Tuesday, January 3, 2012
Arkansas Politics Forestry Commission financial tangle continues
Posted by Max Brantley on Tue, Jan 3, 2012 at 2:13 PM
With Republicans spoiling to lay a mismanagement charge on the Beebe administration, the Beebe administration rolled out its own background today, in advance of continuing legislative hearings tomorrow on the shortfall in Forestry Commission money that recently required layoffs of 36 workers. The agency manages state timberland, sells seedlings and provides forest fire protection.
Cheree Franco will be back with more, but, in the meanwhile, Roby Brock reports that the governor will ask for a $2.7 supplemental appropriation to pay off borrowed federal money and fix accounts depleted by declining severance tax revenue. The governor's office continues to blame the problem on internal bookkeeping error and says it wasn't aware of the problem until this fall. Republicans are circulating 2010 e-mails to dispute the governor, but none of those e-mails seem to have been sent to the governor's office. Gov. Beebe bears ultimate responsibility for several years of failed agency accounting, sure, but Republicans remain silent on what they'd do about it. Besides point fingers, of course.
UPDATE from Cheree, who attended the meeting:
The governor's spokesperson, Matt DeCample, and Department of Finance and Administration (DFA) director, Richard Weiss, claimed that DFA first became aware of financial discrepancy at the Forestry Commission in October, when the Commission indicated that it would need supplemental funds to finish out the 2011 fiscal year. DFA sent its own accountants to examine the books in November. Turns out, for the last four years, the Forestry Commission has been operating in the red and borrowing funds from federal grants to do so. That the Commission was operating on grant money in and of itself was no cause for alarm, according to Weiss — certain grants include operational funds. But when the accountants studied the terms of these particular grants, it became obvious to the DFA that directing these funds towards operational costs is illegal. Worse, the money had been counted twice in Commission financial reports — as both operational funds and as grant money — falsely inflating revenue figures by over three million dollars.
"DFA does not micromanage agencies. That's why you have an agency structure. They know their needs, they know their grants," said Weiss. "Up until this point, we had no idea how they were managing federal grants. That's internal."
DeCample called the discrepancy "an unfortunate but rare occurrence," that, had it been caught sooner, might have been processed more incrementally. The DFA knew the Forestry Commission's trust fund was low at the 2010 Commission meeting, but no one realized how bad the situation was. "The agency began to take measures to operate within its means, such as cutting all discretionary spending and not filling vacancies. None of this was kept secret or covered up," he said.
The Forestry Commission's operations, including extinguishing forest fires, are primarily funded through a severance tax on timber. Since this Forestry fiasco has come to light, Governor Beebe has been criticized for canceling a meeting in June 2010, where Shannon had proposed to talk about raising the severance tax. In a hearing on Dec. 20, Robert Araiza, the Forestry Commission’s former chief financial officer who signed off on the misleading financial documents, implied that the meeting was cancelled because Beebe didn't want to highlight budget troubles before the 2010 gubernatorial race. But DeCample said, "The governor cancelled the meeting because he did not want to raise taxes on an industry hit hard by the recession."
Weiss and DeCample said they don't know if the financial misreporting was intentional.
"There's no true motive," said Weiss. "No one made any money off of this." But he said he felt misled by Araiza, who has resigned as Forestry Commission CFO and taken a different state position. Unless future audits turn up incriminating evidence, the state has no plans to attempt to prosecute anyone involved in the misstatements.
According to DeCample, the immediacy of such a huge budget gap required drastic measures. "We would still be where we are today because the lumber industry is in a downturn, but we might have figured out something other than layoffs," DeCample said.
Weiss said John Shannon, director of the Forestry Commission, bore some responsibility. "Still, we trust him. Shannon says he was operating off of information given by his CFO. We asked him to act quickly and he did. These financial reports are fairly routine. Agency officers don't often go back and check what people do."
Currently the Commission is operating from a cash advance fund. On Jan. 17, when they present the state's proposed budget for 2012 to the legislature, Beebe plans to ask for between $2 and $3 million in supplementary funds for the Forestry Commission.
"If we don't get the supplemental, there will be more layoffs," said Weiss. "We'll have to take draconian measures to bring the budget in check and pay back the borrowed funds." The Commission currently owes the federal government $1.2 million.
Next month, Weiss expects the federal government to examine the Forestry Commission's books.
Speaking of Forestry Commission, Gov. Mike Beebe
-
Beebe names Bunny Adcock to UCA Board of Trustees
May 16, 2012Gov. Mike Beebe has named Robert "Bunny" Adcock, a Conway banker, to the University of Central Arkanas Board of Trustees. /more/
-
Rise in revenues means state spending increase
May 9, 2012An unexpected rise in state revenue will enable an increase in state spending in the final two months of this fiscal year, which ends June 30, Gov. Mike Beebe has announced. /more/
-
Slowing the rise in health care spending
April 29, 2012Nobody's declaring victory yet, but there are enormous implications in the finding reported today that something may be finally arresting the rise in health care spending. /more/
-
Resolved: Scott Roussel should resign from UCA Board
April 27, 2012The faculty Senate of the University of Central Arkansas yesterday adopted a resolution urging Scott Roussel to resign from the UCA Board of Trustees. /more/
-
Sheffield Nelson schools Beebe on severance tax
April 6, 2012I never really expected Gov. Mike Beebe, who cut his teeth golfing with the lobby in the Senate, to be a supporter of the Sheffield Nelson-backed initiative to raise the pitifully low severance tax on natural gas. /more/
-
Former forestry finance chief Robert Araiza retires
March 9, 2012Robert Araiza, the financial officer who was in the middle of the long-running controversy over financial shortfalls at the Arkansas Forestry Commission, has taken state retirement. /more/
-
Missing Mike Huckabee
March 6, 2012Gov. Mike Beebe's office sent out a round of pardons today and they fit the pattern of his tenure — only six granted among 59 applications and then only for relatively minor offenses. /more/
-
Talk among yourselves
March 3, 2012I'm off the web grid this morning outside Johnson City, Texas with only an iPhone for blogging. /more/
- More »
Comments (8)
Showing 1-8 of 8
Is Kathy Holt not a member of Gov. Beebe's office?
http://www.linkedin.com/pub/kathy-oliver-holt/27/1bb/b34
like
dislike
She is. Only e-mails I've seen to her were dated late September 2011. Are there others?
"There's no true motive," said Weiss. "No one made any money off of this." But he feels mislead by Araiza, who has resigned as Forestry Commission CFO and taken a different state position. Unless future audits turn up incriminating evidence, the state has no plans to attempt to prosecute anyone involved in the misstatements.
I thought Ariza was the original whistle blower. Is this some how getting turned around to point to him?
The proposed meeting in June, 2010 was not called in order to "raise the severance tax on timber." It was called in order to look into possible funding sources to address the revenue shortfalls faced by the Commission. The severance tax is only one such source, though it seems to be the only one ever mentioned.
how about richard weiss and others who are double dipping the system giving up their extra "dip" and helping out the guv. ( LOL)
conservative...........you are an idiot.
I bet your momma is real proud, huh?
Amazing how this was money was MISMANAGED and NO ONE is to blame. These are your state tax dollars. This is your money that is going to the District Foresters to fund their little Thiefdoms, your money that John Shannon spent running back and forth to Washington, D.C. (where his current girlfriend lives), your money John Shannon went to Hawaii on in November (right before the December layoff news). Your money funds the P-cards that every Forestry Commission employee carries. How many groceries and other items have been purchased at Wal-Mart and then coded as office supplies? How many feed store bills have "accidentally" been paid for with a P-card. How many forestry commission employees drive a state vehicle as their only means of transportation, such as the secretary that was laid off at Harrison. She doesn't own a personal car. This is very inconvenient for her to be laid off. Who is in charge at the Forestry Commission????
They have blamed this on Araiza, and he does make a good fall guy. Certainly, bringing up mistakes in the books makes him look bad, and they are trying to make it sound like the forestry's troubles are over. Better keep looking auditor's/Republicans, you may find out more than you bargained for. There is definitely more than is being told to the media.
More by Author
-
Limbaugh's a ripe target for Obama
Republican orthodoxy — rigid adherence to a narrow agenda and never admit a mistake — has never been on better display in the reflexive defense of Rush Limbaugh by his Arkansas disciplines on Twitter.
- Mar 3, 2012
-
They hate him; they really hate him
How ugly will the presidential campaign get? You can't imagine.
- May 17, 2012
- More »
Event Calendar
-
Re: Hurst fined again by bar committee for late filing
Hahaha. Partisanship invalidates opinions? This, coming from folks that are actually talking about supporting Q…
- on May 25, 2012
-
Re: Two LR cops busted in federal marijuana sting
Of course you're right, MarcKyle 1964. Yet, as I responded to my new friend Verla…
- on May 25, 2012
-
Re: Riverfest eve open line UPDATE
dbi--True, but sad. When I paid $190. for a year of the D-G, it hurt…
- on May 25, 2012
Top Commenters
Blogroll
Slideshows
-
Police close the Occupy Little Rock camp, perhaps the last Occupy encampment on public land.
Site Index
News
Cover Story / Arkansas Reporter / The Week That Was / Smart Talk / The Insider / The Observer / Editorial / Max Brantley / Ernest Dumas / Gene Lyons / Bob Lancaster / Words / Guest Writer / Letters
Entertainment
A&E Feature / To-Do List / In Brief / Movie Reviews / Music Reviews / Theater Reviews / A&E News / Art Notes / Graham Gordy / Books / Media / Dining Reviews / Dining Guide / What's Cookin' / Calendar / The Televisionist / Movie Listings / Gallery Listings
This Week's Cover
Quick Links
Special Publications
RSS
Facebook
Twitter
