Audit Adds to Troubles for Shelley

Heaping yet another problem onto beleaguered California Secretary of State Kevin Shelley, a federal watchdog agency Thursday ordered a special audit of the state’s handling of millions of dollars in voting reform funds.

The Election Assistance Commission agreed unanimously to examine whether Shelley’s office improperly spent Help America Vote Act money, which Congress authorized to help avoid problems like those in Florida during the 2000 presidential election. It is the first such audit ordered by the bipartisan, four-member commission created to oversee state spending of voting act money.

Officials said that if the audit finds that California spent money for partisan purposes or other matters not authorized by the law, the agency will seek reimbursement. It could also refer the matter to the Justice Department for civil or criminal action.

The commission’s vote was triggered by a scathing state audit in December that concluded that Shelley mismanaged $46 million in voting act money. Auditors found that some of the federal money was used to pay state consultants to attend partisan political events and to write speeches for Shelley.

“We believe serious questions were raised,” commission Chairwoman Gracia Hillman said after Thursday’s meeting.

Shelley’s voting act coordinator, Tony Miller, said he was disappointed with the commission’s decision and called it premature, noting that a new state audit of the federal grants was already underway. But Hillman said the federal audit would examine different issues.

Miller acknowledged that Shelley’s office failed to properly account for voting act spending but added: “Never did we cross the line in terms of authorizing political activity of a partisan nature. There has been no evidence of breaking any law here.”

The federal audit was expected to take several months and focus on $27 million in discretionary funds for reforms such as voter education, poll worker training and improving voter access. The commission said California reported spending $6.9 million of the money to date.

Shelley’s mounting problems have prompted some state legislators to call on him to step aside. At least four California newspapers -- the San Francisco Chronicle, the San Jose Mercury News, the Sacramento Bee and the Long Beach Press-Telegram -- have published editorials saying that he should quit.

A spokesman said this week that Shelley intended to stay and fight the allegations.

Next week, Shelley is scheduled to testify before a legislative committee that is examining the audit’s findings.

On Tuesday, the state Personnel Board asked the attorney general to conduct a criminal investigation into Shelley’s hiring of a campaign fundraiser’s son and his handling of an employee’s sexual harassment complaint. And for several months, a federal grand jury has been investigating Shelley’s campaign finances.

Last month’s report by state Auditor Elaine Howle was an indictment of Shelley’s management of the voting act program, which was expected to bring $350 million to California to upgrade county voting machines and make other election-related improvements.

Auditors found that Shelley’s office exercised poor control over voter outreach consultants who attended dozens of events that appeared to have nothing to do with voting act reforms. Among them were a political fundraiser and a state delegation meeting for the Democratic National Convention.

Shelley staff members who worked on the program were also paid with voting act money, but auditors found that recordkeeping for work by staff members and consultants was so lax that they could not quantify how much was improperly spent and subject to repayment to the federal government.

The secretary of state’s office is adopting guidelines to prevent any partisan activity and is hiring an outside firm to help oversee the program.

Shelley, a Democratic former state assemblyman from San Francisco, has partially attributed voting act management problems to the pressures of running three statewide elections, including the recall of Gov. Gray Davis, during a one-year period.

Schrader reported from Washington, Reiterman from San Francisco.