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Rhoades blocks municipal services payments after hotline tip

Hudson Republican and Co-Chair of the Joint Finance Committee Co-Chair Rep. Kitty Rhoades has blocked approval of nearly $22 million in 2008 payments for municipal services based on an anonymous tip to the Fraud, Waste and Mismanagement Hotline operated by the Legislative Audit Bureau.

The anonymous tip alleged the program "has, for a number of years, been making payments to two municipalities that have not been providing the public services to state-owned facilities that are covered by the governing statute."

The allegation was accompanied by a Nov. 1 2007 DOA Division of Intergovernmental Relations memo saying the City of Kenosha and City of Janesville have received payments for police services not provided to the UW-Parkside and UW-Rock County, respectively.

The November memo said at Parkside, police services are provided by the university's own full-time police force with backup provided by the Kenosha County sheriff and "occasionally" by the City of Kenosha police department.

At the UW campus in Janesville, according to the memo, the services are provided by the sheriff, not the city police department. Counties are not eligible for the municipal services payments unless certain criteria are met.

In addition to filing the anonymous tip with the hotline, a copy was put into an unmarked envelope and delivered to Rhoades' office.

The tip came as the Joint Finance Committee has before it the Dept of Administration's proposed 2008 entitlements and recommended payments under the program in which the state pays municipalities, towns and villages for police, fire and solid waste services provided to state property.

Rhoades filed her objection to approval of the proposed payments and DOA was notified of the objection on Wednesday.

Under the passive review procedure used by the committee to review various fiscally-related items, a single committee member's objection to a request results in the request being denied until either (1) the member removes the objection and allows the request to go forward; or, (2) the full committee meets and decides whether to approve or reject the request.

The payments, while normally approved at this time of the year, do not get made until the first week in February.

There are 300 towns, villages and cities eligible for payments this year. The total amount available for payment is $21,998,800.

The amount to which those entities are entitled this year is $27,124,333, but they will receive only 81.1 percent of the entitlements because when entitlements exceed the appropriation, the actual payments are pro-rated.

Rhoades said Thursday her intention was not to delay the payments but was to determine if the sheriff's departments in the two cities had been paid by the cities for their roles in providing services to the campuses. She said another reason for the objection to let persons filing the anonymous tips know they are taken seriously.

In a November 21 response to Rhoades' inquiries about Kenosha and Janesville, Division of Intergovernmental Relations Deputy Administrator Harald Jordahl said in the case of Kenosha, the DOA database and annual mailings to the city and UW "did not correctly reflect" the UW System rather than the city provided police services for the Parkside campus.

"Because of this, our data base was incorrect and the local government's payment was not reduced accordingly," Jordahl wrote.

Jordahl added the database and annual letters from the community and UW "incorrectly indicated that the City of Janesville Police Department was providing police services for the UW Rock County Center."

Jordahl said since discovering the errors late last year, "we have taken three actions to correct it." Staff and management completed a review to determine if it were an isolated error and whether it was affecting any other communities with UW campuses. Jordahl said it appeared the problem was isolated to the two communities.

He said the department has corrected the data base and reduced payments to those communities "to accurately reflect police services being performed."

Johdaly noted that the 2008 payment proposal before the committee reduced the payments to Kenosha and Janesville to correct the problem. He said compared to last year, the DOA has reduced the recommended municipal service payments to the City of Kenosha by $165,572 and the City of Janesville by $32,253.

Under the proposal before the committee, the City of Kenosha is scheduled to get $472,814 of the $582,976 to which it is entitled, while the City of Janesville is to get $114,794 of the $141,540 to which it would be entitled.

Jordahl said officials have been talking to the cities since September "to recover overpayments made in previous years," but noted the program statutes are silent on overpayment and program guidelines do not provide a "clear mechanism for repayment beyond indicating the overpayments or underpayments are 'subject to fiscal adjustment.'" He said the department wants to address the repayment "in a manner that doesn't unduly burden these communities." Jordahl said.

In a second letter to the committee, dated Dec. 2, Jordahl said the department does not currently know how long the payments were erroneously made to the communities. He said further research will be needed to come up with a final figure on the overpayments.

"It is possible that the data error has been made for a number of years," Jordahl said.

"It is important to note, however, that even if we could confirm the number of years the overpayments have been made and the value of those overpayments, the department's authority to recover overpayments is limited to the two previous years," he added.

Meanwhile, at the Legislative Audit Bureau, where the tip was filed simultaneously with the envelope being delivered to Rhoades' office, State Auditor Jan Mueller said her agency will monitor the JFC actions and their resolution of the issue before deciding whether to pursue further investigation into the tip.