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PA: Week in Review — Wasteful spending by Turnpike, Dept. of Labor uncovered

By   /   January 11, 2013  /   No Comments

By PA Independent Staff

HARRISBURG — Turnpike officials were blasted for spending hundreds of thousands of toll-payers dollars on lavish meals and new personal vehicles this week, while a different report highlighted millions in wasted funds in Pennsylvania’s unemployment compensation system.

The state House will begin a new legislative session on Monday, while the state Senate will return to Harrisburg on Jan. 21.

Audit: Turnpike officials got free cars, lavish meals

A regularly scheduled performance audit of the Turnpike Commission released this week by out-going Auditor General Jack Wagner points to an overall lack of transparency and accountability in how the commission’s expense accounts were used during the January 2007 -August 2011 period the audit examined.

COUNTING NEW CARS: Tolls on the Pennsylvania Turnpike have increased for five consecutive years, in part to help fund lavish perks for the commissioners, including new cars valued at $28,000 each.

The Turnpike Commission incurred more than $539,000 in expenses for the six people who served on the panel during the four-and-a-half years that the audit examined.  Those expenses included meals of more than $400 and hotel stays that cost in excess of $300 per night.

“All expenses were allowed and prudency did not appear to be a concern,” in making decisions about whether the expenses would be reimbursed, the auditors noted. “Accordingly, there is a complete lack of transparency as to what the Turnpike reimbursed commissioners for using toll customers’ monies.”

The commissioners also were given new cars valued at more than $28,000. There were no requirements that commissioners use the vehicles only for work-related purposes.

The Turnpike Commission said they will include the expenses of commissioners and top officials in an on-going review of how expenses are reimbursed for all employees.

“Let’s face it, the commissioners are the leaders, and they need to be cost-efficient for the turnpike to be cost-efficient,” Wagner said during a Tuesday news conference.

State made more than $690 million in unemployment overpayments

Pennsylvania distributed more than $690 million in overpayments of unemployment compensation money between July 2011 and June 2012, according to new data from the U.S. Department of Labor’s Benefit Accuracy Measurement program.  Overpayments are usually the result of fraud, clerical errors and inaccurate reporting by employees and employers.

Improper payments to workers who failed to meet the state’s new, stricter, work-search requirements accounted for $250 million of that total —  the single largest factor in the state’s mindboggling overpayment total.

Sara Goulet, spokeswoman for the state Department of Labor and Industry, said unemployment overpayments are up, in part, because of the new requirements.

While the new requirements have been in place for a year, the department is awaiting the approval of some procedures before enforcing the rule.

“So, claimants essentially received an extended grace period to comply,” Goulet wrote in an email. “We know that more people than ever are complying with work-search requirements, but until we can enforce work-search, we won’t know for sure what kind of compliance we have.”

The Keystone State’s improper payment rate of 23 percent was the third highest in the nation — topped only by Nebraska and Indiana — but the Department of Labor cautions against making state-versus-state comparisons because each state has its own rules for unemployment compensation eligibility.

For the period report examines, unemployment in Pennsylvania ranged from 8.1 percent to 7.4 percent.  Unemployment was 7.8 percent in November 2012, the most recent month available.

Corbett administration still waiting to make final decision on lottery privatization

With a legislative hearing scheduled for Monday morning, the Corbett administration pushed back a final decision on its plan to privatize the operation of the Pennsylvania lottery this week.

HOW’S IT GONNA BE: This chart from AFSCME Council 13 shows projections for PA Lottery profits of Camelot Global Services compared to what the public employees’ union says it could generate if the lottery were to expand to include new games.

The administration hopes to make up to $34 billion over 20 years by selling the operations of the lottery to Camelot Global Services, a U.K.-based lottery firm that is the lone bidder in the state’s attempt to privatize the lottery.  Administration officials say they need the extra revenue to keep pace with increased demand for the services funded by the state lottery, which are targeted at Pennsylvania’s senior citizens.

The state had already extended a deadline to make a decision on the Camelot proposal from the end of 2012 until Thursday.  That deadline was pushed back another 24 hours on Thursday afternoon.

The union that represents the 170 state employees who work for the lottery unveiled a counter-proposal this week that said they could generate $1.5 billion in revenues beyond the promise from Camelot.  Unlike the Camelot proposal, however, those revenues are not guaranteed.

Two prisons closing as new one opens – savings of $23 million expected

Pennsylvania will save an estimated $23 million next fiscal year with the closure of two older state prisons and the opening of a new facility.

CLOSING TIME: Corrections Secretary John Wetzel said Wednesday the state will save $23 million by closing two older prisons and opening a new one.

Secretary of Corrections John Wetzel announced Wednesday that state prisons in Cresson, Cambria County, and Greensburg, Westmoreland County, would be shuttered by the end of June. The two facilities will be replaced with a new state prison scheduled to open at Brenner Township in Centre County.

Staff and inmates at the two prisons targeted for closure will be transferred to the other 25 existing facilities in the state system and to the new prison, Wetzel said. No layoffs are expected.

The department recently announced 450 fewer inmates during 2012, only the third time in four decades that the system has seen a decline in population.

This is a responsible, conservative plan to replace capacity at a time when our population is trending down,” Wetzel said.

The Cresson facility opened in 1913 and costs an average of $103 per inmate per day to operate.  The Greensburg facility opened in 1969 and costs an average of $110 per inmate per day to operate, the highest per diem cost within the state corrections system.

By comparison, the new prison in Brenner Township will cost an estimated $85 per inmate per day.

Utility companies get generally high marks for Sandy response

SHELTER FROM THE STORM: Utility companies said “Superstorm Sandy” was the worst they’d ever seen – the state’s Public Utility Commission agreed.

Utility companies from across Pennsylvania on Thursday said lessons learned from major storms in 2011 helped them prepare for the record-setting damage and power outages wrought by “Superstorm Sandy.”

The storm left 1.8 million Pennsylvania electric customers without power when it hit Oct. 29. Although some of those customers were still without power a week later, the state Public Utility Commission generally praised the electric companies’ response.  Members of the commission said the utilities communicated well with customers and prepared for the storm by bringing in crews and supplies from out-of-state.

Robert Powelson, chairman of the PUC, said he gave utility companies grades ranging from “B-plus” through “D,” but he did not want to point out flaws.

“A storm of this magnitude requires a well-coordinated response, which is what I feel occurred in Pennsylvania,” said Powelson. He said lessons learned from the response to Hurricanes Irene and Lee in 2011 helped workers prepare for Sandy. The goal of the meeting was to learn about potential improvements.

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Eric is a reporter for Watchdog.org and former bureau chief for Pennsylvania Independent. He lives in Minneapolis, Minnesota, where he enjoys great weather and low taxes while writing about state governments, pensions, labor issues and economic/civil liberty. Previously, he worked for more than three years in Harrisburg, Pennsylvania, covering Pennsylvania state politics and occasionally sneaking across the border to Delaware to buy six-packs of beer. He has also lived (in order of desirability) in Brussels, Belgium, Pennsburg, Pa., Fairfield, Conn., and Rochester, N.Y. His work has appeared in Reason Magazine, National Review Online, The Freeman Magazine, The Philadelphia Inquirer, The Washington Examiner and elsewhere. He received a bachelor's degree from Fairfield University in 2009, but he refuses to hang on his wall until his student loans are fully paid off sometime in the mid-2020s. When he steps away from the computer, he enjoys drinking craft beers in classy bars, cheering for an eclectic mix of favorite sports teams (mostly based in Philadelphia) and traveling to new places.