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Frerichs releases internal audit results

Wednesday, Apr 29, 2015

* We’re coming a bit late to this story. Sorry about that

An independent review of the Illinois state treasurer’s office released Monday found problems with internship hiring that favored those with political connections and other programs in need of overhaul.

Democrat Mike Frerichs, having reached the symbolic benchmark 100 days in office, released the results of the audit he promised after becoming the state’s chief investment officer in January. He said he will closely review the report’s recommendations and emphasized initiatives on which he has embarked. […]

The report highlighted a paid internship program that gave positions to young people with connections to influential politicians, campaign donors and lobbyists. The “clout-heavy” program had no formal procedures for how the interns were recruited or managed, the audit said. […]

The report also found that a scholarship framework funded by fees from the office’s college savings program lacks basic management rules. Frerichs’ office said 300 scholarships averaging $1,000 were awarded after 2006 without proper record-keeping, management and distribution.

* From an SJ-R editorial

Between May and September 2012, Rutherford’s office spent $158,504 to pay 51 interns. From May to September 2013, the office spent $170,936 to pay 58 interns.

Rutherford announced his candidacy for governor in June 2013. A 2014 report in the Chicago Sun-Times that looked at the identities of the interns found that many were referred by elected officials, lobbyists, donors and political workers.

Rutherford denied that clout had anything to do with who received summer jobs. Unfortunately, there was little documentation to conclude that it didn’t, either.

The same can be said for the home-based “community affairs” treasurer employees who, according to Frerichs, were not properly supervised, who cost the state more in mileage reimbursements than office-based workers would have, and who were not effectively sited around the state. Without proper recordkeeping, it’s impossible to gauge their value or to know what they were doing on state time.

* Tom Kacich

But the review also noted that Frerichs may want to consider increasing the number of employees in cash management (now one) and investment (four) “as Illinois appears to have fewer employees dedicated to these functions than other states.”

It also suggested that the office’s information technology is outdated.

“The systems in place today were created 15-20 years ago through internal staff design and development. These systems were built based on the business processes that existed at the time, were designed and developed individually, and enhanced over time as resources were available,” Plante Moran said. “This has created systems that operate in silos, do not share data, and are not allowing the business to become more efficient through the use of technology.”

* Illinois Radio Network

Frerichs says an audit – conducted by a firm which volunteered its services – showed not enough accountability in the unclaimed property program and not enough oversight of treasurer’s employees working from their homes. And then there’s another problem.

“The office was named” in the sexual harassment suit against Frerichs’ predecessor, Dan Rutherford. Frerichs continued, “I’ve inherited this. We’re working with the attorney general’s office, trying to reach a resolution soon – we’re trying to – well, that’s probably all my attorney wants me to say about pending lawsuits, litigation.”

Discuss.

- Posted by Rich Miller        

29 Comments
  1. - Oswego Willy - Wednesday, Apr 29, 15 @ 9:47 am:

    When the Rutherford internal investigation, paid for by the taxpayers, gets released, then I’ll actually pay attention.

    It’s a press pop. It’s a chance to kick a guy whose already down, while a taxpayer report stays sealed.


  2. - Not quite a majority - Wednesday, Apr 29, 15 @ 9:48 am:

    “The systems in place today were created 15-20 years ago through internal staff design and development. These systems were built based on the business processes that existed at the time, were designed and developed individually, and enhanced over time as resources were available”

    Exactly! Most of the state’s IT was brought in decades ago and rarely, if ever upgraded. It was a question of MONEY, not union contracts. When the appropriations bills has a bunch of zeroes for equipment - this is the result.


  3. - Makandadawg - Wednesday, Apr 29, 15 @ 9:52 am:

    So it seems there is no need for consolidation after all and that here is still alot of work left to do in the Treasurer’s Office.


  4. - Downstate GOP Faithless - Wednesday, Apr 29, 15 @ 9:54 am:

    OW is not wrong about the Braver report coming out is when people will pay attention. But there are some clear eyebrow raising moments in here which speak to the culture of the previous administration.


  5. - Wordslinger - Wednesday, Apr 29, 15 @ 9:59 am:

    Am I reading this correctly?

    In the state treasurer’s office, there is one employee for cash management and four for investment? Is that possible? Aren’t those the core functions?

    Yet there were 58 paid interns and something called “home-based community affairs” employees? “What would you say… you do here?”

    Geez, I guess we should have been paying more attention to that outfit when Rutherford was there.


  6. - walker - Wednesday, Apr 29, 15 @ 10:21 am:

    Wordslinger is on to something. Five professionals on core functions, and 58 part time interns on community affairs.

    Will say that the Treasurer professionals I have had the pleasure of meeting were well-qualified and responsible. But the office has had a reputation for being a launching pad for future campaigns and fundraising for years. Is that “community affairs?”


  7. - Team Sleep - Wednesday, Apr 29, 15 @ 10:25 am:

    Slinger - nice “Office Space” reference. Maybe the interns talk to the people so the engineers don’t have to?!

    Rutherford suffered from two serious problems. First - he had to have his hand in everything. Micromanaging at that level of state government is a waste. Second - his ambitions outstripped his ability to govern and be an effective officeholder. Had he sat back and actually tried his hand at being State Treasurer instead of Mitt Romney’s main Illinois cheerleader and then candidate for governor he might’ve done a better job and gotten reelected had he run for another term. He’s a competent person and knows how to push the right buttons, but he clearly screwed the pooch on that one.


  8. - Formerly Known As... - Wednesday, Apr 29, 15 @ 10:30 am:

    This is a press pop, as OW says. A ==volunteer audit== press pop repeating old news and issues already scrutinized by the media months ago. This offers little new information.

    Regardless, it appears clear Rutherford is not nearly the guy many thought he was. He fooled a lot of people for years, including some of those most loyal to him.

    Wake me up when the Braver Report, the report we paid for, comes out as it should.


  9. - Anon - Wednesday, Apr 29, 15 @ 10:37 am:

    Surprised to not see this tidbit from the SJ-R editorial included here - “Former state Treasurer Alexi Giannoulias’ administration had eight intern positions on the books his last year in office. But the number of interns grew as much as sevenfold after Rutherford took over. “


  10. - Chris - Wednesday, Apr 29, 15 @ 10:56 am:

    “many were referred by elected officials”

    Ok, I *hate* the Illinois way of doing things, but a reference from an ‘elected official’ isn’t automatically a clout thing–Military Academy nominations flow thru congressmembers and are not (always) about clout or connections.


  11. - VanillaMan - Wednesday, Apr 29, 15 @ 11:03 am:

    Every time you try to get a chance to see Treasurer Frerichs as a legitimate professional in government - he does amateur stunts like these.

    Topinka became bigger than the offices she held by avoiding stupid PR stunts which made her office look more important than it was. It took her a decade. It seems the last two players are so focused on their political future, and are so obviously hungry for more power - they don’t look trustworthy.

    Just do the job and not cause a scene.


  12. - Formerly Known As... - Wednesday, Apr 29, 15 @ 11:13 am:

    Chris - well said. If you are a government official looking for young people interested in working as government interns, then asking other government officials for their recommendations is an obvious start.


  13. - Yellow Dog Democrat - Wednesday, Apr 29, 15 @ 11:19 am:

    Wordslinger:

    From the report:

    Although audit reports follow a sound process resulting in sound findings, it was common for audit findings to go unresolved and repeat over several subsequent years’ audits. This reveals a lack of action and discipline on the part of the organization. We recommend that a corrective action program be formalized so that internal findings are acted upon and managers are held accountable for inaction.”

    To OW point, the auditors do rehash some turf, but there is some much deeper digging here too.

    To be fair, the auditors had some very positive things to say as well.


  14. - Wordslinger - Wednesday, Apr 29, 15 @ 11:19 am:

    I was most taken aback by the existence of “home-based community affairs employees.”

    What in the world are those and what essential function could they possibly serve in the treasurer’s office?

    The fact that they were unsupervised, there was poor record-keeping and they were racking up big mileage charges calls for a deep look from law enforcement.

    C’mon man, TII. The whole setup screams ghost payroller.

    Any other constitutional officers have “home based employees” out there?


  15. - Team Sleep - Wednesday, Apr 29, 15 @ 11:26 am:

    Slinger - those were the “Cash Dash” folks who went to events like county fairs, senior health seminars, etc.


  16. - Oswego Willy - Wednesday, Apr 29, 15 @ 11:33 am:

    - YDD -,

    Communication is a two way street. Silence says muchote to me.


  17. - Oswego Willy - Wednesday, Apr 29, 15 @ 11:47 am:

    What I learned?

    Thank goodness we didn’t pay for this PR gag.

    Frerichs thinks advancing the ball is kicking a man already down, while leaving the taxpayer paid investigation sealed.

    Is Frerichs continuing is press-glomming ways?

    We’ll see.

    It’s a press pop.


  18. - Downstate GOP Faithless - Wednesday, Apr 29, 15 @ 11:53 am:

    TS-they were actually the ICash people…don’t forget, Rutherford rebranded a well functioning program, spending 7 figures to do so, all in the name of legacy.

    Also do not forget Rutherford did some sort of internal audit when he took over (I think Steve Kim chaired the committee) followed by a tour to Metro East where ISP drove him around.


  19. - Snucka - Wednesday, Apr 29, 15 @ 12:09 pm:

    It makes me sad and angry to read people bashing Treasurer Frerichs. He is dedicated to his job as Treasurer and focused like a laser on improving that office. Any suggestion that he is using the position as a PR platform or to position himself for higher office is repugnant.


  20. - Oswego Willy - Wednesday, Apr 29, 15 @ 12:14 pm:

    - Snuka -,

    It’s a self-serving PR stunt, piggy-backing on the usual “Governor’s 100 Days” idea.

    Frerichs is a glommer.

    “Rauner gets a ‘100 Day’ thingy, I want that too. Me!”

    Release the Rutherford Report, then they have my attention.

    Otherwise, they ignore you, until they want something.


  21. - Snucka - Wednesday, Apr 29, 15 @ 12:35 pm:

    OW, I know that you have a problem with Treasurer Frerichs personally. Your name-calling and baseless accusations speak for themselves. Meanwhile, Frerichs is transforming the culture and overhauling the operations of an important public office.


  22. - Oswego Willy - Wednesday, Apr 29, 15 @ 12:41 pm:

    - Snucka -,

    Frerichs is a glommer who could have waited to make this public after 100 days, or even before 100 days.

    The sole reason you make it at 100 Days is a PR stunt, to glom on the Governor’s true measure of the first 100 days of the State’s Executive.

    I can’t help Frerichs is how he is. He’s doing better at it than Rutherford, but what kind of person kicks a man already down, finished, on the “100 Days” timetable.

    It speaks volumes to an officeholder’s ego to think it’s fine glomming on traditional benchmarks for other offices to make their own hay.

    Release the Rutherford Report. Otherwise it’s “Look at me!”


  23. - Sporty41 - Wednesday, Apr 29, 15 @ 12:55 pm:

    OW - I think I speak for all that don’t have twitter but what are Frerichs and Dan The Man tweeting? Please tell us!


  24. - Oswego Willy - Wednesday, Apr 29, 15 @ 12:58 pm:

    @ILTreasurer is Frerichs.

    I hit the search key.

    Have at it.


  25. - Team Sleep - Wednesday, Apr 29, 15 @ 12:59 pm:

    D-GOP - I know. I was breaking…you know, a term from Sopranos and Goodfellas…

    Snucka - I understand your concerns, but did Treasurer Frerichs really need to air all of this dirty laundry? For example, would it have hurt to keep the internship issues in house and have a confidential senior staff meeting to ensure it never happens under Treasurer Frerichs’s tutelage? Mr. Frerichs seems to like the limelight a bit and, given his 100 days “recap”, he seems to be on the same track as his predecessor.


  26. - Yellow Dog Democrat - Wednesday, Apr 29, 15 @ 1:53 pm:

    I suppose Frerichs could have chosen not to poke around to make sure that the programs within his office were well run and that there were good systems in place.

    Or, when problems were discovered, he could have kept them secret from the public.

    However, I would not recommend the “See no Evil, Hear no Evil, Speak no Evil” approach.


  27. - Oswego Willy - Wednesday, Apr 29, 15 @ 1:58 pm:

    Some elected officials do their job, others look for ways to glom on press pops and “100 Day” tie ins.

    Kicking a predecessor when they are down and done, to get a press bump, that ain’t doing the people’s business first and foremost…

    It’s not.


  28. - walker - Wednesday, Apr 29, 15 @ 2:45 pm:

    Two different ways to set oneself up for future office. Can’t wait to see the campaign brochures labeled Treasurer’s Report mailed to potential future funders and supporters. Alexi and Dan both did that.

    JBT simply told the plain truth, when needed, to the public.


  29. - Arthur Andersen - Wednesday, Apr 29, 15 @ 8:39 pm:

    Questions: how many people did Alexi have in cash and investment? Did Rut cut or maintain the status quo?

    I, for one would like to hear how the investments are performing, where they are invested, and plans for change. This would seemingly be more useful than a retrospective on discontinued personnel practices.

    Disappointing, but not surprising.


Sorry, comments for this post are now closed.


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