State Treasurer Don Stenberg has requested a state audit of a quasi-public financial entity which has refused his request to post data on a governmental website run by his office.
Stenberg says the Nebraska Investment Finance Authority has refused his repeated requests to share its finances.
“Since last September, the executive director of NIFA, Mr. Tim Kenny, has with the assistance of his lawyers, engaged in a campaign of obstruction to conceal that financial information from the state Treasurer,” Stenberg tells Nebraska Radio Network affiliate KLIN.
NIFA has so far refused, telling the Treasurer’s office it has concerns about the security of the website StateSpending.Nebraska.gov, which it runs. Stenberg calls that a red herring.
Stenberg says NIFA needs to be accountable to the public.
“This is financial information that’s online and has been since 2009 for every state agency without any problem whatsoever,” according to Stenberg. “So, that’s why I’ve concluded, since there’s no logical reason other than something is being concealed and I have no idea what that is.”
In his letter to State Auditor Charlie Janssen, Stenberg requests the auditor determine whether NIFA is spending money appropriately, whether pay to NIFA staff is excessive, whether internal accounting controls are sufficient, and whether it has misstated the value of its investments.
Stenberg claims that every state agency and “independent instrumentality” except NIFA is complying with the Taxpayer Transparency Act approved by the Unicameral last year.
NIFA helps finance housing and other developments across Nebraska, issuing $475,000,000 in housing bonds in the last two calendar years. NIFA has approximately $1 billion in bonds outstanding, according to the Treasurer’s office.
Here is the letter sent by Treasurer Stenberg:
March 10, 2017
The Honorable Charlie Janssen
Nebraska Auditor or Public Accounts
P.O. Box 98917
Lincoln, NE 68509-8916
RE: Audit of the Nebraska Investment Finance Authority
Dear Auditor Janssen:
I respectfully request that the State Auditor’s Office do a thorough audit of the Nebraska Investment Finance Authority (“NIFA”). This request is prompted by the continuing failure of the Executive Director of the Nebraska Investment Finance Authority, Mr. Timothy Kenny, to provide certain financial information to the State Treasurer as required by law. This continuing failure by Mr. Kenny raises substantial concerns that there is something in the financial records of NIFA which Mr. Kenny does not want the world to see.
Allow me to provide some background which led me to request an audit of NIFA.
In 2009, the Nebraska Legislature passed LB 16 to put the state’s checkbook on line for the purpose of giving taxpayers the transparency they needed to see where their tax dollars go. For each state agency, it requires that the amount, date, purpose and recipient of all state expenditures be made available on line.
In 2016, the Legislature passed LB 851 by a vote of 48-0 to require that the same disclosure be made for entities created by state law whose board has one or more persons appointed by the Governor.
Every “independent instrumentality” except NIFA is complying with the Taxpayer Transparency Act as written.
Since Last September, the Executive Director of NIFA, Mr. Timothy Kenny, has, with the assistance of his lawyers, engaged in a campaign of obstruction to conceal financial information concerning NIFA from the State Treasurer.
Excuse after excuse has been made. Volumes of correspondence has been exchanged. I have enclosed a complete set of that correspondence with this letter for your information.
Several meetings have been held – all of which ended with no agreement from Mr. Kenny or his lawyers that Mr. Kenny would obey the law as written, the law which passed the Legislature 48-0.
In my opinion, when a government bureaucrat fights this hard to prevent the disclosure of financial information, he is hiding something.
Please note that in the last two calendar years, NIFA has issued $475,000,000 in housing bonds. They have approximately $1 billion in bonds outstanding.
I respectfully request that the audit include, but not be limited to, the following:
Whether any money is being spent inappropriately.
Is the pay of the NIFA staff excessive?
Are internal controls sufficient to prevent fraud, waste and abuse?
The audit from KPMG gave NIFA a “qualified opinion”. A copy of that opinion is attached. KPMG states, “As more fully described in note 2(e) to the financial statements, the Authority has reported investments and securitized mortgage loans at amortized cost. In addition, as more fully described in note 2(j) to the financial statements, the Authority does not report commitments to purchase securitized mortgage loans at fair value. In our opinion, U.S. generally accepted accounting principles require that securitized mortgage loans and loan commitments be reported at fair value.”
Why is NIFA intentionally misstating the value of its investments and securitized loans and the value of its commitments to purchase securitized loans? Is it because that if the financial statements were prepared in conformance with generally accepted accounting principles they would show that NIFA is in violation of some of its bond covenants? In my opinion, this issue needs to be examined very closely.
Concerning required supplementary information, KPMG stated, “We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.” Please look into the accuracy of the supplemental information.
And finally, please note, concerning the effectiveness of NIFA’s internal control, KPMG specifically stated they express no opinion concerning that issue.
The Executive Director of NIFA states in the attached Omaha World-Herald article that he would welcome an audit by the State Auditor. Given the large sums of monies involved, I strongly encourage you to give favorable consideration to this request for an audit of the Nebraska Investment Finance Authority.
Please let me know if you need additional information. Thank you for your consideration.
Nebraska State Treasurer
Jane Monnich, KLIN, contributed to this article.