Agency can’t show its math but says tax money wasn’t misspent

Monday, Sept. 10, 2007 | 7 a.m.

It took a year of many hands rooting through dozens of banker's boxes crammed with scraps of paper.

It was the kind of chaos you'd expect in your family's attic - not at a public agency that receives millions in public funds for helping people get jobs.

At the end, on his last day on the job, Terry Johnson, the top man at the state agency charged with cleaning up the mess at the Southern Nevada Workforce Investment Board, penned a memo: "Despite the well-intentioned and good faith efforts of all involved, an accurate accounting of the ... funding ... has proven elusive."

Then he left his post and a new guy came in.

Within a week, Ardell Galbreth, second in command at the Workforce Board, was second in command at the Department of Employment, Training and Rehabilitation, the agency that oversees the board.

Everyone involved says that despite what one accountant called a "systemic" lack of record-keeping during three years, not a dollar of $30 million in federal funds was lost and no one broke the law.

But just in case, the Department of Employment, Training and Rehabilitation has been put in charge of the finances of the Southern Nevada Workforce Investment Board.

And Galbreth, former deputy executive director of the latter, is in his third month at the same post in the former.

As bizarre as this whole state of affairs may seem - not a penny out of place despite the lack of records, the fox in the henhouse angle - the principals insist that things are now on track at the board, and Galbreth, for one, says he can now "sleep a little better at night."

The whole thing started late last year when two audits and a report noted that hundreds of thousands of dollars could not be accounted for at the Workforce Board.

Currently at about $6 million, the agency's budget has reached as high as $10 million in recent years. The board started in 2000 and uses U.S. Department of Labor money for contracting with local organizations to train teens and adults for the workplace.

Galbreth was at the agency for five of those years. At some point during that period, he said, "things got dropped." As a result, "the board's tracking processes were not adequate."

Or as John Ball, interim executive director at the board, put it: "We did not have accurate 21st century accounting practices."

One result, Ball said, is that the board could not "show precisely how checks were moved."

At one point earlier this year, Johnson estimated that up to $1 million might have fallen through the proverbial cracks.

Then the real rooting around started, along with a gradual dismantling of the board's top leadership.

Ball said a year's worth of "endless hours" went into sorting out the records.

The results included determining that three local nonprofit organizations - Greater New Jerusalem, Nevada Partners and CHR Inc. - had been overpaid $86,000. As of August, the three had paid the money back to the state, Galbreth said.

It also turned out that the board had $300,000 it didn't know it had, the result of sloppy record-keeping.

In any case, Ball underscored, "we were able to show all the money, when it was drawn, was for legitimate purposes."

"We know where the money came from and where it went," he said.

Ball and Galbreth acknowledged that what Johnson called "irreconcilable bookkeeping entries" left gaps in knowledge about steps along the way as funds trickled from the federal to state agencies, then to the board and local nonprofit organizations. But they say the bottom line remains the same.

"Not a dollar was lost or inappropriately expended," Galbreth said.

A local accountant who works with a number of nonprofit organizations scratched her head over the situation.

After reviewing Johnson's memo, accountant Dianna Russo said: "I would be concerned if 'an accurate accounting ... has proven elusive.' "

Lacking complete back-up information, it would be impossible for the board or the state to fully understand every transaction, she said.

"It's not that they did lose a dollar," she said. "It's just that they don't know."

Meanwhile, the board now is under the state's control, financially speaking. Under an arrangement scheduled to last until November, the state, or Galbreth's agency, oversees the board's accounting and signs the checks that pay the nonprofit organizations, Galbreth said.

Ball said there also are a host of new procedures in place to ensure that the board will not lose track of its money again.

As for putting Galbreth near the top of the state agency, Ball said, "agencies make hiring decisions and individuals make career decisions."

Galbreth said he earned "$100,000 and change" at the board and earns a few thousand dollars more with the state.

As for whether he now is the fox guarding the henhouse in this story, he said: "It was very obvious during my tenure that I demonstrated and showed a keen awareness of the problems " at the board.

He also noted that his current job involves overseeing programs, but not finances, and that he stayed on at the board until all involved finished most of the sorting through and setting straight.

"It's kind of a relief that the board is on a straight and narrow road," he said. "I did not want to leave with a dark cloud over me."