State vets office ripped in audit

Friday, Feb. 20, 2004 | 11:34 a.m.

CARSON CITY -- The state Office of Veterans Services ignored laws, failed to properly keep track of its finances and mishandled money belonging to veterans under state care, according to a legislative audit discussed by state lawmakers Thursday.

Auditors found $110,000 in errors posted to the accounts of veterans or the state and there was no reconciling the accounts of the wards of the state.

The office also did not have supporting documents for $734,000 in revenue and $167,000 in expenditures in transactions of the accounts of the veterans under its care, the audit found.

Sen. Ray Rawson, R-Las Vegas, chairman of the legislative audit committee, told Veterans Services Director Chuck Fulkerson: "These things we can't allow to continue." He ordered an immediate correction in the errors in the accounts of wards of the state agency.

The examination, presented by deputy legislative auditor Shawn Heusser, found that more than $2 million was spent in hiring and keeping staff before the first patient was ever admitted to the veterans' nursing home in Boulder City.

Assemblyman John Marvel, R-Battle Mountain, asked what the staff was doing when the home was empty. Heusser said he was told they were working on policies and procedures and getting the nursing home up and running.

Marvel wondered if they were just drawing their paychecks without anybody to take care of. The audit noted there have been four directors at the nursing home since fiscal year 2000. The audit noted that the legislative budget committees in 2001 told the Veterans Service Office that the staff at the nursing home should be hired only as needed to care for residents. In fiscal 2002, legislators expressed concern about the number of employees at the home.

The nursing home was expected to open in January or February 2002 but it did not receive a certificate of occupancy until June 27, 2002. The first residents were admitted on Aug. 12, 2002.

Fulkerson said the home was supposed to receive a certificate of occupancy in January 2001 but the date kept slipping back. He said it was supposed to open in June 2001 but then the contractor got fired. He said the home hired staff in anticipation of the opening. But it didn't open until August 2002.

He said part of the reason that John Sias, the first director of the home, was fired was because he hired too many staff members without any patients being admitted

Greg Bortolin, press secretary to Gov. Kenny Guinn, said there were struggles with construction and personnel issues at the veterans home. But now, he said, it "is on the right track."

"We plan to follow all the recommendations" of the auditors, Bortolin said.

Fulkerson, likewise, promised to take care of the problems. He said his agency has grown so fast with the addition of veterans' cemeteries and the nursing home that he has not been able to hire adequate staff.

Vietnam veteran Ed Gobel, who has announced he will run as a Republican in Assembly District 1 and is a frequent critic of the department, said he wasn't surprised by the report and testified on its financial troubles during the last Legislative Session.

"I think they just scratched the surface," Gobel said, adding that he thinks there is more unaccounted for money than reported.

Ace Tan, a certified public accountant and the new office manager for the agency, said there has not been any accounting staff in the office for the last 10 years, and that's one reason for some of the problems. Tan was hired in December.

Rawson directed the legislative auditors to work with Tan to get the books straightened out, especially in handling money for veterans who are wards of the agency.

Military veterans who draw government benefits and who are judged incapable of handling their finances are put in the agency's guardianship program. The majority of them have substance abuse problems or mental deficiencies, Fulkerson said.

The agency doles out money monthly for its wards' housing and living expenses. There are currently 22 veterans who are wards of the agency. The audit said the office "frequently did not comply with state laws and regulations, or its policies and procedures related to its financial and administrative practices."

On Dec. 17, 2003, Legislative Auditor Paul Townsend sent a letter to the governor, the attorney general and all members of the Legislature saying the examination found "evidence of improper practices of financial administration or inadequacy of fiscal records."

The letter said there were inadequate documents for thousands of dollars belonging to the wards that was received or spent. It said that as of March 31, 2003, the accounts of the wards totaled $38,210 less than the amount recorded in the state accounting system.

Because of a lack of reconciliation of the records, "the state may be liable for expenditures made without sufficient supporting documents," Townsend said.

The audit also found the office did not get required approval in entering into outside contracts. For example, the nursing home purchased a software program in June 2001 for nearly $39,000 without obtaining required approvals from the state Department of Information Technology and the state Board of Examiners.

Two years later, the nursing home had to get approval to replace the system at a cost of nearly $198,000 because the system that had previously been purchased was inadequate. While the audit was highly critical of the office, legislators praised Fulkerson and members of his staff for their dedication in helping military veterans.

Fulkerson reported the 180-bed nursing home has 110 patients with more than 100 on the waiting list. He said it was "hard work" to process about six applications a week because they involve a lot of paperwork and medical examinations.

The veterans home in Boulder City has a budget of $21.6 million for the 2003-2005 biennium, with $5.8 million of that coming from state coffers. The home is authorized to have 167 employees. The budget for the rest of the state's veterans services operations is $1 million, of which $1.8 million comes from the state. That covers five offices and 65 employees.

There are about 241,000 veterans in Nevada, with 180,000 to 185,000 in Clark County, Fulkerson said.