JFC questions McGuiness over lack of audits, use of resources

State auditor: Governor approves independent counsel for office
February 15, 2022

State Auditor Kathy McGuiness came under fire Feb. 8 for her lack of school district audits and use of state resources after asking the Joint Finance Committee to approve $150,000 for outside counsel to represent the office.

“Right now the Department of Justice represents our office and agencies that are being audited by us,” McGuiness said. “So we want to have an objective, independent oversight without a conflict of interest.”

In addition to $150,000 for an independent counsel, McGuiness wants to shift some auditor’s office expenses from a special fund that currently receives revenue generated in part by audit fees and move those costs into the state’s general fund.

Two days after making the JFC request, McGuiness sent out a press release announcing Gov. John Carney had approved her request for an independent counsel to represent her office in its effort to audit the Department of Health and Social Services regarding Medicaid eligibility. Carney did not respond to a request for comment before the Cape Gazette’s deadline.

JFC Chair Sen. Trey Paradee, D-Dover, however, took issue with McGuiness’ last-minute request for funding.

“It would have been nice for the committee and our staff to have had the opportunity to review this proposal and vet it for us, rather than it being dropped on us as a last-minute surprise. Very unconventional, to say the least,” he said.

Paradee then grilled McGuiness on why her office has had such a decline in audit revenue – $50,000 last year, and $90,000 brought in so far, compared to $600,000 in fees brought in annually during the Tom Wagner years. Paradee said he asked McGuiness last year about the drop in money and told her then that it appeared she was not doing the work, not billing for it, or not collecting fees for work done.

“There are hundreds of thousands of dollars that your office could be collecting for work that needs to be done that apparently is being left on the table,” Paradee said.

McGuiness said staff shortages coupled with the pandemic have made it difficult to do audits that can generate up to $1.3 million in funds for the office. She said her office is in the process of trying to audit Medicaid funds, and a judge is deciding what information the auditor’s office is allowed to review after the Department of Health and Social Services filed a complaint against McGuiness’ attempt to audit it.

McGuiness also said the office backed off from auditing school districts during the pandemic, but it is in the process of auditing them now, and the audits of the state’s 19 school districts should be done over the next few months.

Still, committee member Rep. Kim Williams, D-Newport, said she was disappointed that no school district audits have been done, because that could pay for staff in the auditor’s office.

“You want us to fund these positions using taxpayers’ money through the general fund when you have the ability to raise these funds through audits,” Williams said. “This is the second year you have not done what you’re mandated to do by law.”

Previous State Auditor Tom Wagner did regular audits of school districts, including several of Sussex Tech, which uncovered financial inconsistencies.

Williams and Paradee also questioned a barrage of emails sent Jan. 30 and 31 from the auditor’s office touting audits of school district hiring practices. Criminal background checks for school hires are already overseen by the state, the legislators said, and the audits had little consequence.

“I don’t see that as part of your job, and it’s just burning up man hours that could be used for other things,” Paradee said.

Paradee also criticized the amount of time McGuiness spent promoting her Gray Fox initiative. During the second half of 2021, McGuiness traveled up and down the state speaking publicly about the interactive, online program in which municipalities and the state can input how they spent federal stimulus funds. A town hall meeting held in Rehoboth Beach by McGuiness and about a half-dozen of her staff members was sparsely attended.

Paradee questioned whether promoting Gray Fox was worth the amount of time and state money McGuiness put into it, since much of the information can be found at other state websites.

“You talk about it quite a bit. I see it all over social media. Obviously it’s something you’re quite proud of,” he said.

Editor’s note: This article has been updated with information on the special fund


Subscribe to the Daily Newsletter