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Ways and Means Committee Debates Future of Examiner of Public Accounts

By Brandon Moseley
Alabama Political Reporter

Alabama has an elected State Auditor, but the Auditor does not actually do audits.  Instead, the Auditor’s office maintains an inventory of state assets, such as land, buildings, computers, vehicles, bulldozers, staplers, copying machines, desks, pencils, etc.  Actual audits of government finances in the state of Alabama are performed by the Public Examiner’s Office, which although clearly an executive branch function, is actually operated by and answerable only to the State legislature.

This very strange arrangement was not always this way.  Previously the elected independent State Auditor actually oversaw the audits, but a power hungry state legislature stole that power for itself in 1939, leaving the State Auditor with its current diminished role as maintainer of the state’s inventory.  Representative Ed Henry (R) from Decatur is seeking to restore the State Auditor’s Office to its original position by returning the responsibility for auditing to the elected Auditor.

Last week, Rep. Henry’s bill, HB 350, was debated in a public hearing before the House Ways and Means General Fund Committee.  On Wednesday the members of the committee met to debate the wisdom of streamlining state government by merging the powers of the two offices.

Rep. Henry said that last week we heard from the County Commissioners Association and since then he has met with the commissioners and has put the language they wanted into a substitute bill.

Rep. Henry said that his legislation was keeping the Department of the Public Examiners intact, but was simply moving it under one umbrella.   Henry explained that he has changed the bill to add safeguards that give the Assistant Chief Examiner a more clearly defined role in the statute.

Rep. John Knight (D) from Montgomery said, “It is unfair to present us with a14 page substitute right before we are to vote on it.”  Knight asked that the bill be held over for another week to give the committee more time to study the substitute bill.

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Rep. Greg Wren (R) from Montgomery was the acting Chair because Chairman Steve Clouse (R) from Ozark had had to go home sick.  Rep. Wren said that it was the position of the chair that in the past substitute bills were held over so the actual vote was held over, but the Committee would allow Henry to explain his substitute.

Rep. Henry said that the County Commissioners wanted the role of the Assistant Chief Examiner to be better defined thus page 13 requires that that position be held by either a certified public accountant (CPA) or by someone with no less than 8 years of experience performing public audits.  This change insures that the person who is in charge can perform those kinds of audits themselves.

Rep. Richard Laird (R) from Roanoke said that under those terms a CPA straight out of school could fill the position and questioned why the post does not require that the Assistant Examiner not be CPA with eight years of experience.

Rep. Henry said, “There are people in the Department now who have 8 years of experience but who are not CPAs.”

Rep. Laird suggested that the bill be amended to read, “8 years as a CPA or 8 years of experience as an examiner of public accounts.”  Henry agreed to make that change.

Rep. Knight asked, “What are the qualifications of the state auditor?”

Rep. Henry said they are the same as the Governor, the Lieutenant Governor, or the Attorney General.  A degree or even a high school diploma is not required.

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“I trust the wisdom of the people of the State of Alabama,” to make proper decisions on who they elect.

Rep. Knight asked, “What is the purpose of this legislation?

Rep. Henry said that the purpose is to streamline State government.  “We are putting things back where they were before the public examiner’s office was pulled out in 1939 and put under the legislature.”  Henry said it is time to put State government resources out in the field instead of in wasteful overhead in Montgomery.

Rep. Knight asked. “What is the real purpose of this bill?”

Rep. Henry replied, “How many times do you want me to repeat this.”  Henry said I was sent down here three and a half years ago to recognize problems and fix them.  “I am not going to hold off a year.  I was elected in 2010 and I don’t know whether or not I will be back.  I see a problem and I am here to fix a problem.”

State Representative Henry said that the Department of the Examiner of Public Accounts acts and behaves as they please.  They have a budget of $19 million and are two and a half years behind on their responsibilities. “You hear stories of people being attacked because of their political views.”  They are spending a lot of money.  “We waste millions of dollars in this state at the top here in Montgomery and if you don’t see that as a problem, I don’t understand what you are doing here in this legislature.”

Rep. Knight proposed an amendment saying that none of the functions of the examiner of public accounts can be contracted out to a third party.

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Rep. Henry said that he could not support such an amendment.  “A third party might save money. The Examiners already do some work with third party contractors.”

Rep. Merika Coleman-Evans (D) from Birmingham thanked Henry for providing her with the substitute prior to this meeting.  She said that the committee has heard allegations that the people at the Department of Public Examiners do absolutely nothing.  In the last week people with the Public Examiner’s Office has contacted her to tell of the positive things that they do and that they should reach out to the other committee members.

Rep. Charles Newton (R after changing party affiliation last week) from Greenville asked, “Will the auditor become the chief examiner?”

Rep. Henry said that the Auditor will assume the authority of the chief examiner and will assume all of the Chief Examiner’s responsibilities.  Henry said, “We are not doing away with the Chief Examiner, the Auditor is assuming all of his responsibilities.”  There will be two departments under the Auditor.

Rep. Henry said that the Examiner of Public Accounts audits state agencies, school boards, and county commissions.  They can audit municipalities but right now the municipalities hire a third party auditor who submits the audit to the Public Examiner’s Office.

Rep. Henry said that by moving this office under the State auditor you are moving the office out from under the veil of secrecy that they are under while protected by the legislature.  “People behave better when not behind a veil.”

Rep. Newton asked that Henry amend HB 350 to put the position of Assistant Chief Examiner under the personnel board.

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Henry agreed to make that change.

Rep. Lyn Greer (R) from Rogersville said I have been in this body (the legislature) off and on for 40 years and nobody ever explained to me how the Examiner’s Office became separate from the Auditor’s Office.  “I admire this young man here (Rep. Henry) for coming forward and identifying a problem we have had in this state for a very long time.

Rep. Wren said that it is interesting that this is the second week and we have nobody here representing the Examiner of Public Accounts.  Wren asked where in the substitute bill is the wording that transfers the funding for the Examiner’s Office to the Auditor’s office.

Rep. Henry said, “That is intentional.  We didn’t go and merge all of those budgets.”  The money stays where it is directed. “The only common denominator is that the auditor is in charge of both entities.”

Rep. Wren said that the legislation should include statutory authority to transfer those appropriations to the Auditor’s office.  Wren said that he had worked on major consolidation efforts in the past and dozens of statutory changes had to be made in the recent law enforcement consolidation alone.

Rep. Henry said that there are 6 or 7 major sources of funding including $6 million from the Education Trust Fund, $6 million from General Fund and other sources totaling $28 million.

Wren said, “If we transfer the duties we have to transfer the revenue streams or the examiners officer will be held hostage to the appropriations process.”

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Rep. Henry said, “I am told this does it.  If it doesn’t would be open to amendment.”

Rep. Wren said, “I will tell you that legislatures in the past have a history of using appropriations to send a message.  They will approve an agencies existence and then completely defund them in the budget.”

Wren also questioned the timeline.  “You can not accomplish all of this by October 1.  I have been around here an awful long time.  The examiner’s office is a large office with a lot of people.  We are talking about transferring all the duties and responsibilities.  I have worked on the consolidation of five major agencies in the last five years and have never seen anything like this accomplished so fast.”

Rep. Henry said, “We are not moving a physical building we are just transferring duties from one person to another.”

Rep. Wren also said that he thought the legislation should include oversight from the legislative contract review committee.

Rep. Laird asked if the salaries of the Chief Examiner and his chief deputy automatically transfer over?

Rep. Henry said the salary for the chief examiner would go away.  The Assistant Chief Examiner is the one that is open right now and Rep. Newton said he would like to put that position under the regulatory authority of the Personnel Department.

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Rep. Henry said that there was a raise given to the last Assistant Chief Examiner immediately after they were hired. “Everyone I have talked to was shocked by the amount given.  We asked the Chief Examiner to reexamine the decision in this time when we aren’t giving raises to state employees.  We asked them to review it and there was absolute disregard for the review.

Henry said that triggered something.  A 105% pay raise on day one to $205,000 a year was absurd.

Rep. Laird said, “DHR is another department that is crying for an investigation.”  Laird wanted to make sure that the $205,000 a year amount does not automatically cross over.

Rep. Henry said that on October 1 the salaries would be set by the chief auditor.

Brandon Moseley is a former reporter at the Alabama Political Reporter.

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