Delayed audit has bad news for state

Florida must repay $267-million paid to the state pension fund, auditors say. Democrats suspect politics delayed the audit.

TALLAHASSEE - A federal audit that was delayed until after Gov. Jeb Bush's re-election last year is finished with bad news for Florida: Florida owes the federal government $267-million for excessive payments Washington made to the state's pension fund.

State officials say fat chance.

"We're not wrong. We're going to prove to the federal government that we played by their rules and they're wrong," said state Senate Appropriations chairman Ken Pruitt, R-Port St. Lucie.

Democrats suggested Thursday that politics played a role in the U.S. Department of Health and Human Services' decision last year to delay the audit for six months. That put its completion after the November 2002 election.

"At least it's part of a mismanagement of the Florida retirement fund," said Rep. Doug Wiles, D-St. Augustine. "At worst, it was a deliberate act to win an election."

The delay caught the attention of Iowa Sen. Charles Grassley, the top Republican on the U.S. Senate Finance Committee, who asked for an investigation into whether HHS inspector general Janet Rehnquist delayed the audit to avoid possible embarrassment to Bush during his reelection campaign.

The audit delay was just one part of a federal inquiry into whether Rehnquist, daughter of U.S. Supreme Court Chief Justice William Rehnquist, had improperly infused politics into her administrative duties. She resigned in June.

Bush has said he asked for the delay because of major staffing changes at the agency that manages the state pension fund.

Florida has 30 days to respond to the audit, and a spokeswoman for Bush said his office was still reviewing the state's options. The state can challenge the findings, cut a check or arrange with the federal government to reduce Washington's payments to the fund.

Washington contributes to the roughly $90-billion fund whenever state or local employees do work for the federal government, such as projects funded through federal grants or through Medicaid, a health care program for the poor.

A draft audit released in March suggested Florida owed the federal government $517-million for pension benefits between 1999 and 2002, but auditors reduced that amount to the $267-million they now recommend.

The audit said the state should refund the money from the $12.8-billion in surplus funds in the $93-billion pension plan, either paying it all at once or over the long term by reducing future pension costs for the federal agency.

Health and Human Services officials have insisted that politics did not influence the delay. Even if the audit began in April as scheduled, it would not have been completed until after the November election, they say.

That assertion appeared to be undercut by documents Rehnquist made public late last year in response to questions from Grassley and Sen. Max Baucus, D-Montana. One of the documents was an HHS e-mail stating that, before the delay in starting the audit, a draft report of the findings was expected by Sept. 30, more than a month before the Nov. 5 election.

"It is very possible that this was a deliberate action on the part of the state to make our budget look better than it really was," said state Sen. Ron Klein, D-Delray Beach, the Senate minority leader.

Bush spokeswoman Jill Bratina called the allegation "absolutely untrue."

- The Associated Press contributed to this report.

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