Oversight, audit of KY charitable funds possible after tornado relief check snafu

Key Kentucky lawmakers say they’ll push for greater oversight of and an investigation into charitable funds administered by the state’s Public Protection Cabinet after learning an unknown number of checks ended up in the wrong hands.

The Herald-Leader reported last Wednesday that multiple $1,000 checks from the Team Western Kentucky Tornado Relief Fund — which raised more than $52 million from thousands of donors — were sent to people unaffected by the storms that killed dozens of people in December 2021.

“The General Assembly at large, we need to make sure that this doesn’t happen again,” Rep. Jason Petrie, R-Elkton, said. “It doesn’t matter if it’s this governor or another governor; it’s the executive branch, and the legislative branch needs to exert proper oversight over all funds, especially if someone, on behalf of the Commonwealth, is out soliciting the funds and trying to direct where they’re going to be spent.”

As of Wednesday morning, the Treasury said it has stopped payment on 196 checks from the tornado relief fund. The Public Protection Cabinet, which administers the fund, has not specified how many of those checks were sent to the wrong people, or were canceled for other reasons, like a change of address or being lost in the mail.

The cabinet has also not specified how many of the 10,040 total checks — that’s more than $10 million in $1,000 increments — may have been sent to people unaffected by the tornadoes. Public Protection has said check recipients were determined using FEMA and insurance claims, but FEMA has pushed back at the suggestion that the issue arose from its records.

“FEMA only provided the Commonwealth information regarding applicants eligible to receive FEMA assistance,” the agency said in a statement. “FEMA thoroughly vetted all applicants for program eligibility. Any applications flagged for potential fraud were not included in information shared with the Commonwealth.”

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Petrie, who chairs the House’s Appropriations and Revenue committee, said he is working on a bill concerning the tornado relief fund, as well as any and all “off-budget accounts held by the executive branch.” There is, for example, also a Team Eastern Kentucky Flood Relief Fund, which was established after the July flooding that devastated large swaths of Eastern Kentucky and has raised about $13 million.

The bill would do a few things, he said: look at the cash available in the funds now and determine how the legislature can investigate and take responsibility for the money; establish reporting mechanisms for the fund; and, potentially, require that money raised by a constitutional officer be spent through the regular appropriations process.

“State taxpayer money that comes in ought to be treated extraordinarily carefully,” he said. “When donated funds come in, it would require the same level — if not even greater care — to encourage that voluntary giving in the future.”

The district of Sen. Robby Mills, R-Henderson, includes Dawson Springs, which was especially devastated by the storm. Mills said he’s heard from constituents about the checks, including one woman who had an insurance claim paid but yet still didn’t receive a check.

“There’s still people that’s without a house, living in a trailer, needing help, and they found out they didn’t get a check and some other people got a check that may not have (been affected),” Mills said.

Also last week, the Kentucky Lantern reported that about $10.8 million of a $12 million allocation to address tornado survivors’ unmet needs had yet to be spent.

Audits of charitable funds could be forthcoming

Auditor Mike Harmon, a Republican who is running in the gubernatorial primary, said he is prohibited by ethics opinions from auditing a fund established by Gov. Andy Beshear, a Democrat seeking re-election, given Harmon’s own campaign for the office.

“I believe, personally, it needs some additional review,” Harmon said of the fund. “We’ve had some concerns expressed to us, especially pretty close to this particular article, but some even before that, wondering where the monies were going.”

Harmon said his team is evaluating if his office could conduct an audit without his involvement, or if it could involve an outside accounting firm.

Senate President Robert Stivers, R-Manchester, agreed it wouldn’t be appropriate for the auditor to conduct the audit and said an outside agency would need to be brought in.

Stivers anticipated that Petrie’s bill would receive wide support in the Senate, saying it would be “very difficult to argue against that.” Republican lawmakers have supermajorities in both the House and Senate.

When asked about a potential audit at a news conference last Thursday, Beshear again noted that all the check recipients were verified by FEMA or an insurer.

“The only way you would audit that is to audit FEMA or to audit the private insurers, because we didn’t want to have to spend millions of dollars doing another verification on the other side of FEMA,” he said. “And doing so would run really contrary to what a lot of us believe, is that the FEMA process is already too tough.”

Beshear noted the error rate for the checks is about 2%.

However, Petrie is skeptical that the public will ever know the true number of checks sent erroneously.

“Yes, we’ve had some checks that have been turned back in,” he said. “These are, again, good-hearted people. They’re trying to do the right thing. How many other people have simply cashed a check and moved on? And there was no real reason for them to receive the check in the first place.”

Were the checks sent with a ‘political phrase’ attached?

Stivers said the need for “better oversight and operations” is par for the course with Beshear’s administration and “the way they’ve dealt with things.”

“These were dollars that were raised, that are having almost a political phrase attached to them, using one’s official position to raise and then distribute, so it should be treated no differently than a dollar that goes through the city, the county or the state, with some type of oversight, knowledge, of what’s being done, process,” Stivers said. “It’s not just like an audit of the dollars, but it is a process audit, too. Who’s determining this? Who’s determining how much it should be? For what purpose? And here is the dollar that you make sure it gets to the right person that has been impacted.”

The “political phrase” Stivers referenced is “Team Kentucky.”

Both Beshear the politician and Beshear the governor have used various iterations of “Team Kentucky” in recent years. The inauguration parade was the “Team Kentucky” Inauguration Parade. His weekly press conferences are “Team Kentucky” updates. Gubernatorial campaign emails are often sent from “Team Beshear.” The phrase “Team Kentucky” was even the subject of a trademark battle between the commonwealth and the University of Kentucky.

In response to a Herald-Leader open records request, the Public Protection Cabinet provided a copy of the standard letter sent to check recipients in December 2022. The stationery bears the “Team Kentucky” logo that also adorns many government websites.

The letter, from Public Protection Secretary Ray Perry, explains “the Governor launched the Team Western Kentucky Tornado Relief Fund which today is providing you a payment to help ease your hardships.”

Perry’s letter concludes: “Finally, the Governor asked me to personally pass along how much he cares about you and everyone else impacted by these events.”