Guam Governor ‘Borrowed’ Funds From Child Support Trust To Cover Payroll Shortfall

$6 million replaced within a couple of days but ‘never should have happened’

By Shawn Raymundo

HAGÅTÑA, Guam (Pacific Daily News, July 12, 2016) – The Department of Administration on Tuesday confirmed it borrowed about $6 million in funds meant for child support payments in early June to cover a shortage in payroll expenses.

“It’s certainly something that never should have happened,” Administration Director Christine Baleto said Tuesday.

The $6 million in the government’s child support trust account was replenished within a few days.

The issue was brought up publicly during a budget hearing at the Legislature last Friday when Attorney General Elizabeth Barrett-Anderson and Deputy Attorney General Rebecca Perez, with the Child Support Division, told lawmakers that DOA had borrowed money from the account.

Typically, Baleto explained, the financial management division cuts and releases checks based on anticipated revenue that’s supposed to come in. However, during the particular payroll week last month, revenue collections were short, prompting them to tap into the child support account — one of the many accounts under DOA’s purview.

“They released payments as scheduled, but the revenue they anticipated to come in for that week didn’t,” she said.

Baleto said financial managers decide which accounts to transfer funds from and that Treasurer of Guam Rosita Fejeran is the only one who has approval to transfer funds. She added that such transfers don’t go through her desk at all.

“The only one who has approval is the treasurer of Guam … she’ll just transfer the funds, the checks will come out,” Baleto said. “It’s kind of an internal accounting, or part of the financial management division. So it’s all internal to them. Those transfers don’t even go through my desk at all. The treasurer has to be the one to do the transfer of funds.”

Within days after returning to the office from the weekend after those paychecks went out, Baleto said Barrett-Anderson had contacted her to state that those funds shouldn’t be touched for any other purpose than for child support payments. Parents who don’t have custody of their children pay child support payments, and the money does not belong to the government of Guam, Perez has said.

“When we do our daily reconciliations we did discover that certain transaction had occurred and that roughly $6,010,000 had been transferred out of the account,” Perez recalled Tuesday.

“What I wanted was the money to be put back,” she added. “When this was discovered my first concern of course would be, here we have a problem, let’s fix the problem … we need to make sure that we’re not jeopardizing payments to parents who need these payments.”

Baleto said she’s still investigating the incident and is waiting on the financial manager who requested the transfer to come back from leave later this month.

“That’s why we’re still going through as part of my investigation … This blew up over the weekend, but I’m still working through who authorized it, what’s the justification?” Baleto said, adding: “We need to go through and have due diligence especially when the individual gets back ... it’s unfair to kind of pinpoint at this time. Then we can map up the true story.”

To address the recent incident, Baleto said the first procedure she changed was the way they manage cash, releasing payment checks based on the cash available and not on anticipated revenue.

“This was the result of our failure to properly manage and again the perception of ‘just because it’s scheduled, doesn’t mean it’s actually going to be released,’” she said.

“We strengthened how we’re managing cash and payments,” Baleto added. “What we’ve done in the past is not how we’re doing now. We’re planning for it, we’re matching receipts, nothing is going out unless it’s covered.”

To prevent DOA officials and the treasurer from accessing the child support fund again, Baleto plans to send a letter to the bank, instructing them to restrict access to that account as well as some others that aren’t meant to be co-mingled with the General Fund.

Baleto said she’s also scheduled to meet with the attorney general Wednesday afternoon to further discuss measures they could implement that would prevent such a mistake from occurring again, even under future department heads and administrations.

“This situation, it’s a terrible situation,” Baleto said. “Sometimes this highlights what needs to be fixed … it doesn’t excuse what happened, but all we can do moving forward is make sure it doesn’t happen again and put in safeguards.”

Deputy Attorney General Perez on Tuesday said she’s in support of additional measures being placed to protect the account from being used for other purposes.

“Our office will definitely be looking at maybe administrative and potentially statutory measures to ensure that the funds in the child support account are used solely for which they’re intended,” Perez said.

Pacific Daily News
Copyright © 2016 Guam Pacific Daily News. All Rights Reserved

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