LOOKING IN ON: CARSON CITY

Thursday, May 17, 2007 | 7:20 a.m.

CARSON CITY - Nevada has mistakenly issued an estimated $7 million in overpayments to welfare recipients and the state is doing a poor job in trying to collect, according to a new study.

A legislative audit found that the state's welfare and supportive services division does not follow up quickly enough when overpayments are discovered and fails to consistently write follow-up letters to remedy the problem.

The division wrote off nearly $920,000 in uncollected debts for more than 800 individuals last fiscal year. The reasons included the inability to find the person who received the payments, bankruptcy or expiration of the three-year statute of limitations.

Welfare Administrator Nancy Ford, noting that changes are being made, said her division has asked the Legislature for approval of a case management system. She has only five employees to check into nearly 7,000 allegations of potential overpayment awaiting resolution, Ford said.

Under division policy, investigations of possible overpayments are to be completed within 10 days after a case is assigned. But the audit found that only 11 of 27 cases examined met that deadline. In addition, the division did not consistently mail delinquency notices to those who were overpaid, the audit said.

The division handles welfare payments, food stamps, employment services, location of nonsupporting parents, child-care subsidies and energy assistance.

The state is going to receive $3 million four years earlier than expected from a college saving plan under investigation for questionable spending.

A report from the staff of the Senate Finance Committee on Monday said the Nevada College Saving Trust will pay off a $4.4 million loan made by the state five years ago to cover early costs. The loan was not due to be paid off until 2013 but will be retired in fiscal 2009.

The legislative auditor was ordered to examine the college fund over allegations that improper expenses for advertisements and legal work occurred during the tenure of then-state Treasurer Brian Krolicki, now lieutenant governor. The treasurer's office oversees the college plan. The audit is to be released by the end of this month.

The fund allows parents to contribute money toward their children's future college costs. The fund, started in 2001, has nearly $3 billion in investments.

Good returns on those investments have increased its reserve, allowing the college program to pay the $3.2 million remaining on the loan over the next two fiscal years to retire the debt early.

The audit began after Treasurer Kate Marshall told Nevada lawmakers that $3.4 million of nearly $5 million in investment fees received by the state last year may have been improperly diverted toward marketing and legal expenses during Krolicki's term. During the 2006 campaign season, $1.1 million was spent on ads featuring Krolicki's name and face.

Krolicki, a Republican, has dismissed Democrat Marshall's claims as "reckless" and politically motivated.