Legislative Joint Auditing: State Agencies – October 7, 2009
Posted on October 7th, 2009
Date & Time: Wednesday, October 7, 2009 at 1:30 PM
Location: Room 130, State Capitol
Committee Information: House Members on Committee
Agenda: http://www.arkleg.state.ar.us/assembly/2009/Lists/Meetings/Attachments/12132/I7834.pdf
Attachments: none
1:32 pm – Representative House called the meeting to order, meeting minutes approved.
1:34 pm – The first audit of the Lottery Commission has been made, there was very little activity on this because it was done earlier in the process. There were no findings.
1:35 pm – George Hopkins, director of the Arkansas Teacher Retirement System is here for the presentation of their audit with findings. There was a violation of Ark. Code Ann. 19-11-1011 which states that no payment shall be made for services rendered prior to the execution date of the contract. The firm provided information stating that ATRS staff instructed the firm to leave out dates on the invoice in an effort to “avoid confusion” about the date on the State contract and the date services began. The violation occured with two different instances involving firms Franklin Park Associates, LLC and Ennis Krupp and Associates.
1:39 pm – Mr. Hopkins has acknowledged the validity of the findings and apologized for the infraction. He stated that internal measures have been put in place to prevent this from occuring again.
1:40 pm – Rep. Dismang asked if something was going on at ATRS during the times of the infractions occured. Mr. Hopkins said there was several scheduling pressures and when those got in the way the were ignored.
1:43 pm – Mr. Hopkins said that he self reported both of these violations to Legislative Audit right after he took over in his positions. He reports that full cooperation was given by both those firm and the staff members have been identified. Those employees are still employeed in their positions. He said the decision not to terminate them was based upon if the employees stood to gain from if they stood to gain personally, or if they were just trying to accomplish and agency goal in a timely fashion.
1:46 pm – Rep. Dismang asked who is responsible for these dates being left out. Apparently the triangle of blame, involving ATRS attorneys, are all pointing fingers at another party in a circle of blame.
1:48 pm – Senator Key is asking a follow up question. He is asking if the conflicting testimonies have been pursued. Apparently the testimony before Audit is a sworn affidavit and that the conflicting stories indicate that purgury may have occured. The ATRS staff attorney claims a conference call did not occur that other parties have testified did occur.
1:52 pm – Senator Key asked if it were possible that there may be other violations associated with contracts. The auditor confirmed. Sen. Key asked the same question of Mr. Hopkins. Mr. Hopkins said that there are many instances of violations that he addressed when he took over and pointed to specific procedures to correct the violations.
2:01 pm – Apparently Ennis Knupp is the major contractor, which extensive experience for ATRS, yet in the a letter to the Division of Legislative Audit, they claim to be unaware of the state procurement procedures and state that they had no reason to believe that the Executive Director of ATRS was not complying with the laws of the state of Arkansas.
2:06 pm – Ennis Knupp was requested to be present at this meeting, they send the letter and did not appear.
2:07 pm – Sen. Bledsoe expressed displeasure with the fact that the ATRS attorney chose not to appear before this committee. Mr. Hopkins stated he had given her the permission to no appear.
2:08 pm – Rep. Dismang expressed concerned that there is no consequences for breaking the law. He is particularly concerned with the ATRS attorney. He said it is inappropriate for an employee to knowingly break the law and there be no consequences. [I find it interesting that these agencies will fine the hell out of businesses in the State of Arkansas for minor regulatory infractions, but these cats break the law with no price to pay.
2:13 pm - Senator Faris is making the point that the only guy innocent in this whole deal who has been trying to clean up the mess is the only one to show up to explain the situation. The legislators here are disturbed that the ATRS attorney and Ennis Knupp did not show up before this Audit Subcommittee.
2:15 pm - Rep. Mike Burris asked if this committee had authority to subpeona testimony. Apparently the full committee does but not the subcommittee. He is concerned about getting the letter from Ennis Knupp at the last minute today. He asked who much we pay them ber year. Mr. Hopkins said it is probably over $1 million per year.
2:18 pm - [My experience with situations like this is that the legislature will let this pass like everything else and not do a damn thing about it. Term limits have so weakened legislators with respect to the agencies that the legislature is a simpering bunch of whiners who do nothing but ask a bunch of questions but never actually take any action. The status quo will be maintained, the agencies will continue the long string of abuses, the executive director will depart, a new one will say "sorry" and no consequences will be held, and the same system repeats.]
2:25 pm – Sen. Key is asking follow-up questions about the contract dates concerning Franklin Park Associates, LLC. Mr Hopkins stridently defended Franklin Park Associates as being above board, and that they even sent letters questioning procedures by ATRS. Mr. Key made the point that this brings us back to inappropriate activity by the employees by ATRS.
2:29 pm – Sen. Bledsoe made a motion to compel the groups involved to appear before the committee. [Good for her] The simpering begins with they are trying to change the motion to “invite” rather than compel them to appear. Sen. Faris stepped up and made the statement that this is dealing with the largest single collection of money in the state government and that we needed to do more than “invite” those parties. [Good for him]. Sen Jeffress makes the point that we we need to remember that Mr. Hopkins inherited this problem.
2:33 pm – Sen. Bledsoe is restating her motion to “request” (rather than compel) those parties appear before the committee next month. Apparently a subpeona could take more than two months. The committee approved the motion. I am surprised, this is more than I have seen done in the past. Perhaps things are getting better.
2:37 pm – The remainder of the audit findings are being covered. Mr. Hopkins is again giving very detailed explanations of procedured he proactively took to put in place to correct the problems even before the audit occurred and the findings reported.
2:41 pm – Rep. Lea asked if the attorney that was involved in the issued discussed today was the same one that advised him to not attempt to collect the overpayments of double dippers. Mr. Hopkins said that they have sought outside legal advice, including the Attorney General, about the double dippers. He said he has not backed off collecting the double dipping, but that he needs to find out exactly who he can collect it from and who he cannot.
2:44 pm – The issue has been deferred pending testimony at the next meeting. This will not appear on the agenda for tomorrows meeting.
2:45 pm – Currently reviewing audit issues with the Beef Council. No questions or comments, report filed.
2:47 pm – I really wanted to go to the Counties and Municipalities Audit because I heard rumors there was juicy goings-on with the Major of Helena West Helena. But since I am not a reporter selling newspapers, I thought it was better to follow the items that most effect the taxpayers of Arkansas. So often, legislators including myself get tangled up in issues concerning $100,000 but fail to evaluate issue concerning $1,000,000,000 (a billion). Those are confused priorities.
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