Auditor Tom Schweich on Public Corruption, Governor’s Withholdings, and Upcoming Pension Audit

Sep 27, 2014

Credit Missouri Auditors Office

Update: Public pension audit released Sept. 30.

Missouri Auditor Tom Schweich says embezzlement is on the rise and is asking for help in identifying corrupt public officials.

Since taking office in 2011, Schweich says his team has identified 32 cases of missing monies totaling $2.3 million, about half of which has been returned to the state.

“We’ve been able to identify the person involved in over 20 of those cases. All of those people have been terminated. 16 have been indicted. Nine have been convicted,” Schweich said.

He encourages Missourians suspicious of such activity to contact his office’s toll-free confidential hotline at 1-800-347-8597, to which calls are made every day, he says.

“It’s a combination of a ‘get what you can’ mentality with some economic problems, and that leads to a lot of public officials just saying ‘wow, there’s a lot of cash coming through my office.’ Whether it’s court clerk or sheriff’s deputy or a county collector, we found all those kinds of people stealing money from the taxpayers.”

He noted that in the case of Mark Brixey, the former MSU employee found to have embezzled over $1 million from the university bookstore; it was discovered through an internal audit.

Lawmakers have since passed legislation that would strip corrupt public officials from receiving a pension if convicted of felonies that breach the public’s trust.

By contrast, Schweich says his office conducts a much more detailed financial review, or what’s called a performance audit.

Speaking with KSMU this week, Schweich touched on myriad of topics, including a recent audit critical of Democratic Governor Jay Nixon for withholding $172 million from several state programs during fiscal year 2012. Nixon had done so to help cover the costs of the Joplin tornado and other recent natural disasters.

Those withholds were the subject of a lawsuit filed by Schweich against Nixon three years, but the case was rejected by the Missouri Supreme Court.

The governor has declared additional budget withholdings in subsequent years.

Schweich says, “Under the Missouri Constitution, the governor can withhold money when revenues are below expectations, when there simply won’t be enough money to fund all the programs. But what this governor’s been doing has been withholding even when revenues are above expectations. When all the money is there and he just doesn’t want to give the legislature the opportunity to override the veto.”

The state auditor says he’s supportive of a November ballot initiative, Amendment 10, which would limit the governor’s ability to withhold funding from the state budget.

Missouri auditor is the only statewide position on the ballot this election cycle. Schweich, a Republican, was unopposed in the August primary, and is a favorite in November’s general election, which features a Libertarian and Constitution party candidate, but no Democratic challenger.

A possible gubernatorial candidate in 2016, Schweich says his focus right now is on reelection as auditor.

Schweich noted that his office has begun its audit of the City of Joplin, which was initiated by a citizen petition. The auditor’s office was also invited in to review Joplin Public Schools financial books.

Schweich says citizens have expressed concern about the way money has been spent in the wake of the 2011 tornado.

“We don’t know if there’s anything wrong or not. But we’ll take a very deep look into it and see if they handled their relief money properly, their rebuilding properly, if their purchases have been in accordance with state law, and if they’ve adhered to all the restrictions on the donations they’ve received.”

He hopes to have that audit complete by early 2015.

Next month, his office is also set to release an audit on the state’s nearly 90 public pension systems (released Sept. 30). He says the good news is a majority of those pensions are “pretty solvent,” but noted that roughly five of the smaller ones in the state are in “serious trouble” and will require further review. Schweich declined to name those pensions ahead of the published audit.

“People wanna know ‘are our pensions solvent? Will we have to bail those pensions out? Will the people who are entitled to that pension money get the money?’ So I initiated a very lengthy and detailed study over a year ago of our 89 pension systems and in a few days we’ll release the results of that.”

Schweich says this will be the first comprehensive study that has been done on pensions in Missouri in over 30 years. He says sometimes pensions come down to a tax, or just good financial management.

“Sometimes they really have the money they’re just not investing it well, or they’re not handling it right or they have too much in the way of administrative costs. So we look at all those things. Our objective is to help pension become solvent if they’re not solvent, and make sure they remain solvent if they are.”

In April, voters in Springfield renewed the city’s ¾-cent police-fire pension sales tax. It was first brought before citizens in 2009, when the pension plan was estimated to be underfunded by $200 million. The plan is now projected to be brought into full funding within five years.