State official earned 2 salaries, audit says

Arkansas Community Correction Director Kevin Murphy is shown in this file photo.
Arkansas Community Correction Director Kevin Murphy is shown in this file photo.

Arkansas Community Correction's chief deputy director was paid $50,500 by a nonprofit group at the same time he received a six-figure state salary, a state auditor told lawmakers on Friday.

Kevin Murphy worked an average of 30 hours a week as executive director of the Arkansas Association of Correctional Employees Trust, said Deputy Legislative Auditor Jon Moore. Murphy's salary information was based on the association's 2015 IRS 990 form.

Moore's salary as Community Correction chief deputy director is $108,100 in fiscal 2018, which started July 1, agency spokesman Dina Tyler said after the Legislative Joint Audit Committee's meeting.

State law prohibits state agency employees from receiving any compensation for performing the duties and responsibility of their position from sources other than their government employment, Moore said during the committee's meeting.

But Community Correction Director Sheila Sharp defended Murphy's part-time work for the association.

She said Murphy's position with the association was disclosed and approved when he was hired by the agency in 2013 and reviewed by the state Board of Correction and the office of then-Gov. Mike Beebe, a Democrat. Republican Gov. Asa Hutchinson's office also was apprised of the arrangement, she said.

[EMAIL UPDATES: Get free breaking news alerts, daily newsletters with top headlines delivered to your inbox]

Sharp said Murphy retired from the Department of Correction in 2010 and then started getting paid by the association. The Correction Department runs the state prisons, and Community Correction oversees those on parole and probation.

After the meeting, Tyler said she doesn't know how much the association paid Murphy for each year since 2010.

Sharp said the association was started about 11 years ago when Larry Norris was director of the Department of Correction. The association provides its members with dental and vision insurance and crisis assistance.

"Mr. Murphy told me that he would be interested in the position [at Community Correction], but he didn't want to give up [working for the association]," Sharp said.

"He visits employees, sits with them at hospitals nights and weekends when necessary, and takes them assistance checks on his own time," Sharp said. "We discussed I really still wanted for him to come to work for me, because I knew if anybody could help me start a re-entry program [he could], and I am extremely proud of what we have been able to do in three and a half years under his leadership."

She said, "I can assure you that the money that he gets paid for being the [association] director and managing that all on his own time has nothing to do with what we do for our employees."

Sharp said she was not aware of nor advised by legal counsel of any conflict with state law when she recruited and hired Murphy in 2013. She said the association also pays a Department of Correction employee to do part-time general accounting work.

After a hearing of nearly two hours over the Community Correction audit, the committee approved a motion asking the legislative audit staff to audit the association and two related groups. Lawmakers also want Murphy to appear before the committee to answer questions.

Moore said the association is one of three nonprofit organizations that are considered related parties due to the significant involvement of Community Correction employees.

The others are the Arkansas Adult Probation and Parole Association, which provides an annual training conference, and the Crossroads Artistry Alliance, which was created by the department to acquire resources to purchase materials for offenders to produce goods for public sale, Moore said.

"The use of [Community Correction] staff, facilities and equipment and other resources to raise funds and promote sales for a related party organization appears to violate the public purpose doctrine," he said. The public purpose doctrine is a constitutional principle under which a public body cannot appropriate funds or resources for a private purpose, he said.

But Sharp said, "From my perspective, everything we do in our organization, or I wouldn't be doing it, is for a purpose that is within our mission."

Moore said a review of electronic files, including emails, show that during the period from Dec. 23, 2013, until May 2, 2017, Murphy sent or received more than 6,000 emails associated with these three organizations.

"The date stamp on these emails confirms that state resources were used during normal state business hours to conduct the business of these entities," Moore said.

Sharp said most of the business aspect of Murphy's association work is done after hours or on his lunch hour.

"Does he send emails to employees maybe during business hours? Certainly, if it is about employee benefits," she said. "He puts in way more than 40 hours a week just for the state."

Moore said the Association of Correctional Employees Trust's members included working and retired members from Community Correction, the Department of Correction, Arkansas Correctional Schools, Riverside Vo-Tech and the Arkansas Parole Board. Six Correction Department employees and two Community Correction employees comprise the association's board of directors, he said.

Beyond providing dental and vision insurance and crisis assistance, the association hosted two golf tournaments each year with the costs covered by vendor contributions and sponsorships that state employees are asked to solicit, he said.

"Our review revealed that 27 contributing vendors received payments totaling $11.5 million for fiscal year 2016 and $12.4 million through April of fiscal year 2017 from the five state agencies with [association] membership," Moore said.

In addition, Moore said Community Correction uses only one insurance agency -- the Eaton Agency of North Little Rock -- to help with Medicaid screening and enrollment for parolees and probationers to ensure continued availability of medical services or treatment as required under state law.

Although no request for proposals was issued by the department, a memo of understanding between the department and the insurance agency was signed in November 2015, he said. Requests from other insurance agents to provide these services, after the memorandum of understanding, were denied by Community Correction, he said.

Sharp said the other insurance agents that have asked to help with Medicaid screening and enrollment "just want to take the location where they can get the most at one time.

"They don't want to go all over the state, where you might have a parole and probation office and only sign up one person, and that what was our rationale for just having one company," she said.

Metro on 09/09/2017

Upcoming Events