Jan. 21, 2003 – The V.I. government has gotten mixed reviews from the Office of the Inspector General of the federal Department of the Interior regarding its compliance with the 1999 memorandum of understanding between the Turnbull administration and then-Interior Secretary Bruce Babbitt.
The audit, conducted last November, found that the government had substantially achieved five of the standards set forth in the MOU and that four of the 13 financial performance standards were fully met.
The government’s performance has led to a somewhat improved financial condition, according to the audit report. But the auditors point out that true assessment of the success of the efforts to balance the Fiscal Year 2003 budget will not be possible until the audited financial statements for FY 2003 are completed.
In the meantime, the report said, the Interior Department for its part achieved two and partially achieved one of the five financial and environmental performance standards relating to its performance.
The objective of the audit was to determine whether the V.I. government and the Interior Department were in compliance with the requirements of the MOU.
Entered into in October 1999, the MOU required the V.I. government to carry out a financial recovery program to eliminate long-term deb and achieve a balanced budget. The government had also agreed to standards for financial and technical assistance. In turn, Interior agreed to assist the territory by considering a proposal to facilitate the local efforts as well as initiatives to enhance the natural resources of the islands. See the Oct. 6, 1999, St. Thomas Source story "Governor signs memorandum of understanding".
The auditors found that these performance standards were not substantially achieved by the territory:
– 50-50 cost sharing related to retirement and health insurance benefits of government workers. A bill to this end was submitted but was not approved by the Senate.
– The pursuing of specific initiatives to improve the collective bargaining process.
– Submission of comprehensive annual financial reports within 120 days of the end of each fiscal year.
– Submission of at least 10 required progress reports to the Interior Department.
The federal auditors found that the government was successful in achieving reductions in General Fund total expenditures and payroll costs from Fiscal Year 1999 to Fiscal Year 2000, but that expenditures increased in FY 2001 and were budgeted to increase again in FY 2002.
As regards the Interior Department’s performance, the audit report said the Secretary of Interior had not issued a certification that the V.I. government had substantially complied with the MOU requirements so that capital improvement funding could be provided, and the department had not secured funding for the VI Conservation Fund as had been agreed.
The auditors cited as high points of the government’s performance since 1999:
– Its preparation of a five-year financial recovery plan.
– A 50 percent reduction in overtime costs.
– A 5 percent reduction in payroll costs.
– Imposition of a hiring freeze.
The auditors noted that the V.I. government held the FY 2000 budget to $432.1 million and balanced revenues and expenditures. Other areas of achievement cited were the contracting for and completion of a single audit for FY 1998 and the implementation of a financial management training plan.
The Interior Department was found to have met its commitments to work with the territory to create a consortium to promote understanding of the marine environment and to provide learning opportunities through a Park Mentorship Program.
The auditors concluded that Gov. Charles W. Turnbull had acted in good faith to achieve the performance and reporting standards set forth in the MOU. Certain initiatives to cut costs and enhance revenues were not approved by the Senate, the audit report stated, and the government continued to experience pressure to increase spending, specifically with regard to payroll.
The inspector general suggested that the governor take additional steps to curb expenditures and increase revenues in order to achieve the long-term balanced budget goals of the MOU. It was also suggested that Interior take a stronger role in monitoring the V.I. government’s compliance while working with Interior’s agencies to accomplish the natural resources enhancement goals that are yet to be achieved.

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