July 18, 2003 – V.I. Inspector General Steven van Beverhoudt told the Senate Finance Committee on Thursday that while he was "pleased and surprised" at the government's decision earlier this year to exempt his office from across-the-board budget cuts, he is still in dire need of operating funds.
Most other government agencies are in the same situation. However, if van Beverhoudt doesn't get the funding his office needs, the territory will be without its only fiscal watchdog.
The Office of Inspector General is the oversight agency for all three branches of the V.I. government and their instrumentalities. Its tasks include conducting audits, monitoring departmental operations and investigating suspected fraud, waste and other abuses.
In addressing his needs for Fiscal Year 2004, van Beverhoudt also once again put before the senators another, almost equally important, request: for the granting of peace officer status to three of his officers.
At a Fiscal Year 2003 budget hearing last year, lawmakers strongly indicated to van Beverhoudt that they would give him the increase he requested to fund his agency adequately and fill staff vacancies. However, they did not do so.
The agency was in critical need of three investigative agents with peace officer status, van Beverhoudt said then. "Without funding these positions, it hampers our work," he told the senators last July. "We need the ability to serve search warrants. We can't put people's lives in jeopardy. All the investigative arms of the federal government have agents with peace officer status."
Nothing has changed. Van Beverhoudt still need the officers, although a glimmer of hope is on the horizon. Gov. Charles W. Turnbull sent down a bill to the Senate in May conferring peace officer status on I.G. officers and also on those of the V.I. Lottery.
The bill has been assigned to the Government Operations Committee, headed by Sen. Shawn-Michael Malone. An aide in Malone's office said on Friday morning that a hearing on the bill would be set probably scheduled as soon as the Finance Committee budget hearings are over in mid-August.
Peace officer status carries a big bonus, van Beverhoudt said: It will allow his agency access to the FBI's National Crime Information Center, where his officers can check criminal records information. Currently, he said, "my investigators have to rely on the services of other law enforcement agencies, which further dilutes the efficiency of the investigators and the independence of the I. G.'s office."
Van Beverhoudt noted that such status already is granted to "Justice, IRB criminal investigators, and even inspectors for the Taxicab Commission, the Anti-Litter Commission and the Health Department." He said criminal investigations require the use of subpoenas and search warrants, which makes his office dependent on the agencies with that authority.
"The inability to act immediately to obtain and execute a warrant of arrest, or make a warrantless arrest, has created confusion and resulted in a loss of time that could allow a suspect to escape the V.I. jurisdiction," he said.
A little more sought, again in a lump sum
Van Beverhoudt requested a FY 2004 budget of $1,277,417, up $181,623 from his FY 2003 appropriation of $1,095,794, and asked that it, like the current budget, be a lump-sum allocation.
Last spring, as part of across-the-board government budget cuts of 10 percent because of what was then called a "cash-flow problem," the Office of Management and Budget sought to reduce van Beverhoudt's FY 2003 funding to $986,215. When the I.G. objected that the cut could jeopardize millions of dollars in federal funding, and that he could not absorb the cut "without serious consequences to the operations" of his office, including possibly shutting it down by summer, OMB relented and left his budget intact.
He said then that salaries and fringe benefits alone this year account for $959,087, leaving barely $27,000 for operating and utility expenses and supplies.
The performance of the I.G.'s office is closely tied to federal funding, and David Cohen, head of the U.S. Interior Department's Office of Insular Affairs, has looked into the I.G.'s funding concerns. An aide to Cohen said in March that the ability of local government agencies to demonstrate that they are accountable for federal funding is imperative. Losing the ability to monitor funding locally is "walking into a minefield," spokesman Keith Parsky said.
The 24th Legislature imposed line-item budgets on all departments and agencies for FY 2002 and 2003, a strategy which required their heads to appear before the Finance Committee hat in hand to request approval if they had a need to shift money around from one purpose to another. The one exception last year was the I.G.'s office, which was granted a lump-sum budget
Earlier this year, the 25th Legislature granted the governor's request to change the budgets back to lump sum. However, senators are now talking of reverting to line-item budgeting for FY 2004.
On Thursday, the Finance Committee members once again all assured van Beverhoudt that they would support his budget and peace officer requests. They are aware that his office has saved the government millions of dollars. Just this year, he noted, it identified underpayment of some $500,000 in hotel room taxes.
Van Beverhoudt said that he would be asking for more money for FY 2005, in line with federal recommendations. And he asked that language be included in the FY 2004 Omnibus legislation providing that the budget of the Inspector General's Office be 0.5 percent of the executive budget, but not less than $2.5 million, and that the inspector general be given direct hiring and promotion authority based on established qualifications.
The Inspector General's Office has an impeccable record of audits, even though many of the office's recommendations are not followed. This fiscal year, Van Beverhoudt said, his office has received about 71 complaints, but due to staff limitations "we cannot address every allegation as quickly as we would like."
Audit reports from the last five years — the latest issued in May 2003 on the use of Y2K funds — can be accessed on the V.I. Inspector General Web site.
Insurance board executive advises against 'shopping'
Also Thursday, Paulette Rabsatt, chair of the Government Employees Service Commission Health Insurance Board, gave the committee an update on the territory's health insurance plans. She provided statistics for the last two years refuting what she called "statements repeatedly made … that the majority of claims dollars under the government's health insurance are being spent out of the territory."
From Oct. 1, 2002, through May 31, 2003, Rabsatt said, 64 percent of all claims dollars were paid to providers in the Virgin Islands, 33 percent went for services on the U.S. mainland and 4 percent went for those in Puerto Rico. In the previous fiscal year, she said, the breakdown was 67 percent in the territory, 30 percent on the mainland and 3 percent in Puerto Rico.
V.I. retirees residing on the mainland account for a large part of the claims paid to providers there, as opposed to people traveling from the islands to the mainland for medical care, Rabsatt said. Reports to the contrary, she said, are "simply not factual." The government's health insurance covers more than 20,000 employees, dependents and retirees, she said.
Rabsatt spent a large part of her testimony Thursday afternoon explaining to Finance Committee chair Adlah "Foncie" Donastorg and Sen. Louis Hill how the bargaining process for insurance companies works. The senators were critical of the high cost of current premiums.
She said that "shopping" insurance companies every year is not a good idea fiscally. She explained
that a company may come in with a low bid one year, only to up it significantly the following year, quite possible bringing it higher than the original company's rate. "Price-chasing strategies" lead to higher rates, she said, and "if you're forever in flux, insurance costs will rise."
The next renewal negotiations are scheduled for July 31, Rabsatt said, and the board has solicited a consultant to assist in the process. She also said the newly enacted reduction in the government's share of employee premium contributions, to 65 percent, is being implemented.
Justin Harrigan, director of the Veterans Affairs Office, also presented his FY 2004 budget request. He asked for $302,823, about $6,300 less than this year's appropriation. Harrigan said finding alternatives to defray transportation costs for veterans traveling to VA medical facilities in Puerto Rico remains at the top of the agency's goals.
Harrigan said FY 2003 accomplishments of the office have included hiring a veteran's representative for the St. Thomas office and establishing an Internet presence on the Legal Services of the V.I.
Committee members attending the hearing were Sens. Donastorg, Roosevelt David, Hill, Malone, Luther Renee and Ronald Russell. Sen. Norman Jn Baptiste was absent.
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