State moves closer to balancing checkbook

The administration of Gov. Susana Martinez is behind schedule but making progress on balancing the state’s checkbook for the first time since at least 2006.

The Department of Finance and Administration has completed work with government agencies to try to ensure each general ledger, or checkbook, entry of a debit or credit corresponds by number to a Treasurer’s Office, or bank, transaction.

Still to be integrated into the system are individual warrants, or checks, written on the state’s behalf by third parties, such as contractors providing managed care for Medicaid recipients.

The goal was to have all the work done by March 1.

“We’re behind, but we’re confident we’re moving ahead,” said Ricky Bejarano, state controller and deputy secretary of finance and administration.

Bejarano said the individual warrants issued by third parties can’t be safely integrated into the state’s SHARE computer system without hardware and software improvements.

Until those improvements are made, probably in 2014, the Finance and Administration Department will monitor third-party transactions to try to ensure the total dollar amount of warrants reported by a third party equals the total amount of its debits reported by the Treasurer’s Office.

Bejarano says the department will be able to balance the state’s checkbook on a month-to-month basis in the fiscal year beginning July 1.

The state hasn’t been able to balance its checkbook despite implementation in 2006 of government’s $30 million-plus SHARE computer system for money management and other functions.

The Finance and Administration Department blames poor implementation of SHARE and is paying Deloitte Consulting $654,000 in the latest effort to solve the problem.

Balancing the state’s checkbook is critical for several reasons, including preventing fraud and ensuring that policymakers know how much money the state has to spend.

At the close of the 2011 fiscal year, the state’s general ledger showed a balance of $2.7 billion more than the Treasurer’s Office reported having on hand. More recently, the Finance and Administration Department has estimated the state’s cash reserves may be $70 million to $460 million less than previously thought.

In addition to balancing the state’s checkbook on a go-forward basis, the department will attempt to balance the checkbook going back two years. That will help determine the exact amount of the cash reserves.

External auditors cited the cash reconciliation problem in a recently released audit of the Finance and Administration Department.

Auditors also noted major problems with the department’s Central Payroll Bureau, which issues paychecks to government workers, and its Financial Control Division.

Among the problems: lack of testing to ensure employees were paid the proper amount and improper approval or lack of approval for some financial transactions.

Bejarano says the problems have existed since the implementation of the SHARE system, a centralized accounting system for government that replaced separate agency financial systems.

“It didn’t start with this administration. It goes way back,” Bejarano says. But he adds, “It is mine now to fix.”

You might remember the government payroll problems last year that resulted in delayed direct deposits and some workers being paid less than they should have.

In July, Finance and Administration began a $245,000 remediation project at the Central Payroll Bureau to try to ensure accurate and timely processing of payroll and related federal tax payments and reporting.

The project includes creation of dozens of employee manuals on payroll processing procedures and the addition of more and better-qualified staff to run the bureau.

Finance and Administration says it also has made staff changes in the Financial Control Division to try to ensure its controls over financial transactions are effective and documented.

UpFront is a daily front-page news and opinion column. Comment directly to Thom Cole at tcole@abqjournal.com or 505-992-6280 in Santa Fe. Go to www.abqjournal.com/letters/new to submit a letter to the editor.
— This article appeared on page A1 of the Albuquerque Journal