A new state audit says leaders in the tiny city of Leadwood treated federal pandemic relief like a bonus fund for themselves, handing out more than $100,000 in extra pay while the town battled budget shortfalls and aging infrastructure. Auditors slapped the city with the lowest possible rating for financial controls and flagged repeated failures in procedure and transparency, raising pointed questions about why bonuses got priority over badly needed sewer work.
Audit Says Relief Money Mostly Turned Into Bonuses
According to the Missouri State Auditor's Office, Leadwood received $117,540 in State and Local Fiscal Recovery Funds and spent $103,360 of it on bonuses. That was roughly 88% of the city’s grant expenditures at the time.
The audit, which reviewed fiscal years ending March 31, 2023, found the Board of Aldermen approved the bonuses on three separate occasions. Auditors criticized the city’s budgeting and accounting controls and said restricted funds were commingled in a way that made it harder to see how money was actually being used.
Text-Message Votes And Off-Books Payments
The audit says many of the bonus votes took place by text message or during telephone meetings that were not properly noticed. Two of the three votes happened in closed sessions that violated Missouri’s Sunshine Law, according to KFVS.
Auditors also found the bonuses never ran through payroll. They did not show up on employees’ W-2 forms, and payroll taxes were not withheld or employer taxes paid. Those lapses, the report says, undercut both transparency and tax compliance for a city that can hardly afford extra trouble.
Who Collected The Cash
The report lays out the payouts in detail. Former city clerk Kendra Boyer received more than $10,000. Former mayor Ed Austin collected more than $5,000. Several aldermen and staff, including John Vickers, Charislis Lewis, Randy Howard, Aaron Penberthy, and Sheila Wisdom, received amounts generally between about $2,500 and $5,624. Coverage by KTTN notes that the single largest total payout was $10,624.
Auditors say the payments violated the Missouri Constitution because State and Local Fiscal Recovery Funds were used to supplement official pay instead of being directed to eligible public purposes.
Bonuses While Sewer Fixes Waited
The timing did not help appearances. The audit points out that the bonuses went out while city officials openly acknowledged Leadwood’s sewer system needed improvements. The city later received a second SLFRF award of roughly $120,000, which was primarily spent on sewer upgrades, an allowable use under federal rules, according to the Missouri State Auditor's Office.
Auditors also found that the city’s General Fund ran deficits across fiscal years 2021 through 2024. They recommended tighter budgeting and regular bank reconciliations. The state review began after the Board of Aldermen authorized an audit in June 2024, and the auditor’s office started its work the following month.
Auditor Blasts ‘Outrageous’ Use Of Funds
“It is outrageous that more than $100,000 in funds was used improperly,” State Auditor Scott Fitzpatrick said, as quoted by KFVS. He urged current city leaders to carry out the report’s recommendations, arguing that cleaning up the books is essential if they want to rebuild public trust.
The audit calls on the board to adopt written policies on public records, improve public notice and minutes for closed meetings, and correct fund accounting practices so restricted money is properly tracked.
What Comes Next For Leadwood
The report gives Leadwood a poor rating and presses city leaders to take corrective steps. Local coverage has pushed the findings into the spotlight and fueled calls for accountability. FOX2 highlighted the report’s release this week and directed readers to the auditor’s office for the full document.
The Missouri State Auditor’s Office also maintains a whistleblower hotline for anyone who has additional information about how municipal operations are being handled, in Leadwood or anywhere else in the state.
