State audit nails insurance commissioner’s office for overspending its budget

[private]A new report from the state auditor’s office details how Insurance Commissioner Ralph Hudgens and his staff severely overspent his office’s budget in fiscal year 2017.

Hudgens’ office overspent for administrative staff salaries by $1.6 million and overspent for salaries in the insurance regulation program by $1.3 million, according to the audit report.

“Significant spending reductions were necessary in the final two months of fiscal year 2017 in order to avoid a budget shortfall,” the audit said.

To help pay for those salaries and benefits, the insurance commissioner’s office took money from the budget of a Special Fraud program — whose funds are restricted by law ” to the investigation and prosecution of insurance fraud in the state,” the report said.

“Between fiscal years 2014 and 2017, the agency provided more than 300 pay increases without requesting additional funding from the General Assembly,” the audit said. “Some of the pay increases were based on salary studies that did not follow best practices.”

In his formal response to the audit report, Hudgens blamed some of the “improper allocation of expenses” on a former chief financial officer, who was not named in the audit.

As for the criticism that Special Fraud funds had been misused, Hudgens’ office noted that “the practice cited has been in place for 14 years, that it originated at the General Assembly’s instruction, that several past audits have reviewed the practice and not declared it to be in violation of budget rules or the statute which established the fund in question.”

Hudgens, the state’s insurance commissioner since 2011, is not running for reelection this year.

© 2018 by The Georgia Report

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Tags: insurance commissioner's office , Ralph Hudgens , state auditor