DENVER – Longstanding concerns voiced by critics of the Colorado Energy Office were validated Tuesday when an audit concluded that $252 million spent on energy projects over the past six years could not be justified.
Perhaps not surprisingly, more records exist related to how funding was acquired than to how it was spent.
The audit, which evaluated a sample of the Colorado Energy Office (CEO) functions and expenses, revealed major deficiencies such as executing inaccurate contracts, failing to monitor work by contractors receiving loans and grants, overpaying contractors, and claiming unapproved and undocumented staff expenditures.
For example, CEO claimed a $25,000 expense for a membership without identifying the employee and name of the organization. Since the recession hit in 2008, the energy office spent $690,400 on travel – including $49,800 on foreign trips to destinations such asChinaandJapan.
“Over the last four, five or six years, this office appears to be a prime example of the arrogance of government, of how government can go wrong,” declared Sen. Jerry Sonnenberg (R-Sterling).
“It’s tough to look at this,” said Sonnenberg, recalling the recession crisis that forced program cuts, fee increases and suspended seniors’ Homestead Exemption tax credits to balance the state budget.
The Colorado Energy Office (CEO) was created to promote energy conservation and independence in 1977, but changed its mission and ramped up funding for renewable energy and weatherization projects under former Democrat Gov. Bill Ritter in 2008.
CEO’s revenue ballooned from $21.5 million in 2008 to $84.6 million in 2011, primarily due to a $144 million cash infusion of federal stimulus money which was supposed to create jobs and, at least in Colorado, promote Ritter’s ambitious green energy plan.
Questions about CEO’s accounting and lack of transparency triggered a performance audit of the Weatherization Assistance Program by the Office of the State Auditor in 2010. That audit also cited errors in management practices and performance standards that were to have been corrected by July 2011.
The CEO manages 34 programs, funded by the federal government, state and private entities, to promote technology and economic development, renewable energy as wind and solar, energy efficiency in public schools and in low-income households which are eligible for financial assistance under the Weatherization Assistance Program.
Under Hickenlooper, the energy program was changed to “all of the above” to incorporate natural gas, oil and coal with wind, solar, geo thermal and electric-powered vehicles.
Sen. Lois Tochtrop (D-Thornton) asked Hickenlooper’s Deputy Chief of Staff Kevin Patterson, who is interim acting director of CEO, when there would be more diversity in the program to include capturing and recycling methane gas from coal and landfills. Bills encouraging this cheaper form of energy died last year in the legislative session.
Patterson said it’s a question of defining renewable energy and how you give financial incentives. Instead, he said, CEO is more focused on expanding the program to promote electric-powered vehicles, natural gas and recycling bio fuels from forest trees, citing a bill sponsored by Sen. Gail Schwartz (D-Snowmass Village).
In fact, the audit report noted that CEO has failed to administer the Electric Vehicle Grant Fund and Green Truck Grant Program, approved by the General Assembly in 2009. Last year, the legislature repealed the Green Truck Grant Program because it wasn’t utilized.
Despite CEO’s claim that those programs were not funded by the state or federal government – the audit revealed that the money was available under the stimulus program as well as grants from the State Energy Program and Clean Energy Fund.
As the audit repeatedly noted, CEO funds were not used in a cost effective way – and without tracking how money was spent and tracking program results, there is no basis to prove the value of the department.
The audit stated that eight program managers didn’t know their program’s budget or spending, and seven of those managers didn’t know how many full-time equivalent employees were under their supervision.
That problem provoked a comment from Sen. Steve King (R-Grand Junction) who said the CEO was audited for a good reason – it was rumored to be “the governor’s slush fund” under Ritter’s administration.
“It had the ability to move money where it needed to be moved,” asserted the Senator. “This is not a good audit report.”
“It’s apparent to me that those rumors were absolutely true,” declared King.
The audit checked 22 contracts totaling $88.8 million in the database system and found two failed to incorporate a performance schedule for work and three excluded budgetary requirements. Another contract for $20.1 million missed both those requirements.
Required status reports on contractors’ work progress were incomplete, late or sporadic – and 59 percent were missing. In some cases, the project manager had waived the reports.
Patterson told the committee that the office is now under Hickenlooper and changes are forthcoming. CEO is now producing a manual of policies and procedures, conducting staff training and encouraging not only progress reports on contract recipients, but site visits.
Sen. Lucia Guzman (D-Denver) agreed with King in that the problems began under the Ritter administration, however, she added a warning to Hickenlooper and Patterson.
“This administration is beginning the third year of its first term,” said Guzman, who added that the CEO needs to show positive outcomes from this audit.
Guzman implored Patterson to “add a little octane gas” to fuel the search for a new director of the program.
“We are painfully aware of where we are in this administration term,” replied Patterson, but because of the chaos, “it’s been a blessing” to not have hired a new director at this point.
Although Patterson vowed to implement the audit recommendations by July 2013, he agreed to provide an update on the progress in April to the Legislative Audit Committee.