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Most WV state agencies late in submitting financial audit information

By JAKE JARVIS

Charleston Gazette-Mail

CHARLESTON, W.Va. — Less than 10 percent of West Virginia government agencies included in a financial audit submitted information to the Department of Administration on time, the governor’s chief of staff, Nick Casey, said Tuesday afternoon.

Nick Casey, Gov. Jim Justice’s chief of staff, updates reporters Tuesday at the West Virginia Capitol on late audits of federal funding that have penalized state university and college funding.
(Photo by F. Brian Ferguson)

Late submissions are inexcusable and have been increasing over the past few years, Casey said. The Department of Administration needs that information to compile the state’s Single Audit, an accounting of all agencies that receive federal money.

This was the third year in a row that West Virginia submitted its Single Audit late.

“Is this going to happen again? No,” Casey said. “This is not going to happen in 2017. The reason it’s not going to happen in 2017 is because everybody knows — they all knew — they had a problem. Now, they know that everybody’s failure to meet the timeline caused real financial and operational and programmatic problems for people in the state.”

Casey released a six-page list of agencies that failed to meet their deadlines. Those documents appear to show about 17 percent of agencies’ information was turned in on time, not 10 percent.

Despite Gov. Jim Justice saying earlier that “heads will roll,” Casey would not say if anyone would be fired because of the tardiness. Some employees of agencies that were late, like the state’s colleges, don’t report directly to the governor.

The House of Delegates passed a bill in late March that would have required earlier completion of the audit information and would offer small punishments for agencies that are late. It failed to pass out of a Senate committee before the end of the regular session.

Because the Single Audit was late again this year, the U.S. Department of Education placed all of West Virginia’s public two- and four-year colleges under financial sanctions, essentially restricting how easily they can access Title IV funds. Most students pay for school with money from that fund, which includes Pell grants and federally subsidized student loans.

The federal education department normally would give schools this money directly, and the schools would disburse that money to students.

The sanctions, which will last at least five years, mean schools will have to pay out the money first, and then ask the department to reimburse them. The colleges will need to come up with about $245 million by the time the next semester begins.

“We believe we will be able to handle that for the upcoming semester,” Casey said. “There will be no negative impact for students.”

Moody’s Investors Service said in a report last week that the sanctions could negatively affect the credit ratings of colleges in the state that already have a low amount of cash on hand, namely West Virginia State University, Glenville State College and Concord University.

Every college was required to submit their audit information to the Department of Administration by the end of October last year, according to Casey. Then, the Higher Education Policy Commission, the state agency that coordinates and oversees all the four-year schools, would combine the information into one consolidated audit.

“If you are in higher education and you were late, you helped create your own problem,” Casey said.

Every college turned its audits in late, according to the documents Casey distributed to reporters. There were only two instances in the past five years when colleges submitted their information on time — Shepherd University and West Virginia Northern Community College submitted on time in 2013.

The entire Single Audit had to be submitted by March 31. State leaders knew in early March that they wouldn’t make that deadline, and the consolidated audit of all the colleges wasn’t submitted until March 6, Casey’s documents show.

Paul Hill, the chancellor of the HEPC, could not remember last week when the audit information had to be submitted to the Department of Administration.

“I don’t recall,” Hill said. “I think it was always, ‘Get it to us as quickly as possible.’ … We met the deadline well in advance.”

At the time, Hill said, the Consolidated Public Retirement Board held up the colleges submitting their audit information sooner. Colleges must incorporate information from the retirement board into their own audits before they submit their information.

“That was one of the holdups,” Hill said. “We received the [retirement board’s] numbers on Dec. 16, so a lot of our institutions were unable to complete their audit until then.”

But the retirement board’s final audited financial statements weren’t submitted to the Department of Administration until April 7, according to Casey’s document.

Jamie Hardman, a spokeswoman for the retirement board, did not respond to multiple requests for comment. The retirement board is part of the Department of Administration.

Hill also would not comment for this report.

“At this time, we are deferring questions to the Governor’s Office as they continue their investigation into the problem,” said Jessica Kennedy, a spokeswoman for HEPC.

State officials knew last year that the federal education department would sanction the schools if they were late in submitting the audit again, documents obtained by the Gazette-Mail show.

The Governor’s Office is investigating to determine who’s to blame for the late submissions. Casey said he expects something to come from the investigation within 10 days.

“This is significant — not fixing it is significant for us,” Casey said. “We regret it’s here. We don’t own it, but we do. We inherited it, and now we’re going to fix it.”

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