Indiana state agencies' late payments are routine practice

Gov. Mitch Daniels

Hoosiers are sounding off about state government agencies paying millions of dollars in late fees.

There's new information on how one agency is wasting thousands of your tax dollars by failing to pay utility bills on time. Also, a clause in state law could force those in charge to take notice.

Gov. Mitch Daniels says Indiana state agencies are supposed to pay their bills at the very last date to maximize interest.

"I gave an order to pay promptly as possible, but not sooner," the governor told 13 Investigates in a defensive tone.

The problem is that the agencies are paying late. When that happens, it's costing both money and possible services.

13 Investigates found it's a routine practice.

In 2010, the state paid $1 million in late fees. Last year the amount nearly doubled. At least six agencies paid six figures in late fees over two years, including:

The Department of Child Services
Department of Transportation
FSSA Medicaid
Department of Correction
Prison Enterprises Network
Division of Family Resources

Marching in right behind them is the office of the Adjutant General, which oversees the Indiana National Guard. Armories across the state paid $95,000 in late fees.

We first spoke with the National Guard's money man about the late bills last November.

"Twenty-five percent of the utilities for the armories across the state are being paid late. The bills aren't even being paid on time," said 13 Investigates in the interview.

That 25 percent is an improvement. The Adjutant General's office had been paying late, 100 percent of the time.

In 2008, auditors ordered the agency to come up with a more efficient payment system, saying, "officials and employees have the duty to pay claims timely."

"Some of it has to do with the time we actually receive the bill," explained Colonel John Bailey, the comptroller at the Indiana National Guard.

"We could have used those late fees towards anything more positive than our state agencies just not paying their bills," responded Kelly Russ, a wife, mother and student who counts her dimes carefully.

Russ says late utility payments for her and thousands of other Hoosiers are unacceptable. She also says a pattern of paying late is met with serious consequences for most residents.

"I personally have a son with a disability and it's like you can't shut me off, I have a child with a disability. But they don't care," she said.

"It's frustrating," added Jenny Rice. Her son Canyon, has been on the state's autism waiver waiting list for four years.

FSSA had given families and single moms like her a meager $2,000 for a few hours of specialized care a month. In 2009 that money was cut off. The following year, it was cut in half.

That's when she started a scholarship fund to help families while FSSA paid a quarter of a million in late fees.

"Just out of frustration, I started the program to help other families that were in need of those respite hours. Raising a kid with disabilities is rough and parents need time to recharge," she told 13 Investigates.

Gov. Daniels calls the millions spent on late fees insignificant compared to the billions the state takes in.

"It is infinitesimal percentage," the governor insisted.

But Kelly, Jenny and even the State Board of Accounts disagree.

In 2008 the state auditor warned the Adjutant General: "Any penalties..interest or other charges paid by the governmental unit may be the obligation of the responsible official or employee."

It's state law, and if enforced, a wake up call.

We contacted the State Board of Accounts. No one could say whether the state law that could require government officials to repay late fees has ever been enforced.

See how many fines state agencies racked up.