Public Eye: California National Guard paid members millions improperly, audit finds

08/26/2011 12:00 AM

11/08/2011 6:04 PM

THE MONEY TRAIL

California National Guard paid members millions improperly, federal audit finds

A recent federal audit has found that from 2005 to 2010, millions of dollars in improper and possibly fraudulent incentive payments were made to California National Guard members who were also federal civil servants for the Guard.

The report adds to illegal or improper recruitment and retention payments to Guard members in recent years, as The Bee reported in October. The prior problems, which included repayment of Guard members' student loans, are the subject of a federal criminal investigation.

The confidential April audit, obtained by The Bee, was conducted by the National Guard Bureau, a federal agency that oversees Guard funding.

The Bureau did not respond to questions about its findings, but in July 2010 it suspended the ability of state Guard units to approve such bonus payments, according to Maj. Thomas Keegan, a California Guard spokesman.

Federal auditors blamed "breakdowns in internal controls" for "numerous instances of potentially fraudulent, improper, and abusive retention incentive approvals" in bonus programs designed to maintain vital civil servants who might otherwise be tempted to take higher-paying jobs outside the Guard.

Among the audit's key findings: Guard managers approved $5 million for 114 employees who the Guard said would have quit without the extra pay. Yet managers supplied evidence to support that assertion in just one case.

Auditors said 87 percent of the employees they sampled – including human resources specialists, clerks and administrators – did not have job skills that are in great demand in the marketplace, as required by law to justify the bonuses. For example, a Roseville administrator received $32,960, for a total salary of $164,799 – far beyond the highest-paid comparable jobs in the region.

The Guard has 2,211 employees in categories covered by the audit. The California Guard's former leader, Adjutant Gen. Mary J. Kight, acknowledged some of the problems in an appended response, and indicated that the Guard had either terminated or declined to renew 135 suspect bonuses.

But she disputed some of the audit's methodology, asserting that steep living costs in California warranted many bonuses. She said competition for labor in an "expanding job market" justified the extra pay.

Keegan said current Adjutant General David S. Baldwin initiated a review of the allegedly improper incentives, but did not indicate whether any attempt would be made to recoup payments. To reduce the potential for future conflicts of interest, Baldwin also appointed new personnel leaders who are not federal civil servants.

"My intent is to ensure these incentives are used to recruit and retain a high-quality force, while at the same time being good stewards of the taxpayers' money," Baldwin said.

Since his appointment in April, California has requested federal approval for only four incentive awards – far below past practice.

– Charles Piller

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