Top officials for Arkansas' parole and probation agency have routinely used nonprofit groups under their control to carry out state work and, in at least two instances, created conflicts of interest through their roles outside the Department of Community Correction, legislative auditors said in a report released Friday.
The critical report was laced with details of private golf outings attended by vendors who had business with state agencies, substandard insurance practices and thousands of emails found in one deputy director's state account pertaining to a private employee association that he was paid to head.
Still the report, which was several months in the making at the request of lawmakers on the Legislative Joint Auditing Committee -- the panel that reviews audits by its staff -- got immediate push-back by some who said it failed to capture the entire picture of the agency's work.
The Department of Community Correction, which supervises more than 60,000 parolees and probationers, released its own response disputing some of the audit's findings and said it was working to correct others.
Sheila Sharp, the agency's director, said any work by agency officials with outside groups is done to promote the agency's mission and to help its employees.
Several east Arkansas lawmakers, who represent areas where many prisons are located, pointed out Arkansas' ongoing struggle to recruit and retain corrections officers. The lawmakers questioned why criticism was being directed at state officials who said their work through nonprofits helped to pay for funerals, scholarships and insurance plans for employees.
"If anything, the Legislature has neglected and fallen short of benefiting [Community Correction] employees," said Sen. Stephanie Flowers, D-Pine Bluff.
Other lawmakers were accusatory, going so far as to hint at illegal behavior. But staff members of Legislative Audit said they had not been in contact with prosecutors.
"What we're dealing with here is an agency that probably got a little loosey-goosey with their practices," said Rep. Kim Hammer, R-Benton.
The audit report examined 11 organizations related to Community Correction: eight employee associations at regional offices, and three nonprofits governed largely by corrections employees. Lawmakers adopted the report, and asked auditors to return with some more details.
EMPLOYEES ASSOCIATION
The most heavily debated aspect of the report Friday had to do with the nonprofit Arkansas Association of Correctional Employees Trust, which counted 4,404 members from employees of Community Correction, the Parole Board, correctional school and state prisons. The executive director of the group, Kevin Murphy, is also a chief deputy director at Community Correction.
Murphy's dual roles created a conflict of interest, the audit report found, stating, "Mr. Murphy performs multiple overlapping duties and has access to and significant influence over the employees of [the Department of Community Correction]."
For example, the report suggested Murphy could have used his position as a supervisor at Community Correction to influence his employees' decisions on joining the employee association, which used membership dues to pay Murphy's salary. Murphy, however, was not accused of actually attempting to influence employees.
The report also provided a breakdown of Murphy's compensation for each position. In addition to his annual state salary of $97,804, Murphy received a total $253,083 in salary and benefits over 3½ years at the association.
During that time, auditors found 6,000 emails on Murphy's state email account that referred to the employees association, which they presented as evidence that Murphy was performing private duties while on the clock for the state.
Defending himself, Murphy noted that his official duties at times pertain to the association, so it would not be odd to find those references in his emails. He said on occasion he did respond to emails regarding his outside work during business hours, but was trying to cut back on doing so.
Several lawmakers took issue when legislative auditor Andy Babbitt conceded that the review of Murphy's emails had not determined how many actually pertained to legitimate state work.
"I am really interested in knowing whether or not there was a real overlap," said Rep. Vivian Flowers, D-Pine Bluff. She and Sen. Flowers are cousins.
After the meeting, Murphy told a reporter he did not believe his position at the association created a conflict. He continues to serve in both roles.
GOLF TOURNAMENTS
But lawmakers expressed deeper concerns about other aspects of the report regarding the association.
Twice a year, the association hosted golf tournaments to raise money for its programs. For $3,000, sponsors could participate in a "directors" tournament, where they would get access to agency managers. The report found 27 sponsors who collectively had $11.5 million worth of business in fiscal 2016 with state agencies that had employees in the association. The report said that access failed to "promote public trust" in contract bidding.
Sen. Alan Clark, R-Lonsdale, went further by saying the relationship between public employees and bidders amounted to "corruption."
The audit also found that the association -- which offered dental, vision and life insurance to certain members -- failed to obtain the proper license to do so.
In its official response, Community Correction said it had been notified that the association has stopped offering insurance coverage to members. The department also disputed the idea that Murphy's dual roles created a conflict, noting that he did not oversee the agency's human-resources department.
"We're just trying to help the corrections employees," Murphy told lawmakers. "I go home at night and to be able to help these families, whether going to their house if they're needing something, going to the hospital, and I've viewed that as my ministry and I've always been able to keep the two separate."
Other nonprofits in the audit report included Mulligan Road, a re-entry program, and the Arkansas Adult Probation and Parole Association, which provided training to parole and probation officers.
MULLIGAN ROAD
Mulligan Road was established in 2014 by Murphy and other Community Correction administrators as a re-entry program designed to teach offenders work skills while having them demolish blighted homes for the city in Pine Bluff. The program was shuttered in 2016 after the federal Environmental Protection Agency found that the inmates had not been properly trained in removing asbestos.
A report in The New York Times that year claimed that the EPA action came after inquiries from a reporter, and the newspaper published its account of the program later that year. Murphy later told the Arkansas Democrat-Gazette that the allegations that the nonprofit had skirted rules were "a shot in the gut," but that he had no plans to restart the program.
The auditors' report on Friday questioned whether Murphy, Sharp and other officials had the authority to start the program in the first place.
"The relationship between [the Department of Community Correction] and Mulligan Road is legally suspect due to the lack of a formal agreement," the report said. "In addition, creation of a non-profit is not necessary for the Agency to perform routine functions."
PAROLE ASSOCIATION
Similar to the fundraisers held by the employees association, legislative auditors found that conferences hosted by the Arkansas Adult Probation and Parole Association were funded in part by sponsors who did business with Community Correction. Another $2,000 in sponsorships came from the Arkansas Association of Correctional Employees Trust itself.
Half of the Probation and Parole Association's board members are publicly identifiable as Community Correction employees, according to a roster posted on the group's website. The audit found that Community Correction employees were doing activities for the nonprofit on state time.
Determining that employee training is a "routine function" of Community Correction, auditors wrote that the use of state employees and resources to run the Arkansas Adult Probation and Parole Association "appears to violate the public purpose doctrine" that requires public funds be used for public purposes.
In its response, Community Correction said it is re-evaluating all of its associations with outside groups to ensure they comply with the public purpose doctrine, but the agency disputed the contention that it had ever intentionally set up private nonprofits in order to work around legislative oversight.
Asked later if he thought the audit was fair, Murphy hesitated, and Dina Tyler, a spokesman for the agency, stepped in.
"I don't think fairness is at issue, it was the accuracy," Tyler said. "Some of the things in that report we dispute."
A Section on 05/12/2018