Estill County misused about $10,000 in homeland security grant money to help a local official buy retirement time for himself, State Auditor Crit Luallen said Friday.
Luallen is referring her office's audit report to state and federal agencies, including the Kentucky Department of Military Affairs, which supplied the grant money from the U.S. Department of Homeland Security.
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"My concern about this is, we're in very difficult financial times where every dollar counts," Luallen said. "So whenever our audits find something like this that clearly falls outside the guidelines of proper expenditures, we ought to make every effort possible to try and recover the money."
Gen. John Heltzel, at the state Department of Military Affairs, said he has imposed new rules so future grants can't be spent this way in Kentucky unless the federal government approves in advance and in writing.
"I don't want you to get the idea that we think this is OK and we're going to let it happen again," said Heltzel, director of Kentucky Emergency Management.
But the official for whom retirement time was purchased, Estill County Emergency Management Director Fred Rogers, said he did nothing wrong.
Rogers, 52, said he agreed to take his current job more than a decade ago if the county would help him buy credit-time in the County Employees Retirement System, so he can draw a pension in the future.
Rogers said part of his salary properly is paid by homeland security grants from the Chemical Stockpile Emergency Preparedness Program, a federal program that gives money to Kentucky counties surrounding the Bluegrass Army Depot near Richmond, where hazardous weapons are stored.
CSEPP funds are to be used for community safety, which is his job, Rogers said.
Estill County clearly stated in its budget that $9,952 in CSEPP funds would be used as reimbursement for money spent buying his retirement time, Rogers said. Nobody at the state Department of Military Affairs or the Federal Emergency Management Agency who saw the county's budget warned that it would violate any rules, he said.
"It was approved by people all the way up the chain to (Washington) D.C.," said Estill County Judge-Executive Wallace Taylor. "This was spent for what it was supposed to be spent for."
FEMA spokesman Kurt Pickering at the agency's regional office in Atlanta said he was unaware of the situation and had no immediate comment.
Heltzel at the state Department of Military Affairs, said his predecessors apparently reviewed Estill County's plans, not him. "FEMA has said this wasn't the way we want you to spend this money, but there's not much point in trying to get it back now," Heltzel said. "The amount that it would cost to recoup the money is possibly more than the money itself."
Luallen said Estill County's defense — that nobody objected to their unusual use of homeland security funds — is irrelevant. The county had no written authorization to do this, she said.
"We have to audit to the documentation. They cannot produce a written agreement that showed they had advance approval," Luallen said. "Clearly this is not a necessary and reasonable expense for this program."
Also, Rogers bought credit-time from the early 1980s, before CSEPP even existed, and federal rules prohibit the spending of grant money on expenses that occurred outside the scope of the contract, Luallen said.
Earlier this year, Luallen issued an audit criticizing Powell County for improperly diverting funds from the same homeland security program — CSEPP — to help cover shortfalls elsewhere in the county budget.