Pol Watchers

Audit shows few problems with adult ed programs

A state audit of more than $11.6 million in adult education programs found $10,540 in questionable costs. State Auditor Crit Luallen, in an audit of 31 adult education programs released Friday, said the $10,540 in questioned costs were mostly due to lack of documentation.

The Council on Postsecondary Education oversees the grants to local counties. Luallen’s office has done an audit of the adult education program -- which includes an assortment of classes -- each of the past four years.

Auditors examined 31 adult education programs in 29 counties. Auditors found some of problems with lack of oversight regarding student eligibility and failure to keep accurate records on staff development, according to a press release from Luallen’s office.

“The overall management and administration of the CPE grants by the local adult education programs seems to be in good standing based on our audits,” Luallen said.

-- Beth Musgrave

Audit documents theft of almost $75,000 at Kenlake Park

FRANKFORT -- State Auditor Crit Luallen released an audit Monday that documents the theft of almost $75,000 by a former employee of Kenlake State Resort Park in Western Kentucky and recommends ways the state parks department can strengthen its financial oversight of state parks.

The former employee, Amy Hall, 35, has pleaded guilty to theft. She was sentenced Monday in Marshall Circuit Court to five years of probation and restitution for the park's financial loss.

Luallen's office worked with the state police in investigating Hall's activities and referred a copy of the audit to state police.

Kenlake officials found missing funds earlier this year and contacted state police. Parks officials and state police asked Luallen to examine the financial records of Kenlake.

Auditors reviewed records at Kenlake that covered Sept. 1, 2005 through last Feb. 29 and documented that $74,803 was missing.

Luallen said more money may have been taken but there are "weak financial controls" at Kenlake.

The audit said Hall, who handled all financial matters, was able to take cash from the daily bank deposits and replace the cash with checks received in the mail -- a process auditors refer to as a "lapping scheme."

Luallen's audit made several recommendations on how the state Department of Parks can strengthen its controls over its business operations.

They included internal audits at state parks and better accounting records.

Parks officials said in the audit that the department intends to implement all of Luallen's recommendations.

They also said appropriate disciplinary actions have been taken with employees involved in the scope of the audit, including the resignation and criminal indictment of Hall.

A complete copy of the audit can be found at www.auditor.ky.gov.

--Jack Brammer

Audit shows theft via prison computer

FRANKFORT -- An inmate apparently tampered with a state computer and assigned extra money to the commissary accounts of 21 inmates, state Auditor Crit Luallen said Tuesday.

The alleged theft, which took place from January 2007 to January 2008, totaled $6,877, Luallen said Tuesday during a news conference.

She said the investigation started after an anonymous caller used the auditor's public hotline -- 1-800-KYALERT -- to question labor reimbursements for inmates in the Kentucky Correctional Industries program.

Luallen's office worked with the state Department of Corrections to examine the agency's inmate payroll processing system.

The industries program is at the state reformatory in LaGrange and houses six industrial plants employing 175 inmates. Their salaries range from 25 cents an hour to $200 a month, depending on the work performed.

KCI is a self-supporting division of the state corrections department that produces goods and services in state prisons. Their products range from furniture to embroidery.

Luallen referred her audit to the state police for further investigation.

For a complete copy of her report, click here .

--Jack Brammer

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State auditor questions Medicaid savings

The restructuring of the state’s Medicaid program was supposed to save Kentucky millions of dollars, but a new report by Kentucky State Auditor Crit Luallen questions whether retooling the state’s health-care program has led to real cost savings.

In a report released Monday, Luallen said savings of $120 million touted by former Gov. Ernie Fletcher could “not be substantiated because of inconsistent and confusing reporting practices.”

Luallen applauded the Department of Medicaid Services for trying to control the growth in spending for the program for poor and disabled Kentuckians, but she said, “this audit, coupled with recently disclosed $389 million Medicaid shortfall in the current year, underscores the need for transparency in Medicaid reporting.”

In 2007, the health-care program covered 711,000 people at a cost of $4.6 billion. When changes were made in the Medicaid program in 2006, officials said there would be savings of $120 million to $130 million a year and $1 billion over seven years.

But that information could not be substantiated, Luallen said

Medicaid submits reports to the legislature, but those reports are based on estimated savings, not budget amounts, the audit says.

There also is no means in the current reporting system for legislators to know whether the Medicaid program is working and whether some of the changes in the program are on target or working.

Luallen said that without accurate information, state legislators will not be able to make informed decisions regarding a health care system that is used by 17 percent of Kentucky and costs almost $5 billion a year to operate.

SEE TUESDAY'S HERALD-LEADER FOR MORE ON THIS STORY

- Beth Musgrave

Next crop of Democrats mull run against McConnell

As one potential Democratic U.S. Senate candidate officially bowed out of the race, several other prospective contenders stepped up yesterday at the same time their target, Republican incumbent Mitch McConnell, launched his latest TV ad.

State Auditor Crit Luallen ignited a flurry of activity on the Democratic side this week as she began making calls to key Democrats to say she would decline getting into the race so as to keep "a balance in my life."

Now, Andrew Horne, a Louisville lawyer and Iraq war veteran, and two wealthy Louisville businessmen -- Charlie Owen and Greg Fischer -- have emerged as the next likely Democratic challengers. Bruce Lunsford, the millionaire Louisville businessman who has twice run for governor, also is still in the mix.

Attorney General Greg Stumbo, who started an exploratory committee for the Senate in August, hasn't officially stepped out of the race, but has begun talking more about seeking his old state House seat from Floyd County.

Democratic leaders are insisting that the party isn't panicking to find someone to take on McConnell, the U.S. Senate Republican leader who has shown some vulnerability in recent polling.

"There's no question the Democratic Party will have a strong candidate in the race," said U.S. Rep. Ben Chandler, D-Versailles, who took himself out of the party's Senate sweepstakes weeks ago. "Who runs, I don't think, is nearly as much of an issue as the political atmosphere and climate that exists."

He said Kentuckians' angst over the war and general frustration at Washington work against McConnell.

McConnell's camp has been well aware of the danger of residual toxicity from Washington politics and started early to try to protect against it.

Known as a prolific fund-raiser, McConnell has collected more than $10 million so far for his re-election bid. He began spending it a month ago on television commercials that tout his leadership position and what he says are his biggest accomplishments.

Yesterday, he began showing two new ads. The one on Central Kentucky's airwaves shows three farmers praising McConnell for his work on the 2004 tobacco buyout bill that paid millions to growers to end the quota price system.

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Crit Luallen officially bows out of Senate race

After telegraphing her move to prominent Washington Democrats earlier this week, State Auditor Crit Luallen officially announced that she won't run for the U.S. Senate this morning.

Luallen, after declining to address the subject Thursday, issued a one-paragraph statement to reporters shortly after 10 a.m. saying that she won't try to take on U.S. Sen. Mitch McConnell, the Senate Republicans' leader.

Here is Luallen's statement in full:

"While I have been honored that so many respected state and national leaders have encouraged me to consider running for the United States Senate in 2008, I have no plans to enter the race. I have just been re-elected as State Auditor and look forward to continuing to serve the citizens of Kentucky in that capacity. The polls show that Mitch McConnell is certainly vulnerable and Kentuckians are ready for a change.  I am confident that Democrats will field a strong candidate next year."

- Ryan Alessi

U.S. Senate race losing potential Democratic candidates?

Two high-profile Democratic officials who had considered taking on U.S. Sen. Mitch McConnell next year are signalling that they're less likely to take the plunge after all.

State Auditor Crit Luallen, in addition to losing key advisers to incoming Gov. Steve Beshear's administration, has told party leaders in Washington that she's decided against running, and that word has filtered back to Kentucky.

And outgoing Attorney General Greg Stumbo, who started an exploratory committee to consider the race, is saying that he's now looking at getting his old job back as state representative from Floyd County.

"I represented that district for over 20 years and still live there. They have a representative up there now who is doing a good job," he told the Herald-Leader this week. "But I love the state House. It's an option."

He would have to win the seat back first through a primary against freshman state Rep. Brandon Spencer, D-Prestonsburg, who has said he plans to run for a second term.

Stumbo hasn't officially ruled out the U.S. Senate. He said he plans to "talk to some folks in Washington" before announcing his decision after Beshear's Dec. 11 inauguration.

Meanwhile, Luallen's spokesman, Jeff Derouen, wouldn't comment when asked about Luallen's phone calls this week to the Democratic Senatorial Campaign Committee chairman Sen. Charles Schumer of New York and to U.S. Rep. Ben Chandler of Versailles.

"We don't have anything to say about that today," Derouen said yesterday about the calls.

Derouen will be announced as a top aide to incoming Lt. Gov. Daniel Mongiardo as early as today, confirmed Vince Gabbert, who has served as the state Democratic Party's political director but who will be named Beshear's deputy chief of staff today.

Derouen is the second key defection from Luallen's staff, joining Ellen Hesen, who last month became Beshear's general counsel.

Both Chandler and Matt Miller, spokesman for the Democratic Senatorial Campaign Committee, declined to comment as well.

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Stumbo says he's the Democrat to beat for Senate

Outgoing Attorney General Greg Stumbo said in an interview Friday that he's received polling numbers that shows he would "have a distict advantage" in a Democratic primary for U.S. Senate.

Stumbo, who formed an exploratory committee in August to raise money to consider whether to run, said his preliminary poll results show him running ahead of state Auditor Crit Luallen and Iraq War veteran and Louisville lawyer Andrew Horne. Stumbo also said the poll gave registered Democrats the option of a yet-unnamed Democrat.

"The primary numbers are extremely flattering," said Stumbo, who declined to provide the figures because they "are still preliminary" and he promised to let his top fund-raisers know the results first.

Stumbo says he won't decide whether or not run until he gets the rest of the figures back that show how he would match up against Republican U.S. Sen. Mitch McConnell.

"We don’t really know whether its something that's do-able or not," he said.

Still, Stumbo said he's pressing ahead to line up big-dollar donors in case he does make the leap against McConnell.

"You'll never believe what I’ve been doing today," he said to start the conversation. "I’ve been calling some of the wealthiest people in the entire world. I’m asking them to invest in me."

He said by 5 p.m. Friday he had made 41 calls to set up meetings with wealthy Democratic donors in New York and Washington, D.C. -- party supporters whose phone numbers were provided by the Democratic Senatorial Campaign Committee.

Meanwhile, Stumbo continued to argue that Luallen would be making a mistake to get into the race.

"Even if I were not interested in this race, I would not advise her not to run," he said. "I would think it would be very difficult to get sworn in one week for a four year term and turn around two weeks later and file for a different position. I think people think that’s too opportunistic."

Stumbo made similar comments earlier last month to the Associated Press. Luallen's spokesman Jeff Derouen, at the time, responded that Kentucky Democrats need "the best possible challenger to Mitch McConnell next year."

But Luallen's camp has remained publicly quiet about the Senate race since then.

But Kentuckians can look for things to start happening soon.

Gov. Steve Beshear and other party leaders have made it clear that the party doesn't have the luxury to wait too long into December before a potential big-name challenger emerges.

So far, only Democrats have officially filed paperwork to run: Michael Cassaro, an Oldham County doctor, and David L. Williams, a perennial candidate from Glasgow who is just coming off a loss in the 2007 agriculture commissioner race.

- Ryan Alessi