Politics & Government

From 2008: As Auditor of Public Accounts, Crit Luallen is devoted to pointing out what's wrong in an effort to make things right

State Auditor Crit Luallen
State Auditor Crit Luallen

FRANKFORT – Crit Luallen helps bring down crooked politicians, something Kentucky has in abundant supply.

As the state's elected Auditor of Public Accounts, Luallen has tracked millions of dollars stolen, wasted or dropped down a rabbit hole by local governments and state agencies. Her reports have served as a blueprint for 14 criminal prosecutions so far.

”I am very impressed with that office under her,“ said Assistant U.S. Attorney Ken Taylor. In June, Taylor used a Luallen audit to win the conviction of Knott County Judge-Executive Randy Thompson for buying votes with public money. ”They have the right attitude about being a watchdog.“

Luallen, 56, is also a consummate Frankfort insider with three decades in Democratic politics and jobs under six governors. Her own reputation is nearly impeccable, but she has worked with her share of besmirched politicians.

It was Luallen who talked Gov. Paul Patton out of resigning in 2002 when he got caught in an extramarital affair with a businesswoman who said he did official favors for her. Instead, Patton limped through his final year.

Luallen was secretary of Patton's cabinet. She was shocked and disgusted by her boss's behavior and thought about quitting herself. But she agreed to stay for several months longer if he agreed to finish the job.

(She also decided not to work for governors anymore. If she was going to suffer for what the boss did, she figured, she might as well be the boss.)

”Crit was adamant,“ Patton said recently. ”She said "No, you should not resign.' And she was right. ... She recognized her obligation to see the administration through that crisis, so we had continuity in government while my attention was unfortunately elsewhere.“

That odd combination of righteous reformer and savvy politico makes Luallen one of Kentucky's most striking leaders.

It's likely Kentuckians will see much more of her in the next few years.

Luallen is interested in a variety of higher offices – maybe governor, congresswoman or senator – and when she speaks to civic groups, as she frequently does, she talks about more than auditing. She talks about 17 percent of Kentuckians living in poverty, and 14 percent not having health insurance and the cost of college tuition rising nearly five times faster than inflation. She talks about a lack of leadership in the halls of power, which means that Kentucky's problems just get worse.

”Our rate of increase in spending for prisons is almost double that of education,“ Luallen tells groups in her stump speech. ”We are spending more and more on our problems at the expense of our solutions.“

More bad news

Luallen is fiercely loyal to her state. She still lives on the beautiful 155-acre farm outside Frankfort where she grew up.

Yet as she serves her second term as auditor, much of her job involves sitting through briefings from her staff on what's gone wrong with the commonwealth this time. To identify millions of dollars in squandered public funds in one of the poorest states is depressing.

”Kentucky does not have enough money to do everything it wants to do,“ she said last month, ”so it certainly cannot afford to lose one dollar to waste, fraud and inefficiencies.“

On a recent weekday, two teams of accountants briefed her on their forthcoming reports: A state parks employee skimmed about $75,000 from her office, and a state contractor was paid several million dollars but produced little of value. Neither case was unusual.

Luallen already had read and marked up the draft reports. She peppered her auditors with questions to check their facts and draw out details that would get attention when the reports became public. What kind of luxury car did the contractor give himself for the job? Where did he and his wife eat at public expense? What was his cozy off-hours relationship with the state bureaucrats who were supposed to monitor him?

”Here's a business we basically created with our tax dollars, and now they're using some of those dollars to entertain our officials,“ Luallen summed up. She lowered her head and grimaced. ”Ohhhh.“

Luallen said she's an optimist. If her office can't fix everything, at least it can offer the promise of change, she said.

”Some parts of the state have resigned themselves to corrupt government, which means citizens don't get the kind of services they deserve, and honest people often don't try to run for office because it's too discouraging,“ she said.

”I hope that some of our audits, and the prosecutions that come out of them, show that it doesn't have to be this way,“ she said.

Old crooks, new crooks

Facts don't always support her optimism.

Kentucky has winked at public corruption since long before State Treasurer James ”Honest Dick“ Tate disappeared in 1888 with a quarter-million dollars from his office, never to be seen again.

Luallen's auditors return to the same counties year after year – sometimes with FBI agents or state police to protect them from local hostility – as voters replace the old crooks with new crooks.

Her work helped convict Knott County's judge-executive for corruption. But he hangs onto his job as he awaits sentencing. His predecessor, Donnie Newsome, himself the subject of scathing audits, kept his $67,000-a-year post while in prison for corruption. Citizens gave him a hero's welcome on his release, with a honking motorcade to escort him back into Hindman.

The legwork for Luallen's audits is done in the field by accountants like Bobby Bowling, her lead auditor for southeastern Kentucky, where corruption seems ingrained.

Bowling flatters, cajoles and leans on officials to get them to hand over financial records that could incriminate them – assuming they maintain any records, or haven't altered or destroyed them, as they sometimes do. (By law, they must document their spending, and they must open their books to auditors – but there's the law and there's reality.)

Not everyone is a fan of oversight. In 2006, Knox County Judge-Executive Raymond Smith indignantly compared Luallen's auditors to ”Nazi storm troopers assaulting a Jewish community in World War II.“

This year, Smith pleaded guilty to fraud for falsifying records to conceal the county business he kicked to himself and his family. Luallen's audits caught him.

When he's stonewalled, the resourceful Bowling goes hunting for documents at banks, vendors and others with whom officials do public business. He chats up secretaries and janitors, folks who overhear things.

”If the people responsible for the problems you're looking at are still there and in charge of everything, it can get pretty hostile,“ Bowling said. ”You always hope when new people get in that it will change things. But it hasn't happened yet.“

Turning the wheels

Aside from tracking misspent money, Luallen also issues ”performance audits,“ to judge how well government does its job in different areas. The answer often is ”not well.“

Long before most observers, she warned about overcrowded and ruinously expensive jails; the shabby personal, medical and financial care provided to adult wards of the state; and other chronic problems.

The governor and legislators usually do little but nod their heads in agreement as they drop her reports into a drawer.

”It can be frustrating to read in the newspaper about continuing problems at Oakwood“ – a troubled state facility for the mentally retarded in Somerset – ”and know that we were warning about this very thing years ago,“ Luallen said.

Kentuckians are likewise frustrated because they don't see anyone in Frankfort solving problems, she said.

”We often take three steps forward and four steps back rather than stick with reforms for any sustained effort,“ she said.

”Higher education is a good example of that,“ she said. ”In the Patton administration, we put a lot of money and effort into higher ed reform, into improving the system and trying to make it more accessible. And nearly every year since then, the higher ed budget has been cut.“

Luallen knows state government because she has worked in or overseen nearly every cabinet as governors came and went.

Patton called Luallen one of his three ”co-equals“ who met as a group and helped him make every big decision.

Chief of staff Andrew ”Skipper“ Martin handled politics. Budget director Jim Ramsey worried about money. And Luallen did policy, Patton said. She knew how to turn the wheels of government. If Patton needed an expert on schools or Medicaid or urban sprawl, he tapped Luallen. (He also asked Luallen to wield the ax when it came time to fire people, not having the stomach for such confrontations.)

Lawmakers credit Luallen with helping Patton pass his higher education reform package in 1997, his signal accomplishment. It took community colleges away from the University of Kentucky – a controversial move – and pumped an extra $38 million a year into higher ed funding. Luallen soothed the egos of UK boosters by arguing that the additional money could make UK one of the nation's Top 20 public research universities.

That year, while earning $90,000 under Patton, Luallen turned down a private-sector executive job in Louisville that would have paid more than $200,000. She said she preferred to stay in government, where she could make things happen.

Her next job

Carol Palmore, who worked with Luallen in different administrations, said her friend has a gift for quickly understanding complicated subjects. She also – and this is crucial in politics, Palmore said – can explain things to people not as smart as her without broadcasting that they're not as smart.

”She was my best sounding board for health insurance issues,“ said Palmore, a former personnel secretary. ”I would get all tied up in the minutiae and the numbers related to our health costs. And Crit would pull me out and say, "OK, let's look at the big picture here,' and she got it.“

The state term-limits law prevents Luallen from running for auditor again in 2011, so she's thinking about her next job.

In 2007, national Democratic Party kingpins flew Luallen to Washington, D.C., and promised her the moon if she would agree to challenge Republican U.S. Sen. Mitch McCon­nell this year. She was tempted – she thinks McConnell is ”arrogant“ and does ”nothing but spew these threats and insults to frighten people“ – yet she had recently recovered from her second battle with cancer. Facing McConnell's swollen $15 million campaign treasury and endless attack ads didn't appeal to her. She would have needed to raise $50,000 a day just to compete, she said.

But after years of pointing out what's wrong, Luallen does want an office with the power to put things right.

”It all comes down to education,“ she said.

”If you take a map of the state and identify where we have the lowest levels of education – and not surprisingly, the highest levels of poverty – and then the worst problems we find with corruption – they will basically match up,“ she said.

”Until we are doing more to educate our people, we're not going to turn around any of these other problems,“ she said. ”We're losing ground.“

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