By DEBRA HAIGHT
BCR Correspondent
ST. JOSEPH, MI – Berrien County Commissioners are looking into the finances and structure of the Kinexus workforce development organization. Concerns about Kinexus finances have grown over the summer and came to a head last week at last week’s County Board meeting.
Berrien County Corporate Counsel Thaddeus Hackworth presented his preliminary report of findings to commissioners first in closed session and then in open session at the end of last week’s meeting.
“It wasn’t one specific question that prompted all of this,” Hackworth said. “But after (Commissioner) Julie Wuerfel was appointed to the elected officials board, she’d come to me from time to time to ask about the governance on the workforce development board.”
“I did my best to answer her questions with the incomplete information we had, but as questions started to stack up it became apparent over time that some additional research was needed,” he added. “And that’s what kind of cascaded into a whole lot of questions being asked.”
Hackworth said that several matters that appeared significant at the start of the investigation this summer have been resolved upon getting fuller information while other matters that were not visible at the start have become central to his investigation.
“In June, the elected officials board members raised questions about among other things how the executive director had been compensated and who authorizes its significant expenditures,” Hackworth reported. “Berrien officials joined by Cass and Van Buren requested records on June 29 and about 2,000 pages been received and reviewed since then.”
One of the things his review has established is that decisions (supposed to be made by the full board of directors, the chief elected officials board, or the three county boards) were made instead by a committee of four to six people or by no identifiable body at all.
In addition, his review found that county reporting obligations were not fulfilled and that questions related to the structure of the organization itself (raised by the Michigan Attorney General’s office in 2000 and 2006) were never really resolved.
Hackworth concentrated a lot of his comments on financial concerns including questions raised by auditors in recent years. Auditors reported control deficiencies in the last three fiscal years, and he said the organization did not qualify as a low risk audit in 2025.
He said that records show that Kinexus has formed, acquired or dissolved a number of non-profit and for profit entities without the apparent approval of the elected officials board, the Kinexus board of directors or the three counties.
The organization’s bylaws appear to have been violated when it came to decision making and governance including setting the executive director’s salary. The executive director’s base salary increased in recent years from $190,770 to $252,400 plus annual bonuses.
“The minutes reflect a settled habit of acting first and authorizing afterwards,” Hackworth said. “The interlocal agreement requires the board to inform the chief elected officials board and the three counties at least quarterly. The bylaws require a monthly accounting of funds dispersed and the annual audit was to go to all three county boards. None of that happened.”
“This report does not assign blame to individuals and the record does not presently support judgments about what any particular person knew,” he said. “The point is structural. A system in which the entity being overseen also prepares, informs and convenes those who oversee it will not reliably report its own failures.”
Hackworth said the financial questions are at least as significant as the governance questions and remain unresolved and largely unexplored. He noted that Kinexus received funds from two pandemic era federal programs, a $1.71 million paycheck protection program loan which was later forgiven and an employee retention credit of $2.308 million.
He said that the three counties could end up with a liability totaling $3.5 million depending on what is found in more thorough investigation of how Kinexus handled the funds from those two federal programs.
Hackworth gave commissioners a couple of options for moving forward once the full investigation is complete, including establishing a new board with Kinexus still serving as the administrative entity or transitioning to a new fully public organization.
County Board Chairman Mac Elliott thanked Hackworth for the work he’s done so far and recommended that each of the three counties form an ad hoc committee to study the issues involved and meet in coming days and weeks at the Berrien County conference center in the Health Department on Napier Avenue.
Elliott appointed current Kinexus board members Julie Wuerfel and Mamie Yarbrough, as well as Administration Committee Chairman Jim Curran, Personnel and Human Services Committee Chairman Robert Harrison, Vice-Chair Teri Freehling and Commissioner Chokwe Pitchford to Berrien County’s ad hoc committee.