U.S. panel urged to open audit of Shelley
Author of law providing election funds wants probe

Zachary Coile, San Francisco Chronicle Tuesday, January 4, 2005

Washington The chief author of the law that sent nearly $4 billion to states for nonpartisan voter education funds called Monday for a federal inquiry into how Secretary of State Kevin Shelley spent California's share of the money.

Rep. Bob Ney, chairman of the House Administration Committee, urged the Election Assistance Commission to conduct a special audit to determine whether Shelley violated federal rules by spending some of the state's voting funds on contracts with Democratic operatives who attended fund-raisers and other partisan events. The federal funds were meant to be used to replace outdated voting machines and for other nonpartisan programs.

"I think it would be good for them to take a look at it," said Ney, R- Ohio, who sponsored the 2002 Help America Vote Act.

His comments came at the swearing-in ceremony for the new chair of the Election Assistance Commission, Gracia Hillman. Hillman told reporters after the event that her agency is preparing to announce in less than two weeks that it will conduct either a full audit of Shelley's handling of the voting funds or a less intensive review of spending by the secretary of state.

Shelley, who is California's top election official, has been under scrutiny since The Chronicle and other newspapers reported that Shelley was spending federal voting funds to hire consultants and "voter outreach workers" mostly Democratic operatives who had ties to Shelley and to his re- election campaign.

A state auditor general released a scathing report Dec. 16 that found that Shelley's office violated state procurement rules in its handling of the voting funds, skirting Legislature-ordered guidelines on competitive bidding in the hiring of the voter outreach contractors.

Shelley's office could not produce proof that the consultants whose 46 contracts totaled $1.5 million did the work they were hired to do, the audit found.

The state auditor general's report also concluded that Shelley's office was slow to forward federal voting funds to counties to purchase new voting machines, which could put the state at risk of missing deadlines required by Congress for improving voting systems.

Shelley, in a statement responding to the state audit, said that having to administer the "historic and unscheduled" recall election may have interfered with his management of voting funds. Shelley added, "Any mistakes that were made were certainly not intentional, and we don't believe the audit report finds otherwise."

DeForest Soaries, the Election Assistance Commission's outgoing chairman, said Monday that the results of California's audit made clear that there were major problems with California's handling of its Help America Vote Act funds that needed to be fixed.

"That's irrefutable," said Soaries, a Republican appointee who remains a commissioner. "(But) you have to separate the problems that are related to California law and the problems that are related to federal law.

"You have to know which problems rise to the level of potential violations and which problems were more bad management," he said. "We also have to look at which problems have already begun to be corrected versus which problems were more historical in nature. But whether or not there were problems is not, I think, subject to question."

Soaries, who served a one-year term as chairman at the newly created agency, is being replaced by Hillman, a Democratic appointee, as part of a normal one-year rotation. Hillman's nomination was recommended by House Democratic leader Nancy Pelosi of San Francisco.

Hillman, a former executive director of the League of Women Voters, said the commission has been gathering information from the California auditor general and is nearing a decision on whether to open a special audit of Shelley's office.

"We will use the next few days to get additional information from Secretary Shelley's office, and then we will be ready by the middle of January to make a decision," she said.

Hillman said a review or a full audit by the commission would probably focus on whether the state met all the guidelines of the Help America Vote Act, other federal rules and the election reform plan the state submitted to the commission.

"Certainly there is no need for us to relook at what the state auditor has looked at, but there may be some things we have questions about that the state wouldn't even be looking at," Hillman said.

The Election Assistance Commission has been cautious about conducting an audit mostly because it would be the first such inquiry ordered by the commission since it was created in 2003.

The commission, established by Congress in response to the Florida election debacle of 2000, also has not yet hired an inspector general. If the commission orders a special audit, it may have to contract out with another federal agency for investigators who could complete the task.

Ney said he also plans to ask the commission to evaluate whether the Help America Vote Act needs to be amended so that it specifically prohibits state and local election officials from using the funds for political purposes.

"The key here is it's got to be bipartisan, whatever is done," Ney said. "You can't use HAVA money to single out educating only people that live in certain suburbs or only people that live in certain cities. It's got to be fairly done."

"We'll see what (the commissioners) come up with and maybe we'd want to fine-tune a provision," Ney said. "We don't want to micromanage the use of the money, but we certainly don't want to see it turn into political use where it's one-sided."

Shelley got a vote of confidence from one powerful ally Monday, fellow San Franciscan Pelosi, who said she does not believe the state auditor general's report indicated a misuse of federal money.

Pelosi also said she opposes a plan, floated by Gov. Arnold Schwarzenegger's administration, to strip Shelley's office of management of the state's federal voting funds.

"I don't think that would be right," Pelosi said. "I think the secretary of state has the role of removing obstacles to participation in the electoral process. If you take the funds away from the mandate, then you're not going to be able to enforce the law."