MORGANTOWN — A new audit by legislative staff dives deeper into the state Supreme Court’s spend-down of $29 million in reserves, its decisions regarding renovations and policies about the payment of senior status judges.
Each of those issues has been part of impeachment proceedings for the Supreme Court.
The report that was released Friday afternoon is the fourth examination by the Legislative Auditor. Other audits looked at issues such as the use of state vehicles by justices, as well as a first look at the spend-down issue.
The House of Delegates passed articles of impeachment last month for each of the remaining Supreme Court justices.
Justice Menis Ketchum resigned before impeachment began. Justice Robin Davis announced her resignation the day after the House vote. Justice Allen Loughry is suspended and faces two dozen federal charges.
The state Senate is scheduled to meet at 10 a.m. Tuesday for a pretrial hearing. Senators serve as a jury to consider the articles of impeachment and decide whether the remaining justices should be removed from office.
Over just a few years, West Virginia’s court system built up a budget surplus of $29 million.
Almost as quickly, while the Legislature was giving the Supreme Court the side eye, the court spent down the money to a few hundred thousand dollars.
The new report goes into greater detail about how the money was spent on raises for court employees, renovations and additional computer equipment.
The court system’s reserves built up rapidly and then were spent down almost as quickly.
In 2007, the carryover was $1.4 million.
Just five years later, at the start of 2012, it was $29 million.
By the end of fiscal 2014, the carryover was only $1.8 million.
And by the end of fiscal 2015, just $333,514 was being carried over, essentially bottomed out.
Expensive office renovations were the issue that kicked off controversies surrounding the Supreme Court about a year ago.
The Legislative Auditor tried to analyze all of the renovations undertaken by the court from 2009 to 2016. But the audit noted that not all invoice documentation wound up being provided.
The audit concludes that the total combined cost of the renovations to the Justices’ chambers totaled $1,943,357. But, because not all information was available, the audit could only provide detailed analysis for $1,568,786, or 81 percent of the total.
Of the total, Silling Associates Inc. billed the court a total of $374,571 for work on the renovations of the Justices’ chambers. Lack of invoice detail meant the audit wasn’t able to break down that expense much further in terms of which justices used the company.
Justice Brent Benjamin, who lost a re-election bid in 2016, had an office renovation valued at $264,836. The renovation expenditures included $25,489 for flooring, about $38,000 for wood work and $21,000 for window treatments.
Justice Beth Walker, who defeated Benjamin in 2016, took over that office. It then went through another $130,655 in renovations, seven years after the prior renovation.
The renovations under Walker included expenditures such as $9,000 for flooring, over $7,000 for cabinetry and about $23,000 for tables and chairs.
“Approximately $9,000 of flooring costs in Justice Walker’s chambers are attributable to her covering the $25,000 of flooring completed approximately seven years prior in the same chambers under Justice Benjamin,” wrote the Legislative Auditor.
The report also noted that when Benjamin left office, he bought eight pieces of office furniture from the court for a total of $6,720. The original price had been $10,260.
“Justice Walker, upon election to the court, may have needed to replace these items either by purchasing new items or selecting items from the court’s storage warehouse.”
Justice Ketchum’s office renovation originally totaled at $193,970, including about $9,100 of work to two antique Cass Gilbert desks.
Ketchum disputed two charges attributed to his office totaling $18,098, saying that work was not actually done on his office.
If that’s the case, the corrected renovation costs for Justice Ketchum’s Chambers would be $175,871. The legislative auditor acknowledged not being able to draw a conclusion.
Justice Margaret Workman’s chamber renovations totaled $112,780. The expenditures include $12,000 for cabinetry, $35,000 for flooring and $17,000 for fabrics and reupholstery of various pieces of furniture.
The audit concludes that a disputed $5,038 expense that had been attributed to Ketchum’s office could actually have been for work done on Workman’s flooring. “Thus, Justice Workman’s cost for renovations could be as much as $117,818, not including the Silling invoices.”
Justice Loughry’s renovation expenses, which drew the most attention, total $367,915.
This includes expenditures such as an $8,500 custom sofa that was upholstered for $23,000, totaling almost $32,000. Also: a desk totaling $3,300 and about $20,000 for chairs.
Justice Davis had the most expensive office renovation, $503,668.
“Justice Davis’s Chambers renovations cost more than any other Capitol renovation project undertaken by the Court and includes expenditures such as $8,000 for a chair, $22,000 for flooring and tile work, and $28,000 for a pair of rugs.”
The largest categories of expenditures for the renovations to Justice Davis’s chambers were fixtures (38 percent) and infrastructure (35 percent), including more than $56,000 for glass countertops.
Additional renovation projects undertaken by the court had a combined total cost of $1,464,369. Those included renovations of a third floor women’s restroom, a first floor hallway, the common area, the chief counsel’s office, the courtroom itself and the justices’ conference room.
The renovation of the conference room cost $300,350. That included $18,000 for a cabinet to house a 55-inch flat panel television, about $20,000 for a custom bookcase and more than $34,000 for a conference room table.
There were additional renovations to the public men’s restroom on the third floor of the East Wing, the East Wing elevators, and the “Saferoom.” The legislative auditor lacked invoices with sufficient detail to break down the costs but estimated them to be $522,000.
Senior status judges
Finally, the audit gets into the issue of payments to senior status judges. Several of the articles of impeachment contend the justices intentionally circumvented state law capping the amount retired judges can make.
Senior status judges serve as temporary replacements in circuit courts throughout the state when an active circuit judge is absent from duty or caseloads necessitate the services. The practice was formalized in 1991.
Senior status judges receive a $435 per diem but are prohibited by statute from making more than active circuit court judges.
“Any judge serving as a senior status judge whose combined compensation and retirement benefits reaches the cap is required to cease receiving their monthly retirement annuity or forego additional assignment or compensation as a senior status judge.”
Between 2009 and 2017, the chief justices allowed 10 senior status judges in the Judicial Retirement System to exceed the statutory compensation cap 20 times for a total of $271,000, the audit concludes.
The issue came up because of an IRS audit of the Supreme Court during the spring of 2017. The IRS auditors were examining the court’s 2015 federal employment tax returns.
“One of the findings of the IRS audit dealt with the court inappropriately designating certain employees, including senior status judges, as independent contractors,” the Legislative Auditor wrote.
The court wound up paying a $227,541 settlement to the IRS.
The legislative audit also concluded that the court had a practice of converting some senior status judges from employees to independent contractors to let them keep receiving full retirement benefits after they were no longer eligible because they had exceeded the cap.
Of the 34 senior status judges who served during the review period, 10 were paid in excess of the cap and six were paid over the cap on more than one occasion.
That included Judge Thomas Keadle, who exceeded the cap for three consecutive years from 2013 through 2015, and Judge John Henning, who exceeded the cap three out of four years between 2013 and 2016.
“The legislative auditor observed that in each of the years reviewed, only a small number of senior status judges exceeded the compensation cap. The vast majority of senior status judges were below the statutory cap.”
The court continued the theoretical conversion of the senior status judges to independent contractors until the IRS audit.
Prior to the release of the IRS audit, then-Chief Justice Allen Loughry entered an administrative order “in which he attempted to legitimize the court’s practice of allowing senior status judges to exceed the statutory cap” by invoking administrative authority.
After that, the court stopped the conversion to independent contractor status and simply allowed compensation in excess of the statutory cap. “In fact, one judge exceeded the cap by over $55,000 in 2017 through wages reported on a W-2.”
The legislative auditor concluded that the Supreme Court’s chief justices took the easy way out to make sure senior status judges could serve on open benches.
The legislative auditor concluded that while some senior status judges exceeded the cap, there were plenty of others with days available and who could have served.
“Further, it is the opinion of the legislative auditor that circumvention of state law, even where legally permissible, should be a matter of last resort rather than a matter of convenience.”
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