Large amounts of uncollected taxes, unrestricted hiring of exempt employees, and overall poor financial management have been identified in the government's employee management programs by four recent federal audits.
At a time when the territory is seeking substantial financial assistance from Washington, more than 30 audits of various departments and fiscal practices — most done during Gov. Roy Schneider's administration — linger unaddressed by the government. These outstanding audits were identified in April in the Interior Department Inspector General's semiannual report to Congress.
A 1996 audit of the V.I. Department of Labor's Workmen's Compensation Program found, among other problems, employers were not being made to pay compensation premiums consistently, the revenues were not properly recorded or expenditures were not always authorized, and some claims took as long as five months to five years to process.
"We concluded that improvements were needed in the areas of insurance premium collection, compensation disbursement, and overall safeguarding of the Government Insurance Fund," Inspector General Wilma Lewis wrote in the 1996 audit.
"Therefore revenues of about $22,000 from other sources were erroneously deposited into the fund, and expenditures of about $875,000, were paid from the fund for activities of the Department of Labor that were not related to the Workmen's Compensation Program," Lewis wrote.
The audit found the government was owed $1.3 million in premiums and interest by private and government employers for fiscal years 1993 and 1994; $94,700 of that amount was owed by private employers while $1.2 million was owed by government departments.
Long delays in payments of claims were also discovered.
"Some claimants had to wait as long as two years before they received workmen's compensation benefits, and hospitals and other medical providers waited as along as two years to receive payment for services rendered to claimants," Lewis wrote.
Auditors also found that of the $7.4 million in revenues put in the fund in 1993, and of the $6.8 million deposited in 1994, $6.3 million and $4.6 million were misclassified as malpractice insurance. According to the audit, the Labor Department also used the funds to pay salaries of full-time and summer employees who did not work in the Workmen's Compensation Division.
The government was further criticized for not re-evaluating disability cases to determine if a change in an injured or ill employee's condition warranted a change in the amount of disability benefits they were receiving.
Among recommendations the audit made: stricter enforcement of collections from employers, swifter processing of claims, reorganizing the Division of Workmen's Compensation, deposit workmen's compensations premiums into the Government Insurance Fund on a quarterly basis, and make sure funds are only used for the division.
"Establish time frames for the timely follow-up and re-evaluation of rehabilitation cases to ensure that claimants are cleared to return to work expeditiously as possible," the audit also suggested.
The inspector general considers all 15 recommendations unimplemented.
A December 1998 audit of the Unemployment Insurance Program found inaccuracies and delays in billing, unqualified persons receiving benefits and a failure to assess or enforce interest and penalties against delinquent employers.
"As a result, delinquent unemployment taxes totaled about $18.5 million, 156 claimants received excess benefits of more than $152,800, supporting records were not available for 183 additional claimants who received benefit payments of about $400,400, and 197 canceled checks for benefit payments could not be located," Inspector General Eljay Bowron wrote in the audit.
Auditors discovered one business that did not make unemployment tax payments from 1993-1995 and another that made no payments for four years; and, although the businesses had outstanding balances of $130,000 and $140,000, the Department of Labor contacted neither of them.
The audit recommended contacting delinquent employers more frequently, increasing attempts at collecting on delinquent accounts, managing bank accounts better and ensuring all beneficiaries are eligible to receive unemployment benefits.
The only recommendations auditors consider resolved and implemented are issuing periodic balance statements to delinquent employers and planning for the installation of a new computer system. All other recommendations are considered resolved, but not implemented.
Both the Department of Labor and the Legislature are currently considering reducing the premiums employers must contribute to the Unemployment Insurance Fund. At a Senate hearing last week, Labor officials said the fund is "too solvent."
It seems, however, the Turnbull administration is working on rectifying the problems identified by at least one of the audits in the semiannual report.
An audit done earlier this year on the Division of Personnel targeted — and offered solutions to — many of the same problems that Gov. Charles Turnbull is trying to solve in his financial recovery plans. It also found where the government missed out on $16 million in savings.
"We found that the government . . . had not complied with the work force reduction and financing requirements of the Early Retirement Act," Bowron wrote in the audit, which was a follow-up to a 1992 audit on the Division of Personnel.
The audit found that although 567 executive branch employees elected for early retirement, the government did not, in accordance with the Early Retirement Act, reduce the size of the executive branch by a commensurate number of permanent positions, which could have saved $16 million in payroll costs.
"The government did not take action to amend the Government Reorganization and Consolidation Act of 1987 to remove a conflict that allowed the governor to hire individuals into unclassified (exempt) positions that did not meet the requirements of the Personnel Merit System," Lewis wrote.
The audit recommended implementing a hiring freeze and an attrition program, decreasing the amount of exempt employees, and cracking down on governors' abuse of the exempt hiring.
Some of these recommendations, unlike the those made in other audits, are now becoming policy.
Last month, Turnbull issued an executive order to institute a hiring freeze and directed all departments to begin developing an attrition programs.
And the Senate majority's Financial Accountability Act, which is moving through the Legislature, places restrictions on the governor's ability to convert exempt personnel into classified employees.
