POLICY HIGHLIGHTER

Volume 14, Number 30
December 8, 2004

State's fraud investigators need refuge from politics

On the basis of strict confidentiality, frustrated fraud investigators from various state agencies have contacted the Evergreen Freedom Foundation (EFF) to voice their dismay that politics often override and interfere with their ability to effectively investigate fraud committed against the state and taxpayers. Local law enforcement officials have also expressed concern that agency fraud investigations may be tainted by political pressure, resulting in less than full cooperation by state agencies.

At a September 20, 2004, Senate hearing on the Department of Social and Health Services (DSHS) Mattawa daycare scandal, Grant County law enforcement officials testified that one way to avoid the lack of cooperation they received from agencies like DSHS is to separate oversight of agency fraud investigations from the agency's policy officials. This would eliminate any real or perceived conflict of interest and free state fraud investigators to do their job without fear of political repercussion. Grant County prosecutors are currently running up against the statute of limitations to prosecute those believed to have committed daycare fraud in Mattawa; they believe this is primarily due to the lack of timely cooperation from DSHS.

In 1999, Rep. Marc Boldt offered a similar proposal, HB 1126: Creating the Office of Inspector General (OIG) in the State Auditor's Office (SAO). Based on the concerns expressed by Grant County law enforcement and those agency fraud investigators who have contacted EFF, a revision of HB 1126 creating an OIG in SAO is worthy of consideration.

Modeled after Rep. Boldt's HB 1126, an office of inspector general reform bill could read:

To protect the people's investment in their government by ensuring the integrity of agency fraud investigations, an office of inspector general is established in the state auditor's office to:

(1) Conduct and supervise investigations relating to allegations of fraud or abuse;

(2) Provide leadership and coordination in recommending policies and procedures designed to detect and prevent fraud and abuse; and

(3) Provide a method of informing the auditor and the legislature about vulnerabilities and deficiencies relating to the detection and prevention of fraud or abuse as may be discovered as a result of completed investigations conducted or coordinated by the office.

The legislature declares that all powers, duties, and functions of all state agency fraud units pertaining to the investigation of fraud and abuse are transferred to the office of inspector general of the state auditor's office. All state fraud investigators shall have direct access to all agency records and information as necessary to conduct thorough fraud investigations. Upon completion of an investigation, the office of inspector general shall provide full cooperation to the office of attorney general or any division of law enforcement in any fraud prosecutions.

Adopting an office of inspector general within the state auditor's office would not lead to an increase in the state's bureaucracy. Rather, all current agency fraud investigators would remain within the various agencies but instead of reporting to agency policy officials, they would be under the jurisdiction of the OIG. Funds currently allocated to agencies for fraud oversight would be transferred to SAO and earmarked for use by the OIG (similar to the manner in which agency assistant attorney generals operate). Agencies would no longer be able to divert funding to reduce fraud investigator employees to other programs; agency fraud investigator staffing levels would be determined by the OIG.

Such reforms would allow agency directors to focus on policy concerns while ensuring that the integrity of state fraud investigations is not compromised or dictated by any consideration other than compliance with law.

Currently many other states, counties, and cities have separate OIG divisions to oversee fraud investigations; they include, in part, Chicago (IL), Florida, Illinois, Massachusetts, Miami-Dade County (FL), Ohio, and Pennsylvania.

Confidence in Washington's oversight of public funds is of the utmost importance and essential to the effective operation of state government. By ensuring state fraud investigators are able to do their jobs independent of any conflict with an agency's political concerns, state officials will take a major step toward restoring trust in state government. An office of inspector general within the state auditor's office to oversee agency fraud investigations would go a long way toward achieving this goal.

Prepared by: Jason Mercier | Budget Research Analyst | 360.956.3482

Evergreen Freedom Foundation P.O. Box 552, Olympia, WA 98507 Phone: (360) 956-3482, Fax: (360) 352-1874 Email: effwa@effwa.org