March 7, 2007 — Day two of a Senate Finance Committee hearing was more like round two, as the gloves came off in Ottley Legislative Hall, where senators and the governor’s financial team continued a long back-and-forth discussion that went late into the afternoon.
“The jig is up. Washington is on to us,” advised Committee Chair Sen. Terrence “Positive” Nelson, who kept driving home the point that the fiscal business practices of the territory needed to be cleaned up and brought into the 21st century. He encouraged openness and cooperation with the words, “Five fingers, one hand; different branches, one government.”
However, at times during the hearing, it seemed that unity and consensus would be difficult to achieve.
According to both the financial team and the committee, fiscal efficiency and transparency are dependent on new technologies. All concurred that the territory is in transition, coming from an antiquated system to one in which complete interconnectivity of the various branches of government is the goal.
Being able to “follow the money” is difficult in the best of systems and that is not the current state of affairs, as the senators discovered Wednesday. At times, frustration boiled over. There was plenty of finger pointing and blame to go around, with the senators accepting some of it.
After an opening prayer, the meeting began with an admonition to the press for the headlines in the morning newspapers as generated by yesterday’s meeting.
“We are not running a deficit,” was reiterated time and again.
However, the Source's coverage of Tuesday's hearing used only quotes taken directly from the printed statement given by Nathan Simmonds, director of the Governor’s Office of Fiscal and Economic Recovery Implementation, and made reference to a projected shortfall — not a deficit.
The session at times became heated as a great number of issues and projects came to the floor. At one point, Nelson expounded on the corruption in the system, saying that there was a necessity to acknowledge its existence in order to fix it. There were calls for immediate fixes and accountability. “Change is hard,” said Nelson, “but it is necessary.”
A common thread running through Wednesday's hearing was that money was being lost because the government was not doing business in a timely manner. One example cited was a long-standing issue concerning vendors, who are often are not paid within 90 days and then require prepayment in order to continue doing business.
In other instances, by the time funding requests come in and go through the system, the funds' availability has expired and the funding goes unused.
Nowhere was this more obvious to the senators than in the projected loss of $11 million for the Department of Education, which may not be fully reimbursed by the federal government due to insufficient and incomplete documentation on the department's part.
Testifying before the committee was Karen Marsal of Alvarez & Marsal, the third-party fiduciary contracted to turn around the Education Department so as to better garner reimbursements. Marsal explained that the projected loss was from a period starting in July 2004 and extending for 27 months in which $29 million in local monies was used assuming federal reimbursement.
However, the application for reimbursement was not submitted until the last moment and contained errors that required filing an extension. Ultimately, even though there were still problems with the application, the federal government began reimbursement.
Currently, only $18 million has been repaid to the system. Describing the system as “very broken,” Marsal said that in order to receive the federal monies already allocated in the current cycle, which started in September 2005, the DOE would have to spend “one million a week” for the remaining 14 weeks, at which point it expires in September 2007. This, she admitted, was highly unlikely. Thus far only 13 percent of the allotted funds has been spent, and there is potential for more losses in this current cycle. Senators called upon school officials and principals to submit requests and requisitions immediately to minimize those losses.
One tool that is being put in place to alleviate problems of this nature is the the Enterprise Resource Planning System (ERPS), an overarching computer system that will connect all financial aspects of the government. Susan Sturgis, a representative from the software company Tyler/MUNIS, designer of ERPS, appeared before the committee to answer a myriad of questions concerning implementation and training.
ERPS is one of the key elements in bringing the V.I. government's fiscal house into order, but the new system has been met with resistance and noncompliance. At times, employees who have never turned on a computer have been asked to learn how to work with one.
According to testimony, training has been offered, but it is not mandatory for workers — even though they need it in order to use the system and perform their responsibilities.
Sen. Louis Patrick Hill called for the establishment of standard operating procedures and some measure of accountability. “There you have it, a system with hundreds of employees, dealing with millions of dollars, and no consequences for mismanagement,” Hill said.
Currently the post auditor does not have access to the system — nor do senators, who lack user names and passwords. They were assured that they were readily available. “Get our codes ready, because we are ready,” warned Nelson.
Sturgis indicated that the previous system was equivalent to “strings and cans,” but she was 100 percent confident that employees will be ready to use the new system shortly.
The committee dealt with many individual projects throughout the territory, leaving no issue unexplored. It ended only when no senator had any further questions.
At the end of a bruising day, both the financial team and the senators pledged to continue to work together. Nelson ended on a characteristically “positive” note: “Together I can. Together, we will.” He promised another meeting shortly.
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