Feds will audit Shelley's use of election reform money

By Erica Werner
ASSOCIATED PRESS  January 27, 2005

WASHINGTON ? In the latest blow to California Secretary of State Kevin Shelley, the federal commission that distributes election reform money voted Thursday to audit millions in questionable expenditures he oversaw.

The four-member U.S. Election Assistance Commission voted unanimously to audit $27.3 million sent to California in 2003 for general voting reform activities. The funds were a portion of the $180 million the state has received under the Help America Vote Act of 2002. Most of the rest of the money has not yet been spent.

 A state audit released last month said Shelley mismanaged the money, including by paying employees to attend partisan events.

"Legitimate questions have been raised by both the California state auditor as well as the California Assembly," Commission Chairwoman Gracia Hillman said before the vote. "We have a responsibility to make sure that all states are in compliance" with federal law.

Commissioners said the audit was necessary because the state audit sampled only about 12 percent of the $27.3 million, and a more comprehensive review was needed. California could be required to return some of the money, and the audit's findings could be turned over to the Department of Justice for further investigation.

The audit is expected to take about four months and should begin in several weeks.

The decision by the Election Assistance Commission, which is split between two Democrats and two Republicans, is the latest in a cascade of problems for Shelley, once considered a rising Democratic star.

The secretary faces two state investigations and a federal probe into accusations he accepted laundered campaign contributions, and he's been accused of illegally accepting political donations in his state office. On Tuesday, the state Personnel Board accused him of creating a hostile work environment.

The San Francisco Chronicle, San Jose Mercury News, Sacramento Bee, Santa Rosa Press Democrat and Long Beach Press-Telegram all called this week for Shelley to leave office. Even a prominent member of his own party, Democratic state Sen. Richard Alarcon of Los Angeles, has said Shelley should resign.

But Tony Miller, a Shelley aide who attended Thursday's commission vote, said he didn't expect Shelley to resign. The secretary is scheduled to testify under oath before the state's Joint Legislative Audit Committee next week at a hearing on his handling of the Help America Vote Act money.

Miller, who is Shelley's Help America Vote Act coordinator, said the commission's vote was premature and commissioners should have waited for the results of another state audit now under way. But he predicted the federal audit would vindicate Shelley, and he said the secretary would cooperate.

"I think the audit will show that Secretary of State Kevin Shelley never authorized anyone, whether a consultant or employee, to be involved in partisan political activity on the state or federal time or dime," Miller said. "There was a failure of process, which we've talked about, in terms of not documenting all of the hours, not having time sheets appropriately done."

Miller contended the problems were being addressed, and "we want to get things right."

The state audit said that Shelley employees whose salaries were paid by the Help America Vote Act attended events such as a legislator's reception to "spread the word" about Shelley's office. Consultants hired by the office with federal funds attended fund-raisers and a meeting of Democratic National Committee delegates.

A law firm paid with federal money wrote speeches for Shelley that had little to do with the Help America Vote Act. Both federal and state law generally prohibit the use of public funds for partisan activities.

"I was terribly disappointed when I read the state auditor's report," Commission Vice Chairman Paul DeGregorio said after the vote. "Certainly there were newspaper articles, but until I read the audit report itself I had hoped that it wouldn't be as serious as it is."

Besides the money it's already received, California is supposed to get $170 million more under the Help America Vote Act. It's unclear if that money will be held up by the audit.

The audit by the Election Assistance Commission is the first the agency has ordered since its creation by the Help America Vote Act, which Congress passed in the wake of the 2000 election dispute. The commission is charged with distributing more than $3 billion to states to their voting systems and replace punch-card and lever machines.