State auditor finds ‘serious
deficiencies’ in Labor Dept.

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By Lyn Danninger
ldanninger@starbulletin.com

A legislative audit of the state Department of Labor and Industrial Relations Disability Compensation Division found a number of "serious deficiencies" in fiscal internal controls.

The division, which employs about 124 people, administers benefit programs that provide health care and economic relief to workers for on-or-off-the job injuries and illnesses, such as workers compensation.

Among the criticisms, the report by state auditor Marion Higa noted that the department director lacked policies about waiving penalties imposed for employer violations of the workers' compensation law.

For example, during the past two fiscal years, the Disability Compensation Division admin- istrator waived $950,000 of more than $1.2 million in penalties without the approval of the director, the report said.

While department Director Leonard Agor said he could not comment on the waivers without first researching individual cases, he agreed with many of the report's criticisms.

"I think it was fairly accurate in certain respects as to what they said about some things, for example the lack of policies over the waiver of penalties," he said.

Agor said the division administrator has traditionally dealt with penalties and waivers.

But in the future Agor said he would become more actively involved in oversight of the matter.

"I can understand the auditor's position that we should be looking (at the penalties and waivers) and that we should have policies and procedures in place," he said.

The report also noted that a number of the division's staff were performing duties unrelated to their job descriptions.

It also called into question much of the division's financial reporting system which continues to be maintained manually even though the department had spent more than $750,000 for a new computer system.

As a result, accuracy, reliability and usefulness of data produced in the division could not be relied upon, the report said.

Agor said the division, like many state departments, struggles with short-staffing in some areas and not enough funding.

"During this legislative session, we have asked to use the special fund for some of the positions the auditor is talking about," he said.

Agor said that his department is working on improvements. But some of the problems cited in the report also relate to resources, he said.

"We generally agree and will try to implement some of the suggestions," he said.