Pat Dollard

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Arizona Republic:

Sheriff Joe Arpaio’s office was hit Wednesday with wide-ranging budget restrictions amid evidence of misspending that Maricopa County officials say could be upwards of $80 million over five years.

The county Board of Supervisors also will forward its findings to the U.S. Attorney’s Office for review.

After a lengthy presentation by budget officials on the breadth of financial problems in the agency, supervisors unanimously agreed to the budgetary actions. County Manager David Smith tacitly acknowledged that the problems resulted from a lack of careful oversight by county officials, noting that until now the county’s financial affairs were conducted “on a trust policy” under which some of the problems occurred.

By Oct. 31, the county will now require pre-approval of non-routine transfers of money, and will require the Sheriff’s staff to sign timecards attesting to the accuracy of data reported to the county. Also, county officials each month will perform a line-item review of the agency’s detention fund, and transfer inappropriate expenses to the Sheriff’s Office general fund.

Over the next several weeks, the county also will work with sheriff’s officials to identify the exact amount that must be reimbursed to funds spent inappropriately out of the sheriff’s detention fund, and determine how to pay the fund back.

For example, the county could pay a lump sum or pay smaller sums over time.

“We will not harm public safety,” board attorney Tom Irvine said. “But we have to squeeze every penny . . . out of this system while maintaining public safety. It could be very painful for Maricopa County as a whole.”

Also, county budget officials will develop a new countywide policy for handling cash. And, by January 2011, staff will work on developing a new policy to handle county jail inmates’ cash. The policy would eliminate liabilities and streamline booking and release processes.

The county also will work with its criminal justice agencies to develop a new extradition policy, and possibly contract with vendors to reduce costs. Budget officials expect to recommend by January 2011 a new countywide travel policy to try to reduce costs in that arena.

Irvine said the county “wants to get off the litigation track.”

The host of proposed changes was unveiled Wednesday when the county’s Office of Management and Budget discussed potential misuse of public funds by the Sheriff’s Office, publicly presenting key findings to supervisors after hundreds of hours of staff research. Officials reviewed findings involving sheriff’s purchasing-cards, the detention fund, cash handling and extradition and travel policies, County Manager David Smith said.

The detailed review of spending by the county found stays in Puerto Rico and Belize charged to county credit cards, and unusual expenditures like first-class airfare upgrades, stays at luxury hotels and $2,215.48 spent at the Disneyworld Yacht Club Resort.

“We have hundreds of dollars spent at resorts, including room service . . . in what appear to be leisurely activities,” said Lee Ann Bohn, a deputy budget director.

The findings mirror those of an Arizona Republic investigation earlier this year into Sheriff’s Office credit-card use.

According to some financial records, Bohn said, training trips to Honduras by 10 Sheriff’s Office employees in July 2007 and October 2007 cost $91,000 in salaries, overtime, benefits and airfare.

Other major findings by county budget officials substantiated that the Sheriff’s Office tapped the jail-operations fund to pay for functions not allowed under jail-fund rules, such as salaries for deputies who worked on public-corruption investigations into county supervisors and judges.

Deputy County Manager Sandi Wilson told the board the county gathered business cards left by deputies working Arpaio’s corruption task force and discovered they were being paid with detention funds.

County human-resources data, information from a racial-profiling lawsuit and other documents show many Sheriff’s Office employees were not working in the same job assignments recorded for them in county records.

Wilson said the Sheriff’s Office kept a separate set of personnel books detailing actual work assignments. Those assignments are different than information kept on the county’s official human-resources records.

“They actually kept a shadow system,” she alleged. Wilson also asserted that the Sheriff’s Office annually has spent at least $16 million from the detention fund inappropriately. The problem could stretch back at least four years, she said, and could cost as much as $64 million, possibly more depending on how long the problem existed.

That money comes from a general sales tax approved by voters. Its use is restricted to spending on jail items such as food, detention officers’ salaries and equipment

“That means there is a state law, and a voter-protected funding source being violated, and remedies will have to be taken,” Smith said. “Is it $60 (million), is it $70 (million) . . . is it more? That is the most serious issue.”

Wilson said budget officials needed more records and more cooperation from sheriff’s officials to determine the extent of the problem.

Supervisor Andy Kunasek said he believed the Sheriff’s Office needed an audit of the fund. The agency over the last year has resisted at least five audits of their books.

Sheriff’s officials also were alleged to have misused jail-enhancement funds, backfilling the account using general fund dollars that are less restrictive, Bohn said.

Bohn asserted that the office knowingly violated the procurement code and a capital freeze on jail-enhancement and anti-racketeering funds. She presented excerpts of e-mails to back up her allegations.

“Should we be getting a freeze exemption approval before processing the (purchase order)?” one sheriff’s e-mail said. “This could be something sensitive that shouldn’t go through the county.”