Misallocated mileage reimbursement funds found in two separate investigations of state agencies expose the difficulty of supervising work-at-home state employees and might be only part of a larger problem, State Auditor Beth Wood said.

“There’s always a possibility, again, when you have policies and procedures that are not in place to stop it … the risk is higher that more of this is going on,” Wood said.

“It is absolutely difficult to monitor, to supervise people who work from home unless you have some kind of performance measures or metrics or objectives that somebody’s supposed to complete. Unless you have that in place it’s practically impossible to monitor someone working from home,” Wood said.

State employees working from home is not a common practice, Wood said, “but it’s not unusual either.”

Reports on the financial improprieties, released on Wednesday, involve personnel at the state Department of Public Instruction and the state Department of Insurance claiming either bogus trips in order to receive extra compensation or excessive miles driven to improperly inflate reimbursement.

In addition, a former division director at DPI was cited as improperly negotiating a return to employment with the education agency prior to a statutorily required six-month waiting period after retirement. Carolina Journal has confirmed that the former division director is Charlotte Hughes.

“At this point, the matters included in that audit report are personnel issues that are under investigation by department staff. Once an action is taken on those items it will be a public record and we will be happy to share it at that time,” said DPI Communications Director Vanessa Jeter.

Insurance Commissioner Wayne Goodwin said in the agency response to the audit that the two employees determined to have salted their travel reimbursement will be subject to further review of travel records for the fiscal years ending June 30, 2011 and 2013.

“After that review is finished we will take appropriate action. At this point no actions have been taken,” said Insurance Department spokeswoman Kerry Hall.

Neither Hall nor Jeter would identify the employees under investigation, although Wood said the names are public record. As a practice, the Auditor’s Office does not identify subjects, but defers that to the agencies involved, Wood said.

The DPI investigation was launched after a hotline tip, Wood said.

The technology support analyst investigated worked in the Federal Program Monitoring and Support Services Division, whose mission is to ensure federal funds targeting schools with high percentages of low-income families are being properly used to help students meet state academic standards.

The analyst submitted and was paid $3,403 for mileage traveled from Raleigh to Midway High, Middle, and Elementary schools, and Plain View Elementary School. Yet auditors found administrators at those schools did not know the employee, did not recognize her name, and were unaware of any technical assistance being provided to their schools. The analyst’s job did not require travel to the schools.

The employee defended the mileage, saying her supervisor directed her to submit it because the analyst’s duty station changed from Raleigh to at-home.

The duty station change, which would have qualified her for reimbursement for travel from home to Raleigh, was never officially recorded, so the manager told her to just use a school near her home to file for the expenses as a business trip, she said. The supervisor denied that.

Auditors recommended disciplinary action against the employee and recovery of the reimbursement funds. In the agency response, State Schools Superintendent June Atkinson said after a corrective review, it was determined the reimbursement requests were “due to miscommunication.”

A review of the DPI employee directory shows Loreto Tessini, of Dunn, is the only technology support analyst listed in the Federal Program Monitoring Division.

“When you write down on a piece of paper that you traveled from Raleigh to Dunn, that you visited a school, and then you sign your name to that, and never went to that school, that is not a clerical error,” Wood said. The reimbursement forms require truthful information “under penalty of perjury,” she said.

“But our recommendation was that the superintendent of public instruction take disciplinary action not only against the employee who did it, but those above her who signed off on it,” including her supervisor and division director, Wood said.

Wood stopped short of saying fraud or other criminal activity was committed.

“I’m not saying that it [wasn’t], but that’s not my call to say something is illegal. The state auditor doesn’t make that allegation. We’re putting that back into the hands of the state superintendent to determine if this person falsified records and should she be disciplined, and what that discipline should be,” Wood said.

Hughes, the former division director in the Federal Program Monitoring and Support Services Division retired April 1, 2012, and later signed a contract to work as a DPI quality reviewer.

Under state return-to-work laws, she was ineligible for state service for six months.

“However, the former division director engaged in activity and discussions regarding a return to service within six months of retirement,” including attending two training sessions, the audit stated.

Auditors recommended that the State Treasurer’s Retirement Systems Division should determine whether the former division director should forfeit retirement pay and state health plan coverage already received. She received $70,758 in retirement benefits from her retirement until June 30 this year.

In an email message, Margaret Jordan, a spokeswoman for the Office of State Human Resources, said she would attempt to determine how many employees who retired with the state have been hired under a re-employment contract. Meantime, she suggested contacting Schorr Johnson, the press secretary in the state treasurer’s office, under which the state’s retirement systems operates..

“The department will be reviewing the auditor’s report and the recommendations to see if actions are appropriate,” Johnson said.

In the Insurance Department audit, investigators looked at top travelers and identified two employees with “excessive or unnecessary costs of about $3,800 during 2012” derived from 6,132 overstated miles driven. Anything 20 miles more than the distance between two locations is considered excessive.

The department could have saved $13,400 by assigning state cars to employees who must travel the most, the audit said.

One employee claimed an average of 41 excessive miles on 120 trips resulting in $2,123 of overpayment.

The other claimed an average of 48 excessive miles per trip on 25 occasions, resulting in $663 in improper reimbursement. He claimed that on one trip, he recorded three hours of extra drive time because he took a wrong turn and didn’t realize he was traveling in the wrong direction for more than an hour.

The audit calls for the department to seek reimbursement from the employees, and to ensure travel is properly documented in the future.

Auditors used Mapquest to double-check mileage figures. Wood said department managers could require a Mapquest form to be attached to the reimbursement request as a simple fix to this problem.

Dan Way (@danway_carolina) is an associate editor of Carolina Journal.

Editor’s note: This story was changed after initial posting to include the comments of Margaret Jordan.