McCrory, Berger call for Rural Center changes after audit

Posted July 17, 2013

— The North Carolina Rural Economic Development Center isn't keeping track of grants it awards, is improperly keeping interest on grant funds and is overpaying its top managers, according to an audit released Wednesday.

The audit prompted Gov. Pat McCrory to call for new leadership at the Rural Center, which uses state and federal money to support business and infrastructure development in 85 North Carolina counties.

"At a time when rural areas of our state are suffering the most, we must ensure that we are using our limited funds by the most effective, efficient and transparent means," McCrory said in a statement. "I believe that new leadership will begin to address and fix the serious issues identified by the state audit."

Senate President Pro Tem Phil Berger said state funding to the center should be eliminated.

"This audit reinforces my belief that the Rural Center should receive no taxpayer funds in the state budget," Berger, R-Rockingham, said in a statement. "Funding the Rural Center would send the wrong message to voters who elected Republicans to provide accountability in state government.”

The Senate's budget proposal completely cuts funding to the Rural Center, while the House's plan gives the center more than $36 million over the next two years. Lawmakers are working on a compromise budget.

Rural Center, N.C. Rural Economic Development Center Audit cites Rural Center for oversight, salaries

State auditors said the center doesn't verify that grant recipients are using their money for the intended purpose, noting that the center had no idea how many jobs were created by a $1 million grant in Harnett County and an $814,000 grant in Halifax County. Grant recipients also weren't punished for not providing progress reports on their projects, according to the audit.

"For all practical purposes, there is no oversight. There is no monitoring of what's going on with all these monies," State Auditor Beth Wood said. "If they are not monitoring what's being done with the money they pass out, none of us can be assured that taxpayer dollars are accomplishing what they intended to do."

Rural Center officials told auditors that the organization lacks the resources to monitor grant progress and noted that they try to work in cooperation with recipients and don't want to be seen as an enforcer.

According to the audit, center President Billy Ray Hall was paid more than $220,000 last year, or 77 percent more than then-state Commerce Secretary Keith Crisco. His salary and those of center vice presidents also were at least 20 percent more than those of other rural development centers nationwide.

Hall said in a response to the audit that salaries are approved annually and are based on a national compensation report, but auditors said the report includes nonprofits that do different types of work, some of which operate overseas.

"The Rural Center is committed to being a good steward of state funds," Hall said in a statement. "We have a long history of serving the people of rural North Carolina and welcome the opportunity to improve our operations."

The center has come under fire recently over political connections to some grants that sometimes didn't meet the organization's guidelines. An independent committee is now reviewing all grants made in the last five years to determine if they followed Rural Center policies.

"I think it's time for Billy Ray Hall to resign," said Bob Luddy, a Raleigh businessman and Rural Center board member. "This is very poor bookkeeping, and I don't think our board of directors remotely understands what's going on. They only understand what Billy Ray Hall tells them."

Luddy said the center has $60 million in the bank – state money that sits there earning interest, and part of that interest is paying for Hall's salary.

The audit also criticized the center for now turning over the interest to the state General Fund and called on lawmakers to clarify policies for the way the center handles its money.


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  • Honesty first Jul 18, 2013

    Luddy says the Board of Directors did not know what was going on. Are they serious? What is the BoD for if not to control the activities. Who approved the compensation of the head of this organization? The BoD!

  • FlagWavingFascistCrank Jul 18, 2013

    Amazing, ain't it? Everytime the Teflon Conservatives get busted for looting and plundering, it's a democrat's fault. Art Pope was set up by Bev Perdue to make him look like a greedy, two-faced hypocrite who leeches off the taxpayer.....RIGHT.

  • Unbroken Jul 18, 2013

    "Go get them Gov. McCrory and Sen.Berger.

    I agree that at the least Hall and the Board need to go, and the Center should be shut down for re-evaluation. But do you REALLY think that McCrory, Tillis and Berger have YOUR best interest(s) in mind? I wouldn't trust them with my $5 anymore than I would trust Hall.

  • hangry Jul 18, 2013

    For the folks who sell equipment and services to the water and waste water industry in North Carolina, the Rural Water market is far more lucrative that the normal municipal water market. If you want a booth to exhibit at the NC Rural Water Conference it costs you around $1200. A booth at the NC AWWA conference which targets your normal municipalities, it only costs $250. It is well known in this industry that money is easier to come by for the rural water guys. By looking at the Rural Center's website I gather that they fund this type of infrastructure for rural communities. May be something for the state auditor to look into.

  • rushbot Jul 18, 2013

    relic you are clueless..kingfish pope has benefited when the funds were used to build shopping centers for him to build his stores..spend some time researching, instead of getting your news exclusively from fox new, wptf, limbaugh and hannity and other venomous hate spewing reactionary news sources.. ..

  • Relic Jul 18, 2013

    rushbot - Please, spare us. The Rural Center is a pork barrel Democrat payout fund and keeping track of money isn't the same as cutting it off. All of this stuff has been coming to a head long before the GOP took over and have to clean up Bev and Co.'s "slush funds".

  • jdupree Jul 18, 2013

    Close it down and let all business stand on it's own legs to make it or not. If they can make a profit, they will open a business, if not they will not. The state has no business getting involved in picking winners and loosers. That is what Obama and Washington try to do with things like Solyndra when they give away 500 million for political purposes. Not fair to workers and taxpayers who must foot the bill!

  • Karmageddon Jul 18, 2013

    Shut it down and put Billy Ray in jail.

  • rushbot Jul 18, 2013

    its all about wealth redistribution (middle class and lower class wealth to the 1%ers and corporations )with lil' patty the gov and his director kingfish pope..i predict they'll keep better records, but it will become much less transparent to the media and us.. ..they are seizing control of money to give to their cronies all around..for example when they have completed their siezure of charlotte douglas airport they will have immediate control of the very large, multi-million dollar clt airport improvement discretionary fund and all the daily arrival/departure gate receipts they collect from airlines, the $3 dollar passenger facility charge the airlines collect from each passenger who boards a flight at clt, the vendor booth rental receipts, and the parking receipts.. ..yesseree bob..small gub'mint in action here!! (not)...

  • rushbot Jul 18, 2013

    kinfish pope is pulling more wealth distribution under his tight control..big grants ahead for gop donors and corporate farmers..small family farmers watch..the boogeyman is not coming..the boogeyman is here!!!