Subcommittee hears Alex Partners: $1.8 billion traced to conversion entries, agencies to implement corrections

The constitutional subcommittee of the Senate Finance Committee on Thursday heard that a forensic review by Alex Partners traced approximately $1.8 billion in disputed balances inside a state treasury fund to incorrect conversion entries made during the state's migration to the SKIS accounting system.

The finding matters because the amount has circulated in public testimony as apparent cash available for appropriation even though Alex Partners concluded most of it was an accounting artifact. Clarifying that distinction — and making agreed corrective entries — is now the focus of several state offices and of a recently passed Senate joint resolution that would require a third‑party compliance monitor should implementing legislation be enacted.

Director Adams of the Department of Administration told the committee that the department issued the request for proposals used to hire Alex Partners after a proviso last fiscal year. The RFP went out June 24, 2024; Alex Partners received a notice of award July 17 and began work July 18. The contract cost the state $3,000,000, Director Adams said. The consultant delivered the report in mid‑January 2025 after roughly six months of review, including dozens of meetings and hundreds of data requests.

Clarissa Adams, chief of staff at the Office of the State Treasurer, read the treasurer's office response to the report for the record and emphasized what the office views as the central technical point: "The Alex Partners report confirmed that the state treasurer's office cash and investment balances are properly accounted for by the state treasurer's office. There is no mysterious bank account, no missing money, no stolen money, and cash and investments for which the state treasurer's office is responsible for are correct." The treasurer's staff said they accept the report's recommendations and are prepared to implement them with their financial partners.

Alex Partners documented that during the SKIS conversion a set of entries for certain "act‑for" business areas were recorded in fund 30350993 and that incorrect conversions of those items produced the $1.8 billion balance. The report identifies two main contributors: (a) business‑area appropriation and conversion entries incorrectly moved into the fund and (b) an older STARS legacy account that was not converted. The report singled out a $1.56 billion balance that earlier staff had proposed writing off; CliftonLarsonAllen and the Comptroller General's Office opposed that write‑off at the time, the report says.

Comptroller General Brian Gaines told the committee he accepts the Alex Partners report and said the CGO will take responsibility for making the corrective accounting entries that Alex Partners validated: "I do. Fully accept the report," he said when asked whether he accepted the findings. The Comptroller General's office also identified recommendations in the report intended to strengthen internal controls, reconciliation practices and communications among the central finance agencies.

Committee members pressed witnesses about whether elected constitutional officers knew of the issue earlier. Department and treasurer staff repeatedly told senators they cannot speak to what individual elected officials personally knew in 2017 but said staff-level discussions and conversions occurred during the 2015–2017 migration and after. Witnesses said turnover in technical and accounting staff across the Treasurer's Office, the Comptroller General and SKIS teams complicated institutional knowledge.

The report lists a set of operational recommendations (system changes, reconciliations and governance steps). Committee members and witnesses discussed one legislative response already introduced or passed by the Senate: a joint resolution that, if enacted, would require the Department of Administration to contract a compliance monitor to ensure cooperation among the Treasurer's Office and the Comptroller General while corrective actions proceed. Witnesses described the compliance monitor as a likely next step if the resolution becomes law.

Senators also asked whether the state could face SEC scrutiny or fines. Department of Administration leadership said the attorney general's office was coordinating with federal investigators and that implementing Alex Partners' recommendations would be viewed as a constructive response by outside regulators, but witnesses declined to speculate on penalties.

The committee requested documentation and timelines: the Department of Administration and the Treasurer's Office agreed to provide copies of correspondence, meeting logs, the Alex Partners report and the mark‑up language the treasurer's staff said they had requested to clarify page 10 of the report. The offices also said they would provide lists of meetings with Alex Partners and, where available, records showing whether elected officials attended.

The subcommittee did not take a final vote on any statutory change during Thursday's hearing. Members said they intend to continue oversight, seek additional records and reconvene to press remaining questions about communications, timing and past disclosures to the General Assembly.

Ending: Witnesses said they will cooperate with further committee requests and work with the Comptroller General to apply the validated correcting entries; the committee signaled it would meet again to review progress and any legislation required to implement recommended governance changes.