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[ATG] AG thanks Sen. Charbonneau for passing Public Integrity Coalition bills
Start Date: 5/18/2015Start Time: 12:00 AM
End Date: 5/18/2015
Entry Description

VALPARAISO, Ind. – A package of bills the Public Integrity Coalition recommended was passed by the Indiana Legislature this session, creating new legal tools to prevent misappropriation of public funds and hasten greater recovery of taxpayer dollars. Indiana Attorney General Greg Zoeller today praised the author of the legislation, State Senator Ed Charbonneau, and thanked lawmakers for passing the three bills on a bipartisan and nearly unanimous basis.

“While the vast majority of public servants are trustworthy and honest, the few who violate the public trust and steal taxpayers’ money harm the reputation for all in government. The Public Integrity Coalition identified changes needed to state law, particularly whistleblower protections so that honest employees will be empowered to report suspicions of theft or embezzlement before it snowballs into a huge loss. Thanks to Senator Charbonneau’s efforts, these reforms have become law,” Zoeller said today in Valparaiso.

Charbonneau, R-Valparaiso, authored and introduced the legislation recommended by the Public Integrity Coalition and steered the three bills to passage.

"Hoosiers have the right to expect that public officials serve honestly and faithfully and not use public office for personal gain. This legislation answers the call of the Public Integrity Coalition in collaboration with the Attorney General to improve local government efficiency, strengthen government ethics and provide additional protections for individuals that report violations of the law,” Sen. Charbonneau said.

Whenever the State Board of Accounts in an audit discovers misappropriation of public funds in a public office and requires repayment by the persons responsible, the Attorney General’s Office serves as the State’s collection agent and seeks to recover the money. Between 2009 and 2014, the SBoA referred to the AG’s Office approximately 250 audits that sought repayment of approximately $6.5 million at all levels of local and state government. Any part of a loss not covered by a surety bond or crime insurance policy is a defendant’s personal responsibility to repay.

Created by Attorney General Zoeller, the Public Integrity Coalition is a group of officials from state, city, county and township governments and schools that seeks to educate and train elected officials and government employees on the best practices for managing and handling taxpayers’ money. Through training, deterrence and earlier detection, the Coalition’s goal is to reduce the instances of misappropriation of public funds that the State then must try to recover. After studying the problem, the Public Integrity Coalition in September 2014 made recommendations that Charbonneau introduced as a package of bills. All passed and became law:

            Senate Enrolled Act 394: Whistleblower Protections

To encourage public servants within government to contact authorities and confidentially report suspected misappropriation others commit, SEA 394 protects whistleblowers against job retaliation. If terminated, demoted or discriminated against, the whistleblower who exposed misappropriation could obtain civil relief, including reinstatement, double back pay and attorneys’ fees. SEA 394 passed 50-0 in the Indiana Senate and 97-0 in the Indiana House.


Senate Enrolled Act 393: Public Official Surety Bonds
Even if public funds are misappropriated, a local government need not suffer a financial hit if it has proper insurance or bonds and can get promptly reimbursed for its loss:

  • Bonds and insurance coverage.  As a type of insurance policy against public employee theft, elected officials already must obtain $30,000 surety bonds. If an audit discovers misappropriation, then bonds can be redeemed to reimburse the public treasury for the loss. Under Senate Enrolled Act 393, any employee in a public office or school corporation who handles public money, including clerical personnel, also would have to be covered either by a bond or a crime insurance policy. Like an insurance premium, the cost of a bond is usually a fraction of the face value of the bond.
  • Searchable bonds. Officials’ bonds already are filed at local county recorder’s offices, but to improve transparency, SEA 393 requires that copies of bonds will also be filed with State Board of Accounts. This means the public will eventually be able to more easily search bond records on a database to see if an official is indeed bonded as required and thus determine if the elected office has adequate coverage for any lost funds.
  • Better chance of full recovery, earlier. So that full reimbursement of misappropriated amounts is possible, the SEA 393 clarifies the annual and per-term bond coverage that public officials need to have in place: $30,000 a year for each year the official is in office.

SEA 393 passed 47-1 in the Indiana Senate and 97-0 in the Indiana House. 

Senate Enrolled Act 514: Clerk-Treasurer Vacancies

In case of a vacancy in the office of town clerk-treasurer – the elected official who handles public money in town governments – it might be difficult for a small municipality to find a local resident qualified and willing to be appointed to serve out the unexpired term. The legislation solves that by allowing the town to sign an interlocal agreement with another town to utilize the services of their clerk-treasurer temporarily, until the next election, or to contract with a Certified Public Accountant (CPA) to fill the vacancy on an interim basis until a new clerk-treasurer is elected.  SEA 514 passed 41-7 in the Indiana Senate and 95-0 in the Indiana House.

All three bills were signed into law by the Governor. 

“Public integrity is essential to all sectors of our communities. These new laws focus on prevention and transparency and will help ensure a strong public trust in state and local governments,” Valparaiso Mayor Jon Costas said.

When the State Board of Accounts examiners find misappropriation in a government office, they issue a certified audit seeking repayment of the amount. As the state’s collection agent, the Attorney General’s Office typically seeks an injunction in civil court to freeze the defendant’s financial assets temporarily so that available funds are not squandered, concealed or transferred. If the court enters a civil judgment against the defendant, then the AG’s Office pursues a collections action against the defendant to recover the money owed and return it to the public treasury, similar to any creditor taking legal action against a debtor to collect on a debt. The state Attorney General’s jurisdiction is civil only; filing criminal charges is solely the jurisdiction of county prosecutors or the U.S. Attorney.

The Public Integrity Coalition’s members include associations representing government officials at the county, city, town, township and school level, plus the Attorney General, Charbonneau, several other state and local government officials, the U.S. Attorney for the Northern District of Indiana and others. Zoeller thanked the Indiana Association of Cities and Towns and the Association of Indiana Counties for their service on the coalition and for offering constructive input into local government accounting issues. He also thanked Mayor Costas and the Porter County Commissioners’ office for hosting today’s announcement of the new set of laws.

NOTE: More information about the Public Integrity Coalition is available at this link: http://in.gov/attorneygeneral/3058.htm.

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