adopt and follow the corrective steps recommended by auditors.
“Homer has good people and a real future, and rebuilding trust starts with being open with our citizens,” Hand said.
Personnel matter raised during council meeting
A personnel matter appeared on a Monday’s Town Council meeting agenda under executive-session provisions of Louisiana law, La. R.S. 42:17(A)(8).
During the meeting, Seals attempted to entertain a motion to table the matter because “our respondent is not present.”
The employee involved was not identified in the agenda or during the public discussion.
Town Attorney Pam Breedlove diagreed with entertaining such motion, saying the individual had been notified and recommended that the council proceed. Breedlove said whether the person attended was beyond the council’s control.
The regular meeting resumed after executive session, but no public explanation or action on the matter followed. The available information does not establish a connection between the personnel matter and the audit findings.
Attempts to reach Seals and Harris for comment were unsuccessful as of publication deadline.
Auditor’s recommendations
The Legislative Auditor recommended that the Town consult legal counsel regarding the transactions and payments identified in the report, including whether funds should be recovered for improperly credited utility accounts, excess compensation and incentive payments.
Other recommendations include implementing independent daily reconciliations of utility collections, repaying customer deposits used for payroll, obtaining proper approval for utility rates and employee compensation, and maintaining documentation of employee hours and overtime.
Auditors also recommended that the Town remit outstanding payroll taxes, ensure future tax payments are made on time and work with federal and state agencies to address issues involving the use of ARPA funds.
The report’s findings identify potential violations and weaknesses in the Town’s financial controls. The auditor’s conclusions do not, by themselves, establish criminal liability.