April 14, 2014

Allegations Regarding the Department of Energy's State Energy Program Funding to South Dakota

South Dakota used its American Recovery and Reinvestment Act of 2009 (Recovery Act) State Energy Program (SEP) funds to identify and implement cost-effective energy conservation measures at state institutions such as schools, prisons, and administrative buildings.  It allocated about $23.5 million in subgrants to 22 state institutions for 48 projects, and about $200,000 to South Dakota’s Office of the State Engineer for administrative functions.

The Office of Inspector General received a complaint that South Dakota officials had modified supporting documents for completed, state-funded projects in order to replace state dollars with Recovery Act SEP funds.  The complaint also asserted that there were irregularities in a number of building projects managed by two of the state’s public institutions, and that there were media reports of potential financial misconduct within the Governor’s Office of Economic Development.

We did not substantiate the allegations.  Specifically, nothing came to our attention to indicate that South Dakota used Recovery Act SEP funds to pay for projects that had already been completed prior to the SEP award performance period.  Additionally, our limited testing of select files did not identify irregularities that would indicate fraud, waste, abuse, or mismanagement related to Recovery Act SEP funds.

Topic: Management and Administration