John Shannon resigns as state forester after adverse audit | Arkansas Blog

Friday, February 10, 2012

John Shannon resigns as state forester after adverse audit

Posted By on Fri, Feb 10, 2012 at 10:02 AM

JOHN SHANNON: Out as state forester.
It's official — as if we needed legislative audit's imprimatur for what had already been admitted.

The Arkansas Forestry Commission improperly borrowed federal grant money to meet operating costs. About $6.4 million worth. As a result, John Shannon has submitted his resignation as state forester.

Here's the full audit report.

The following was written before his resignation announcement and subsequent update:

Legislative Joint Audit heard the report this morning. Forestry tapped the money 59 times over four years before the practice was discovered and halted. To balance the books in the future, 34 people were laid off and two retired. The coming legislative session will consider supplemental money to cover past expenditures and a fund transfer to rehire 15 firefighters.

The audit places some of the blame on John Shannon, head of the division, for not being fully informed on grant requirements and monitoring the situation. The harshest critics of the agency — Republicans generally — have said they are reluctant to approve fixes for the commission without a change of leadership. I've asked the governor's office if he remains supportive of Shannon, who has put blame on his top accounting officer for the problem. The audit notes that the chief fiscal officer, Robert Araiza filed the inaccurate documents and drew the federal money improperly. He no longer works at Forestry.

The report will be forwarded to prosecutors, as is often done.

Accountability in the Beebe administration? We'll see.

The governor's office says a statement is coming later this morning. That has an ominous ring for someone, I think.

UPDATE: Shannon has resigned. Statement from governor's office:

Effective at the end of business on Friday, John Shannon is resigning as Arkansas State Forester. Shannon's decision came after reviewing the results of the Division of Legislative Audit's investigation into financial problems at the Arkansas Forestry Commission.

"John Shannon has helped develop the Arkansas Forestry Commission into a widely respected agency that Arkansans count on, especially in times of crisis," Beebe said. "However, after Legislative Audit's review of the financial troubles at Forestry, I agree that a change in management is needed. I thank John for his years of dedicated service to Arkansas."

The Arkansas Forestry Commission will make a recommendation to Governor Beebe for an interim agency head. Shannon's resignation does not change Beebe's supplemental request for the rest of the fiscal year and will not alter plans to rehire 15 firefighters with reallocated Agriculture Department funds.

State finance chief Richard Weiss says his agency will begin reviewing every budget line of every state agency, though, in defense, he says one agency has never gone off the reservation so badly before. I think Republican critics raise a fair point. Shannon knew he had money troubles. He wanted to talk about tax increases two years ago, but Gov. Beebe didn't want to have such a discussion in an election year. As a practical political matter, Beebe was correct. It would have been futile. But .... we'll never know if the occasion of the meeting might have brought a deeper examination of the need for more money and uncovered the improper borrowing sooner.

After the fact, apologies for oversights all around and promises of a new day at forestry. Shannon still blaming Araiza, who has previously pointed finger back at Shannon. I think it is fair to say the chief executive of an agency should be well versed in uses of federal money (the feds are famous for being picky about this) before tapping it nearly five dozen times.

UPDATE: Jason Tolbert has more coverage plus video of Shannon and Araiza in their finger-pointing during the two-hour session. As the man at the top for such an extended problem, Shannon was due for this fall almost regardless. But if Araiza knew better and didn't blow the whistle — or if he didn't know better — well, perhaps he should get some close watching at his new state job at Career Education, a department that could stand some watching based on recent events.

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