By Debra Jasper
and Spencer Hunt
Enquirer Columbus Bureau
COLUMBUS - Saying too many contractors who do business with the state get away with wasting tax money, state officials today will announce reforms that would give them more power to recover misspent cash.
State Sen. Jeff Jacobson, a suburban Dayton Republican, is introducing the reform bill, which would also make state officials use tougher contracts that hold firms more accountable.
"There was a gaping hole in the law that allows those who want to loot the system at the expense of the elderly and handicapped the chance to get away with it," Jacobson said. "This will make it real clear that if you take care of our neediest citizens, we're going to know what you are spending to do it."
Jacobson said the bill is particularly aimed at cracking down on misspending in companies that provide care to foster children, the mentally retarded and other vulnerable populations.
State Attorney General Jim Petro plans to attend a news conference this afternoon with Jacobson to show support for the measure. He and Jacobson called for reforms last spring after an Enquirer investigation showed little was done to recover $346 million in tax dollars misspent since 2000.
An analysis of state audits revealed foster-care companies alone spent nearly $16 million on questionable items such as a Mercedes Benz, plastic surgery for a director, stocks and Rolling Stones tickets. The companies repaid just $117,000 - a penny on the dollar.
Petro, who was state auditor at the time, said such spending is unacceptable and the state should do more to recover money. His spokeswoman, Kim Norris, said Petro supports any bill that strengthens the state's power to go after misspent funds.
"There were so many instances of abuse in those audits," Norris said. "The intent of this (bill) is exactly what Jim Petro has been advocating for some time."
Among other things, the bill would:
Make state agencies specify in their contracts exactly how much money a firm will spend on services and how much can go for indirect costs like profit, salaries and overhead.
Require firms that get more than $500,000 a year in tax money to submit to state audits.
Give state officials more power to get back misspent money, even if company officials already spent it on luxury cars, trips or other questionable items.
"Most people who do business with the government are scrupulous," Jacobson said. "But if they aren't, it's time we have some real teeth in our laws so we can get our money back."
Betty Montgomery, who was elected state auditor this year, has also been calling for reforms, but she stopped short of supporting Jacobson's bill. Her spokesman, Joe Case, says she "supports the notion of increasing accountability," but might advocate a different approach.
Montgomery and Petro, political rivals who both want to succeed Bob Taft as governor in 2006, have disagreed on how much the state can do to go after misspent tax money. As Ohio's former attorney general, Montgomery said the state needed to clarify its authority to audit private firms.
Petro disagreed and audited 26 private foster care firms as state auditor - identifying millions in misspending.
The issue is now tied up in court. The Ohio Association of Child Caring Agencies sued the state last year over the foster care audits, claiming the auditor has no right to review spending by private companies paid with public funds. A judge has yet to rule on the case.
Penny Wyman, executive director of the association, says her organization believes that once private nonprofits have fulfilled their contracts, they can use any remaining money to further their mission in their own way. The group represents 67 public and private foster care agencies.
"If you hire me to clean your house and you pay me $10, is it your business what I do with that money?" Wyman said.
Other non-profit agencies that do business with the state are expected to challenge the bill. Jennifer Campbell, interim director Ohio Association of Nonprofit Organizations, said the state doesn't need tough new rules.
"There are extensive accountability measures that are already in place," Campbell said. "It's just a matter of state agencies following through on that."
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