Legislative Audit Story Archives - West Virginia Public Broadcasting

Audit Finds Job Vacancies; Inaccurate Budget Process

Tens of millions of dollars are appropriated to state agencies for vacancies, many of which remained unfilled for years — skewing the state budget process.

The West Virginia Legislative Auditor Performance Evaluation and Research Division (PERD) reviewed vacancies throughout the state in its latest report to the Post Audits Subcommittee during Sunday’s Interim Legislative Meetings. The report found that there are hundreds of positions open in the state that haven’t been filled, some dating back to 2014.

Lukas Griffith is the senior research analyst for PERD. He said the report found that there were 4,857 budgeted vacant positions, which comprise 12 percent of all authorized positions. The amount appropriated for all budgeted vacancies, including estimated benefits, is $226.9 million.

Some vacancies have been unfilled since 2014, and nearly 500 vacancies have been unfilled since at least 2018. Vacancies originating between 2014 and 2018 alone account for $22.9 million and appropriated salaries and estimated benefits.

A total of 106 different agencies had at least one vacancy, and the Division of Health and the Division of Corrections and Rehabilitation had the highest number of vacant positions with more than 800 in each agency.

“The vacancies for the Division of Corrections are especially pertinent considering the governor’s recent state of emergency declaration to deploy the National Guard to fill critical staffing shortages at specific correctional facilities,” Griffith said. “Five hundred of the 812 corrections vacancies are correctional officer positions.”

The Division of Human Services had nearly 600 vacancies and the Division of Highways had 338 vacancies.

PERD also found that a total of 80 positions that have been vacant prior to 2018 were not being advertised to allow prospective workers the opportunity to apply for them.

The point that got legislators attention was that while some of the money for those budgeted, unfilled positions was used to pay for other needs in the various departments, like overtime and salary increases, contract employees and nurses, it was only a small fraction of the total.

Michael Cook, the director of the State Budget Office in the Justice Administration said the annual budget bill provides permissive language that allows those agencies to transfer those funds that the legislature has appropriated for personal services and employee benefits. It allows those cabinet secretaries to use their judgment and latitude to fulfill their mission by moving those funds into other items of appropriation.

“When I read the report, I didn’t want it to have the appearance that there were, as the Legislative Auditor mentioned, just millions and millions of dollars that could be swept into savings,” he said. “That’s not necessarily the case. If it were to be swept, then those positions would have to be deactivated. And then you would budget that money, as it should be reflected, there really wouldn’t be a significant savings at that point, you’re still maintaining that budget at the total legislative appropriation for each of those funds.”

“Are there actually savings to be had by eliminating the vacancies?” House Speaker Roger Hanshaw, R-Clay, asked. “Or is the aggregate dollar value of that amount being used elsewhere? And it just doesn’t reflect reality?”

Cook agreed it was the latter.

“They’re not in the budget bill itself, and the appropriations are not accurately reflected, but the bottom line is not changing,” he said.

Del. Brandon Steele, R-Raleigh, questioned that assertion and noted that even with those transfers, there is a lot of money being given to agencies that isn’t being spent.

“If I’m reading this right, table five is the reallocation. It’s only $15 million out of $216 million,” he said. “That’s $200 million we’ve got floating in the wind out there. And I don’t know how often people are looking at the news, but $200 million dollars roughly covers everybody’s disagreement with taxes these days. So if I’m reading that, right, where’s the other $200 million bucks?”

Hanshaw agreed with Steele’s concerns.

“In other words, you’re telling us the budget process, as we know it, just doesn’t reflect reality,” he said. “In four years of sitting on this committee, this has to be one of the most informative reports I’ve ever received. I think it’s fair to say we will ratchet this up to the Joint Committee on Government and Finance for further consideration.”

An additional point raised by the report was that approximately 400 state employees qualify for Supplemental Nutrition Assistance Program (SNAP) benefits.

Audit: Association of Smaller W.Va. Colleges And Universities Received $132,000 In Illegal Payments

Smaller and regional colleges and universities made $132,000 in illegal payments to an association that was created to lobby on their behalf, according to a legislative audit released Monday.

In 2013, the West Virginia Association of Regional Colleges and Universities was created as a 501(c)6 organization through the IRS and was registered with the West Virginia Secretary of State’s office in May 2014. The organization was exclusively comprised of college and university presidents, who are state employees.

The group — which included presidents of Bluefield State College, Concord University, Glenville State College, Shepherd University, West Liberty University and West Virginia State University — was dissolved in November 2015 after failing to submit annual filings and fees, which no longer authorized them to legally conduct business in West Virginia.

Despite the dissolution, the audit found the schools made $132,000 in unauthorized payments to the association between 2015 to 2021. At least $105,000 of those payments went toward lobbying on behalf of the schools.

Each of the participating colleges and universities made payments in varying amounts and took part in the association in different years.

Adam Fridley, manager of the West Virginia Legislative Auditor’s Office Post Audit Division, told members of the Legislature’s Post Audit’s Subcommittee that his office received word of the improper payments in March 2021 through the state Ethics Commission.

The Legislative Auditor’s office began investigating and contacted officials with the Secretary of State and Auditor’s office.

“Ultimately, based on our conversations with those two organizations, it appears that the significant difference in the way that the vendors names are listed in their respective systems contributed to the vendor not being flagged as non-compliant and allowed payment,” Fridley told the committee.

Fridley also noted that his office was confused that the association had been formed and was paying for a lobbyist when schools are not prohibited from doing so themselves under current law.

The Legislative Auditor office also determined that the West Virginia Higher Education Policy Commission also functions in a similar fashion as the West Virginia Association of Regional Colleges and Universities.

“Even if there was a need for one or more schools to procure lobbying services, we can’t really ascertain a good reason that it was done through a private association,” Fridley said.

While the Legislative Auditor offered no specific recommendations to the subcommittee, the report outlined statutory citations from other states that have enacted laws prohibiting taxpayer funds to be used for lobbying efforts, similar to a prohibition the Legislature enacted for professional and occupational licensing boards in 2019.

Legislation to Reinstate the W.Va. Film Tax Credit Could Return in 2020

West Virginia’s film tax credit was eliminated by the West Virginia Legislature in 2018 after a legislative audit report deemed the credit as providing only “minimal economic impact.” But people who work in the film industry don’t agree. An attempt to resurrect the credit failed this past session, but supporters are hopeful it will make it through the next legislative session.

Robert Tinnell is a West Virginia filmmaker who was born and raised in Marion County. He’s been making movies professionally since 1980, and since 2005, he and his brother Jeffrey have been running a production company called Allegheny Image Factory out of the Morgantown area.

They’ve produced award-winning films, documentaries, music videos and commercials. One of their recent feature films was, Feast of the Seven Fishes based on Robert Tinnell’s graphic novel of the same name. The film featured actors Skyler Gisondo and Madison Iseman and was filmed entirely in West Virginia.

https://www.youtube.com/watch?v=ZeIWozecO50

Feast of the Seven Fishes will be available later this year but possibly under a new name. Tinnell said the film will likely be released under the title, 7 Fishes & Christmas ’83.

Tinnell said production of the film benefited greatly from West Virginia’s now-defunct film tax credit. He said the movie was able to be filmed and produced in-state, attracting actors and crew from the larger-film industry outside West Virginia thanks to incentive from the tax credit.

Now, since the credit was eliminated, Tinnell said it’s been harder to attract big productions to film in West Virginia.

“Stripping us of the tax credit, effectively disabled our ability to bring feature films or TV projects to West Virginia,” Tinnell said. “I mean, it’s that simple. Whether you agree with the tax incentive business model or not, the reality is, the industry and states, and even national governments, embrace the policy. And it simply is the cost of doing business.”

After losing the credit, Tinnell said it cost his production company two films and the potential of bringing about $4 million into the state.

“We say we want to diversify the state’s economy. We don’t want to just lean on extractive industries, it’s just too, up and down, and it’s putting all your eggs in one basket,” he said. “Here’s a really smart way to do it – and in a way that boosts not only the entertainment industry, but it’s just a great way to promote tourism.”

Del. Dianna Graves, R-Kanawha, discusses HB 2941 (reinstating the film investment tax credit) on the House floor on Feb. 27, 2019.

During the 2019 state Legislative session, Del. Dianna Graves, R-Kanawha, introduced a bill that would have reinstated the film tax credit – but with tweaks and adjustments based on the legislative audit report that made 12 recommendations if the credit were to be kept.

Graves has worked in the state’s film industry as both an accountant and producer, and she argues the tax credit was working but admits it did have problems, but problems she sought to fix with her bill.

“Even the audit admitted that it brought economic benefit to the state, it just didn’t think there was enough benefit to justify keeping it, well, then fine, let’s not get rid of it completely. It’s working. Let’s make it better. That was my goal,” she said.

Graves’ bill increased the cap of the film tax credit from $5 million to $10 million, and it would have required a film production company to spend at least $50,000 in-state before they would be eligible for the credit. After that, for every $100 spent, that production company could take home $27, but the remaining $73 would stay in-state.

Her bill managed to pass out of the House of Delegates but not without pushback. House Finance Chairman Del. Eric Householder, R-Berkeley, was one of 26 who voted against the bill.

Householder admits he’s not a fan of tax credits. He said they allow the government to pick economic winners and losers. He also argues the original film tax credit just wasn’t justifiable.

“In 10 years, only $8.6 million in tax credits were used,” Householder explained. “And if it’s such an attractive, competitive force, we would see more companies coming here, wanting to come here and take advantage of the tax credits, and it just wasn’t happening.”

He also felt Del. Graves’ bill didn’t make enough of the changes that were recommended by the audit.

“If she tightens all those up or takes those recommendations, I think it will pass the scrutiny,” he said. “Right now, I don’t foresee it happening since, remember, it was repealed in 2018. So, maybe in a year or so, maybe next legislative session, [it] might stand a better chance.”

Graves’ bill may have made it out of the House chamber last year, but it was never taken up by the Senate Finance Committee. In an emailed statement to West Virginia Public Broadcasting, Senate Finance Chairman Craig Blair, R-Berkeley, said he also felt Graves didn’t make enough changes recommended in the audit report.

Like Blair and Householder, Graves identifies as a fiscal conservative, and she said she doesn’t often vote for tax credits but says the film tax credit is different.

“The West Virginia film tax credit; it functions much more like advertising expense than a traditional tax credit,” she explained. “We are trying to entice film companies and movie studios to come here and film. But instead of giving this money up front, like you do with advertising expense, we only give it if you come here. So, that means that our advertising expense has a 100 percent success rate.”

Graves said the film tax credit helps to diversify the state’s economy. She plans to reintroduce her bill during the 2020 state Legislative session.

She said she hopes she can communicate to the Senate in particular of the credit’s benefits, increase the cap, and get it signed by the governor.

**Editor’s Note: This article was edited on Jun. 28, 2019 to add the correct spelling of Robert Tinnell’s last name.

Audit: $5 Million IOU as West Virginia Missed FEMA Deadlines

A state audit says West Virginia’s Department of Homeland Security and Emergency Management didn’t comply with federal regulations, forcing localities to pay for disaster relief.

The Charleston Gazette-Mail reports on the Legislative Auditor’s Office audit released on Sunday. It says the state has been late for years in submitting a grant spending report to the Federal Emergency Management Agency. Last year, it says, the agency missed a federal deadline by more than 170 days.

It says the agency is three years behind in requesting $8.3 million in federal grants that have already been spent. Over $5 million of that is owed to counties and cities.

FEMA penalized the state for that noncompliance, requiring it to use state funds for relief that may be eligible for federal reimbursement.

Auditors Seek Answers on State Supreme Court Spending

Legislative auditors have expressed concern on how the West Virginia Supreme Court accumulated around $29 million in its excess revenue funds in fiscal year 2012.

Justin Robinson with the legislative auditor’s office says the court had $1.4 million in its rainy-day fund in fiscal year 2007. He says the court accumulated $29 million in its rainy-day fund by fiscal year 2012.

News outlets reported Sunday that a memo indicated the court had spent that rainy-day fund to around $333,000 at the start of fiscal year 2016.

An ongoing legislative audit shows the court is on pace to accumulate around $19 million in its own rainy-day fund by the current fiscal year as West Virginians prepare to vote on whether the Legislature should have more control over the court’s funds.

Audit: Legislative Employees Were Paid for Days Didn't Work

Auditors have concluded that at least four state legislative employees were either paid for days they did not work or took days off without submitting the proper leave time.

The Charleston Gazette-Mail reports Legislative Post-Audit Division director Denny Rhodes told legislators Sunday that an initial review found three Court of Claims employees were compensated for a total of 64 days not worked, totaling nearly $7,000 in pay and more than $2,000 in benefits.

Rhodes says auditors who analyzed the time sheets and leave time records for all Court of Claims employees will present a full report at September interim meetings.

Court of Claims Clerk Cheryl Hall told the legislative Post Audits Committee that the issues raised in the preliminary audit report have been corrected.