State auditor highlights ‘disturbing uptick’ of alleged fraud in Nebraska local governments

State Auditor Mike Foley’s office has issued eight audit letters to local governments in Nebraska calling out improper financial practices in the last six weeks.

The alleged infractions include a former Cedar County Commissioner using a county pickup truck for personal business, a former Farnam village clerk not billing herself for municipal services and the Decatur Housing Authority Executive Director processing over $18,000 in excessive compensation and unsupported reimbursements to herself.

Foley’s office also found a Nemaha County commissioner using a county gas pump to fill his personal vehicle, a Custer County employee who recorded work hours while at her children’s school events and Pleasanton village employees who used their 11% rebates from village expenses at Menards for personal purchases.

Alleged malpractice was also cited in Dundy County and the village of Litchfield.

Dundy County and the Decatur Housing Authority each issued responses to the office saying they have taken steps to improve oversight.

Foley said the incidents are part of a concerning trend of rising cases of fraud in small counties and villages.

“When I was auditor previously, I don't remember there being so many cases,” he said. “Now it's just like, constant.”

He said that smaller communities are more prone to malpractice, in part because fewer staff members provide fewer opportunities for oversight.

“A big part of the problem is in small governments, you don't have a lot of checks and balances built in, because the workforce within the small government is pretty limited, whereas in a larger entity, whether it’s government or even a private business, the person who's using the credit card is not the same person who's going to pay the credit card bill,” he said.

Foley recommends that village boards and county commissioners take their oversight responsibilities more seriously – something he said hasn’t always happened when his office presents them with evidence of malfeasance.

“They’ll say, ‘Hey, hey, I don't work there. I'm just on the board.’ And we say, ‘Yeah, that's the point. That's why you're on the board, to be watching these things,’” he said.

The Nebraska State Auditor is in charge of keeping tabs on the more than 2,500 units of local government in the state.

Foley said the increase in reported infractions at the village and county levels have made it difficult for his office to spend time monitoring the state’s bigger cities and statewide government agencies, like the Nebraska Department of Health and Human Services

“It's regrettable, first, because it's happening, but secondly, because this is taking us away from the large government agencies where there's billions of dollars being spent that we have to watch,” he said. “I'd rather spend my money watching the billions, rather than hunting the thousands, but you’ve got to watch both.”

Foley’s office has around 50 employees, a slight reduction from the 60 employees Foley said the state auditor had 40 years ago.

He said the Legislature’s Appropriations Committee, which determines the auditor’s budget each year, was “good” to the agency this year, but more resources are still needed.

“If you want to save money, give me the tools to do it, because I can show you where the money can be saved, and I'll more than pay for the appropriation,” Foley said.