Louisiana auditors have found issues with two state agencies: the Ag Department and the Louisiana Board of Ethics.
The Louisiana Legislative Auditor's Office took a look at the Louisiana Department of Agriculture and Forestry (LDAF) to evaluate certain controls that LDAF uses to ensure accurate financial reporting, compliance with applicable laws and regulations, and accountability over public funds. The period involved was July 1, 2019 through June 30, 2021.
Auditors found that LDAF made Forestry Productivity Program payments totaling $3,686,026 to landowners during the period July 1, 2019, through July 31, 2020, of which $553,041 (15%) violated the provisions of Revised Statute 3:4412(C) that were in effect at the time.
That section of the law reads: The commissioner shall determine the extent of the state's involvement in each cooperative agreement which shall not exceed fifty percent of the cost of the cooperative agreement or a total value of assistance of ten thousand dollars to any one landowner during a fiscal year.
The auditors pulled 21 payments under the program, and found:
- Seven payments totaling $91,441, of which $30,480 exceeded $10,000 and were based on a 75% state cost share rate, which violated the revised statute that stipulates a maximum allowable amount of $10,000 and a cost share rate of 50%.
- In addition, our procedures disclosed that for each of these payments LDAF split payment amounts in expenditure data to reflect that no one landowner was paid more than $10,000 during a fiscal year.
- Based on discussions with LDAF personnel, it was LDAF’s practice during fiscal year 2020 to split payments by using two application numbers to avoid the $10,000 per landowner limitation in the FPP system.
- Fourteen payments totaling $58,825, that were less than $10,000 were reimbursed by LDAF at a 75% cost share, which violated the cost share rate of 50% allowed by R.S. 3:4412(C), resulting in overpayments of $19,605.
After finding those issues, auditors then "compiled a report of all payments made to landowners during the period July 1, 2019, through July 31, 2020. We identified additional payments to landowners, in excess of $10,000, totaling $502,956 violated the provisions of the revised statute. If landowners had been paid no more than the maximum allowed $10,000 per fiscal year, and if the payments were based on a maximum cost share rate of 50%, potentially more eligible landowners could have received assistance before the funds were exhausted," the report states.
The report says that LDAF interprets this law in a way that allows the practices they've been using - but ignores part of the law.
"LDAF interprets the pre-August 1, 2020, language of R.S. 3:4412(C) as providing that “more than one cooperative agreement is permitted per landowner, but no more than Louisiana Department of Agriculture and Forestry Procedural Report 3 the cap is allowed in payment” [for each agreement]. This interpretation omits the entire second clause in the statute (that is, the phrase “a total value of assistance of ten thousand dollars to any one landowner during a fiscal year.”) Any interpretation that makes words of the statute meaningless is contrary to the rules of statutory interpretation and, therefore, is legally erroneous," the report states. "Also, in interviews conducted during the engagement, LDAF personnel acknowledged that applications were reimbursed on a first come, first served basis and that once the FPP appropriated amount was exhausted in fiscal year 2020, the department rejected subsequent applications received and refunded these applicants."
In his response, the Assistant Commissioner of the department, Dane Morgan, disputed auditors' interpretations. He said the department's legal staff had reviewed the practices.
"LDAF did not "split payments ... to avoid the $10,000 per landowner limitation." Rather, we put procedures in place in order to comply with the law by making one payment per agreement, and some landowners had more than one agreement on different acres as allowed by law," Morgan wrote. "When implementing these procedures, the department recognized the law could be
misinterpreted. Therefore, the department had the language clarified during the 2020 legislative session."
The auditor's office also evaluated internal controls and transactions relating to self-generated revenues, statutory dedications, state purchasing card expenditures, Fueltrac card expenditures, lease expenditures, payroll expenditures, information technology related expenditures, and LaGov user access. Except for the forestry payments issue, auditors found that those controls provided reasonable assurance of accountability over public funds and compliance with applicable laws and regulations for the period examined.
Here's their summary report. You can read the entire audit by scrolling down.
In their review of the Louisiana Department of State Civil Service, auditors found that, for the third consecutive report, the Louisiana Board of Ethics (BOE), which is under the department’s jurisdiction, was not submitting delinquent debts to the Attorney General in a timely manner. As of March 18, 2021, the BOE website noted 2,129 outstanding late fees totaling $2.7 million from campaign finance disclosure reports, lobbying expenditure reports, and personal financial disclosure statements.
The state's auditors tested 30 late fees levied between July 1, 2019 and March 18, 2021, and of those 25 "had processing delays that caused the debt to either not to be sent to the AG or to be sent untimely. In addition, one had mail delivery issues that prevented the debt from being established as delinquent and being sent for collection."
Auditors also evaluated controls and transactions relating to the processing of late fees by BOE, purchasing card expenditures, revenue collections from state agencies, and payroll and personnel. Except for the issues with late fees, auditors found these controls provided reasonable assurance of accountability over public funds and compliance with applicable laws and regulations for the period examined.
In the agency response, Ethics Administrator Kathleen Allen said that some delays were necessary because of requirements of the process, and noted that postal service was disrupted during 2020 because of the pandemic.
"While the Agency concurs that all efforts should be taken to minimize any delays to transmit the debts to the Attorney General’s Office. it asserts that it does comply with the statutory provisions in R.S. 47:1676. After providing the requisite notices and waiting 60 days as required by the statute, the agency is required to authenticate the debt prior to sending it to the AGs Office pursuant to R.S.47:l676C(2)(a)," Allen wrote. "Determining the finality of a judgment is a manual process, which during normal times can be time-consuming to ensure that all required statutory notices have been received, all delays have expired. and all notices pursuant to R.S. 47:1676 have been provided.
"Most of the sample set that was tested for procedural review had due dates during 2020," Allen continues. "Due to changes in the USPS procedures in response to COVID-19. the process to determine the finality of judgments has taken additional time. Verifying receipt of notices and finality of reports has taken additional time. Furthermore, during the early part of the COVID shutdown when employees were starting to work remotely, the Ethics Administration Program was asked by the AGs Office to hold up on sending over delinquent accounts. Steps have been taken to temporarily assign staff to assist with the assessment and collection duties, as well as processing returned mail."
Here's the summary report. You can read the entire audit by scrolling down.
Here are the full reports: