Veteran State Auditor issues stern warning, announces she will not seek re-election

State Auditor Beth Wood testified Wednesday before a legislative committee (Photo: NCGA video stream)

One of the most recognizable figures in the North Carolina Council of State offered a blunt assessment of one state agency and many local governments on Wednesday before surprising a room of legislators with the decision that she was stepping out of the political arena.

State Auditor Beth Wood was invited to appear before the House Oversight and Reform Committee to share her agency’s audit of the state Division Employment Security. Like past legislative appearances, she did not sugarcoat her findings.

“The biggest issue that we need to talk about was the lack of preparedness,” she said.

North Carolina’s Division of Employment Security did not meet the federal requirement for the timely payment of first-time unemployment benefits during the COVID crisis. Not only that, but the agency missed meeting its federal requirement for nine years prior to the pandemic.

“$342 million was anywhere from two months to 365 days late,” testified Wood.

The untimely payment of first-time jobless benefits meant families were unable to pay their mortgage or rent, cover their car payment, and faced real food scarcity while DES struggled to manage a backlog of claims.

“Nobody was paying any attention to how long it was taking some of these applications to get reviewed, get them met, and back out the door and people paid,” Wood told legislators.

Over a five year period, the auditor’s office identified $166 million in improper payments.

During his testimony, Antwon Keith, head of the Division of Employment Security (DES), acknowledged many of those problems, but said progress has been made since the height of the COVID crisis.

DES prevented $142 million in fraudulent payments last year and $68.5 million so far this year, Keith testified.

But Wood cautioned the National Bureau of Economic Research estimates that there is an economic downturn every five and a half years.

“When there’s an economic downturn, we’re going to see a rise in unemployment and yet there was no preparation by DES since the Great Recession in 2009 and 2010.”

From jobless benefits to unqualified local government workers

“I deeply appreciate your willingness to protect the citizens and research things that directly affect citizens,” said Rep. Allen Chesser. “So, if we could change hats, I want to talk about some of the work you’ve done with local government.”

Chesser (R-Nash) asked the longtime state auditor to pivot and share the greatest vulnerabilities and concerns her agency has regarding local governments.

“I think it’s the lack of financial oversight,” Wood answered bluntly.

“They don’t even understand what a bank reconciliation is. And if they don’t have bank reconciliations being done timely, I don’t know how the elected officials know how much cash they got in the bank.

“It’s just an overall lack of financial understanding and sort of a business acumen, if you will, of how to run a business, to run these particularly small towns and poorer counties.”

Wood said she has been working with the NC League of Municipalities and CPA firms to step in and help.

She said elected, local officials need meaningful reports that they can read and understand.

Wood told the committee one small town almost went bankrupt, with the town employees simply giving their elected officials five account balances each month with no understanding of the budgeting process.

“If you had the microphone, and you do, what steps would you encourage local governments to take to shore up the financial and operational burdens that they have that they’re currently struggling with?” Chesser asked.

Start with a competent finance officer.

“Does their finance officer have the qualifications to do that job? Are they looking at getting the right reports every month to elected officials?” responded Wood.

Far too often, the auditor’s office finds bills getting paid with no documentation and no clear understanding on how it might impact the local budget.

“Many years ago, we authorized the local government commission to conduct schools to train local finance people. I was just curious as to whether you had ever looked into or are familiar with the training and whether it has provided any benefit,” asked Rep. George Cleveland (R-Onslow).

The training is provided by the UNC School of Government in Chapel Hill.

“For all practical purposes, those that want to do a good job send their staff to that school. But those that don’t care will never send their staff unless made to,” Wood said.

The challenge for many of North Carolina’s smallest towns is that finance officers are hard to find, and “they don’t stay long, particularly if the books are in shambles.”

Wood is advocating for a more sustainable solution in finding CPA firms that will keep the finances for these towns.

For years, some local governments never completed an annual audit.

“Spring Lake, that was the problem there. They hadn’t had an audit for three years, and that’s why $474,000 got embezzled,” she reminded House members.

“Now, if you don’t have an audit within a year of your year-end, you will have a portion of your sales tax withheld. That law just got passed this session.”

“Your department gives us the information that allows us to make inquiries into the problems that plague government. So, we appreciate what you do,” said Rep. Jeff McNeely (R-Iredell).

A surprise announcement

In the closing minutes of the meeting, Wood took many aback with the announcement that she would not be seeking re-election in 2024.

“There are some circumstances that are in my life and I’ve recognized four years from now, I’ll be 74 years old. And so, if there’s some things I want to do, I need to get them done now.”

Wood, a Democrat who was first sworn into the office of State Auditor in 2009, became the first woman to hold the position.

Even after an accident in a state-issued vehicle last December, Wood was expected to seek another term.

On Wednesday, Republicans and Democrats alike praised her dedication to the office.

She told members of the House Oversight Committee that her commitment and focus would not wane.

“I want you to remember, we got 14 months to kick some butt.”