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Auditor Crit Luallen says she has no plans yet for life after office

Auditor of Public Accounts Crit Luallen

By Beth Musgrave
bmusgrave@herald-leader.com

FRANKFORT — State Auditor Crit Luallen raised eyebrows Saturday when she said at the annual Fancy Farm picnic that she has no plans to exit public service even though she is leaving state office at the end of the year.

The two-term auditor, who has built a reputation as a tough watchdog, has been frequently mentioned as a possible candidate for some of the state’s top elected offices.

But Luallen said Monday she has not made a decision about what she will do after leaving office. Luallen can not seek a third term as auditor.

“This is not a situation that I have a secret plan that I’m keeping confidential,” Luallen said in an interview Monday.

Fancy Farm schedules speakers for annual political picnic

The crowd at the 130th annual Fancy Farm Picnic held signs and yelled as politicians spoke. Photo by Tom Eblen.

By Jack Brammer – jbrammer@herald-leader.com

Candidates for governor, U.S. senators and a “farewell” speech by Lt. Gov. Daniel Mongiardo will highlight this year’s Fancy Farm picnic, which traditionally kicks off the fall campaigns in Kentucky.

Mark Wilson, political chairman for the 131st annual picnic on Aug. 6 at St. Jerome Catholic Church in the small Western Kentucky community of Fancy Farm, released information Wednesday about the picnic’s political speaking program.

Wilson said Democratic Gov. Steve Beshear and Republican Senate President David Williams have confirmed they will speak at the picnic about their campaigns for governor.

Wilson also said Lexington attorney Gatewood Galbraith, who is running for governor as an independent, will be invited to speak if his required candidacy papers have been formalized.

Lawmaker pledges to push again for reforms in state pension system

State Rep. Mike Cherry, D-Princeton

By John Cheves – jcheves@herald-leader.com

FRANKFORT — A key lawmaker on Wednesday said he will revive his efforts to ban well-connected middlemen known as “placement agents” from doing business with the Kentucky Retirement Systems, following a new state audit that raised concerns about the agents.

State Auditor Crit Luallen presented her audit of the state pension agency to the legislature’s interim joint committee on state government. Luallen said she identified no misuse of KRS money related to placement agents, who help private investment companies sell their products. But one agent in particular, Glen Sergeon of New York, enjoyed close access to KRS and made nearly $6 million in fees through his relationship with Adam Tosh, then KRS’ chief investment officer, Luallen said.

Tosh resigned in 2010 after being questioned about Sergeon in an internal audit at KRS.

Beshear’s office sought meetings for political allies at pension agency

Gov. Steve Beshear

By John Cheves
jcheves@herald-leader.com

At least twice in recent years, Gov. Steve Beshear’s office called the Kentucky Retirement Systems to suggest meetings with two of the governor’s Democratic political supporters who were working on behalf of private investment companies.

The supporters were Mark Guilfoyle, a Northern Kentucky lawyer and lobbyist who helped lead Beshear’s 2007 transition team, and Jill Daschle, wife of the then-executive director of the Democratic Governors Association and daughter-in-law of former U.S. Senate Democratic Leader Tom Daschle.

Guilfoyle worked with Fort Washington Investment Advisors, based in Cincinnati, although he said in an interview that he was not paid. Daschle is managing director of investor relations at EnTrust Capital, based in New York.

The companies wanted to manage part of the multi-billion-dollar pension fund for state and county government retirees, said Mike Burnside, KRS executive director until he was fired last month. Both companies were given meetings, although neither won a contract with KRS, Burnside said.

“The only reason I took the meeting (with Guilfoyle) is that I was called by the governor’s office and asked to meet with Guilfoyle and his client,” Burnside said. “I received a similar request from an aide to the governor to meet with Jill Daschle, (who) had a client trying to do business with KRS as well.”

Department of Insurance asks Passport to tighten reporting, conflicts of interest

By Beth Musgrave
bmusgrave@herald-leader.com

FRANKFORT — The Kentucky Department of Insurance wants the Passport Health Plan to require more of its staff to report conflicts of interest and also wants more reporting on how some grant money is spent.

The recommendations came out of an insurance audit of Passport Health Plan, which was the subject of a scathing state audit in November that questioned the organization’s management. Passport Health Plan is currently the only Medicaid managed health care plan in Kentucky, serving more than 160,000 poor people in Jefferson and 15 counties.

Luallen questions Fish and Wildlife contract for luxury suite at Louisville Bats games

Auditor of Public Accounts Crit Luallen

By Jack Brammer
jbrammer@herald-leader.com

FRANKFORT – State Auditor Crit Luallen is questioning $3,900 the state Department of Fish and Wildlife paid the Louisville Bats minor league baseball organization to promote the agency.

A $3,400 contract the department had in 2010 with the Bats called for four “sponsor nights” at the Louisville ballpark. It provided discounted admissions to four games for owners of hunting and fishing licenses and the use of a 22-person luxury suite for two games, not including food and beverage.

The department also paid $500 to use the luxury suite an additional two nights but used it for only one of the two optional nights for a total of three nights, said Luallen spokesman Terry Sebastian.

Department of Fish and Wildlife spokesman Mark Marraccini said the agency stands by the expense.

The agency’s partnership with the baseball team directly ties to the department’s mission to conserve and enhance fish and wildlife in the state and provide opportunities for hunters, fishers and boaters, Marraccini said.

State auditor criticizes board that oversees for-profit education

Auditor of Public Accounts Crit Luallen

By Cheryl Truman
ctruman@herald-leader.com

The board that regulates the state’s 122 for-profit colleges provides inadequate oversight, hasn’t had an outside financial audit in 10 years and lacks a clear understanding of its role, according to an audit released Wednesday by State Auditor Crit Luallen.

The Kentucky State Board for Proprietary Education oversees the burgeoning field of for-profit colleges that enroll more than 19,000 students each year and specialize in educating them for specific careers. The institutions are known for their bold recruiting, including TV commercials featuring people who have gone from unemployment to middle-class lifestyles after completing career training with the colleges.

“Board leadership is fundamental in establishing the tone for its operations,” Luallen said. “When the leadership is lax and inconsistent, then the quality of the board’s oversight is diminished. It’s essential for the board to carry out its statutory duty to monitor these schools.”

The board is dominated by the same people who run the colleges. Six of its 11 seats are filled by representatives of the colleges themselves. The members of the board are appointed by the governor.

State audit finds problems with petty cash account, technology

Auditor of Public Accounts Crit Luallen

By Beth Musgrave – bmusgrave@herald-leader.com

FRANKFORT — An audit released Thursday of the state’s finances found few substantial problems but made several recommendations to tighten controls over a few key programs.

The Statewide Single Audit of Kentucky, which is performed by State Auditor Crit Luallen, listed 53 recommendations that range from tightening security for information technology systems to ensuring that the state parks department pays its vendors on time.

The audit of $24.7 billion in expenditures for the fiscal year that ended June 30, 2010, found several specific problems, including:

  • $11,000 in purchases with little or no documentation at Hazelwood, a state-owned facility that houses people with intellectual and developmental disabilities.

Audit of Pike Co. utility raises concerns about state lawmaker

State Rep. Keith Hall, D-Phelps

By John Cheves – jcheves@herald-leader.com

Mountain Water District, a public water and sewer utility in Pike County, has paid more than $36 million in fees to a private management company since 2005 without adequate disclosure or evidence that ratepayers got a good deal, State Auditor Crit Luallen said Thursday.

The utility entered into the original 2005 contract with Utility Management Group without any public board discussion or review of the contract terms “which resulted in costly management fees and conflicts of interest,” Luallen’s office said in audit of the district it released.

One of the conflicts state auditors found was with a company owned by state Rep. Keith Hall, D-Phelps, which collected more than $171,000 for electrical work from the water district. He used a billing method that avoided competitive bidding and public discussion by the district’s board.

As the area’s state representative and a member of the House Appropriations Committee, Hall also helped to allocate state funds for the project he later won, Luallen said. The work was done in 2004 and 2005.

Two Passport Health executives fired

Passport Health Plan has terminated the contracts of two top officers, Mark Carter, its interim chief executive officer said Tuesday.

Governor Steve Beshear called last week for the ouster of the two executives — Executive Vice President Shannon Turner and Associate Vice President Nici Gaines— after the state auditor found widespread conflicts of interest and lavish spending at the group that manages Medicaid services in Jefferson and 15 surrounding counties.

Passport’s $800 million-a-year contract is the state’s largest.

The Passport board of directors must approve the firing of Turner and Gaines.