Nebraska auditor: Financial wrongdoing in local governments seems ‘increasingly commonplace’ 

LINCOLN — After Nebraska State Auditor Mike Foley issued a recent statement exposing alleged financial improprieties involving several local governments, he said his office faced a surge of callers requesting probes of their towns, too.

It’s a common response, Foley said, after news hits of a small-town investigation by the auditor.

“The phone starts ringing,” he said, repeating a common refrain: “‘Hey look at us. Look what’s happening in my village or county too.’”

While grateful for the interest, Foley said such complaints are “disconcerting” in that they could signal rising misuse of public resources in smaller public entities across Nebraska. He said the alerts also “distract” from one of his office’s other main tasks, bird-dogging the “mega agencies” of state government.

“How much time can you spend on the Decatur Housing Authority when you’ve got DHHS sitting over there with 40% of the state budget?,” Foley said, referring to the Nebraska Department of Health and Human Services.

Troubling trends

In his most recent press release June 3, Foley grouped highlights of eight audit letters he sent local governments. His office’s allegations ranged from a Decatur housing chief giving herself more than $18,000 in unsupported payments to a Nemaha County commissioner caught on camera using a county gas pump to fuel his personal truck.

Not all caller alerts result in investigations, Foley said, particularly if the person complaining doesn’t provide enough detail. When a probe of a local government entity is launched, he said, an auditor team typically spends weeks collecting and analyzing information. In many cases, he said, someone is fired or results are turned over to law enforcement.

Foley said the Auditor’s Office staff of nearly 50 is down from about 60 three decades ago — and has audit oversight of roughly 2,500 units of local government. Under their watch are state agencies, officers, boards, commissions, certain political subdivisions and federal funds under contract.

While acknowledging state budget concerns and competing demands, he noted that the state spends about $200 to audit every $1 million in spending. “That’s not a very good ratio.”

Standing out as troubling trends during auditor reviews, Foley said, are misuse of credit cards and government-owned vehicles.

“Credit cards are an enormous headache for auditors and for these agencies,” he said, adding that too many agencies allow too many credit cards to be in circulation and are too loose with controls.

Agencies are starting to install GPS trackers on public vehicles, he said, which has led to improvements.

Foley assembled those eight letters sent over six weeks to local governments as part of an effort to underscore his sense that there has been an “uptick in improper financial practices in local governmental entities.” (He said the auditor’s office, meanwhile, continues to do other work and conduct other reviews.)

“Unfortunately, these more recent eight examples of both accounting incompetence and apparent financial malfeasance at political subdivisions are not unusual,” said Foley. “Based upon my office’s ongoing work, especially over the past year or so, they seem increasingly commonplace — making heightened vigilance, by public servants and citizens alike, ever more crucial.”

Foley cites reasons for concern

The examples cited: 

Decatur Housing Authority in Burt County:

In addition to allegedly processing about $18,000 in excessive compensation and unsupported reimbursements to herself, the executive director reportedly mishandled cash rental payments resulting in roughly $8,000 in “missing money.” She reportedly tried to delete hundreds of computer files. Furthermore, Foley noted that his office earlier this year had sent a separate audit letter to the woman’s previous employer pointing to an alleged salary overpayment to herself of about $11,000. The auditor’s report on the Decatur Housing Authority did not indicate an effort by the audit team to contact the housing director, who was reportedly terminated from her job in February. The report said it forwarded information to various law enforcement and government agencies. The housing authority board, in its response to the state, said it was implementing steps recommended by the auditing team. 

Cedar County:

A former Cedar County commissioner allegedly used a county pickup truck for personal business — though the commissioner denied that a few photos included in the report represented him on unofficial business. The same commissioner, according to the auditor’s report, allegedly allowed payment for county services with gift cards that were largely unaccounted for — something also denied by the commissioner. The auditor’s report said the former commissioner didn’t provide an explanation for a gift card that was produced during the review. The county also was accused of not following proper bidding procedures for nearly $1 million in contracts.

Village of Pleasanton in Buffalo County:

Public employees allegedly spent more than $20,000 on village business at Menard’s over a two-year period, and one employee allegedly used about $2,000 in rebate coupons as well as several hundred dollars in store credit vouchers for personal purchases. Separate “shoddy accounting” practices, according to the auditor, resulted in the village paying thousands of dollars of claims. 

Village of Farnam in Dawson County: 

The audit team, as part of its review, identified 22 months of utility and other services, or about $2,700, that the former Village Clerk did not bill to herself. At the time of the auditor’s letter, she was on the Village Board. She was found guilty of official misconduct in May, paid $3,151 in restitution, and a sentencing is set for July.

Nemaha County and Nemaha Rural Fire District 4:

Auditors reported that a county commissioner was photographed March 24 using a fuel pump that can be accessed after hours by personnel with insider knowledge.

Dundy County:

A deputy county clerk who resigned from her position at the request of the Dundy County Board continued to work and was paid full-time wages despite a considerable drop in responsibilities.

Custer County: 

Employees are able to clock in and out of work using mobile devices, and a county highway worker was alleged to be at home or at her kids’ events when she was supposed to be at work. She resigned before she could be questioned, the auditor said.

Village of Litchfield in Sherman County

A Village Clerk, prior to resigning, allegedly paid herself at least $2,200 more than allowed and was paid $763 in “suspicious” reimbursement. The village allegedly failed to withhold proper taxes from employee paychecks, opening the community to retroactive payments and penalties.