State labor department spent $1 million on free meals for employees, audit finds

A state audit criticizes the Georgia Department of Labor for wasteful spending by purchasing lunches for employees during the pandemic. (JOHN SPINK/JSPINK@AJC.COM)
Caption
A state audit criticizes the Georgia Department of Labor for wasteful spending by purchasing lunches for employees during the pandemic. (JOHN SPINK/JSPINK@AJC.COM)

Credit: JOHN SPINK / AJC

Credit: JOHN SPINK / AJC

Inspector General calls spending wasteful; Labor Commissioner defends agency.

There is no such thing as a free lunch, unless you are an employee of the Georgia Department of Labor.

A state audit obtained by The Atlanta Journal-Constitution found labor department employees received a daily free meal beginning in March 2020 and continuing for more than a year, violating state purchasing rules. Until it was discontinued this summer, the pandemic-long feast cost taxpayers more than $1.1 million in state and federal money, much of which was earmarked for unemployment benefits.

In an interview on Tuesday, Commissioner Mark Butler strongly criticized the findings, saying he received permission to provide the free meals from Alex Atwood, head of the state Department of Administrative Services (DOAS), which oversees state spending.

“This isn’t something we did on our own without asking,” Butler said. “I fully explained to him the reasons why we were doing it — to keep our people safe, to minimize bringing the COVID-19 virus into our buildings and to require all the individuals who work here to work all through the day.”

Butler added, “If they had told us no under any circumstances, we would not have done it. Absolutely not. We follow the rules.”

Allowing employees to stay on the job helped them process more unemployment claims during the pandemic than the office had in the past 10 years, he said.

“We squeezed every single bit of work we could get in,” Butler added. “I’ll stand up for our folks here. I’m going to take care of them because they were taking care of Georgia.”

Findings at a glance

The Department of Administrative Services audit of the Georgia Department of Labor’s meal purchase program found:

  • The labor department spent $1,112,802 to purchase meals for employees from March 2020 through June 2021, roughly split between state and federal funds.
  • Labor Commissioner Mark Butler said he got permission from DOAS to make the purchases, but auditors and the Office of the Inspector General both said the labor department abused the practice, carrying it one long past its emergency authorization.
  • Costs often ran over the allowable daily limit for employee lunches and sometimes included sales tax, which the state is not required to pay.
  • The labor department did not have an itemized receipt for all the purchases, as required by state purchasing rules.

The spending came as the department was being criticized for its progress in handling an unprecedented surge in unemployment claims, a process so slow that desperate workers tacked notes on locked Department of Labor office doors begging for callbacks on their claims.

One such worker was Roland Glover, a carpet mill worker in Calhoun who taped his name and number on the glass door of the local DOL office in May 2020 when he was laid off.

He was confounded by DOL’s decision to provide free meals for its employees.

“There were people in the state who really needed their money,” he said. “The labor department should have been worrying about them instead of feeding their own faces.”

The free meal program began in the worst of the COVID-19 crisis, arguably when restaurant closings made lunch offerings for workers scarce. But it continued long after Gov. Brian Kemp declared the state “open for business,” with the department ordering in everything from fast food meals to catered lunches by coveted names like Fox Bros. Bar-B-Q and Proof of the Pudding.

Kemp had no comment on the audit “at this time,” spokeswoman Katie Byrd said Tuesday.

In an Oct. 4 letter to Kemp obtained by the AJC, Georgia Inspector General Scott McAfee classified the program as a waste of taxpayer money and criticized the labor department’s “opaque” and shifting explanations for the meal purchases.

McAfee, a former federal prosecutor, said the meals were purchased at every one of the department’s 41 offices across the state with “no distinction based on the location of an office, or the role, age or health condition of any particular employee.

“Notably, DOL never supported these expenditures by claiming that they resulted in increased productivity.”

While department officials claimed the meals were meant to safeguard employees’ health, McAfee said, officials never explained why they could not bring meals from home or explained the danger they were exposed to from takeout or delivery.

“There were people in the state who really needed their money. The labor department should have been worrying about them instead of feeding their own faces."

- Roland Glover, a carpet mill worker in Calhoun

McAfee added, “By offering to purchase meals, DOL removed any incentive for individual employees to prepare and pack their own meal, a practice that is generally more cost-effective and efficient when compared to retail purchases.”

McAfee said the free meals may have violated the state constitution’s ban on using taxpayer resources for gifts, known as the gratuity clause.

There may also be possible federal violations, since nearly half of the money came from federal grants meant to pay unemployment claims.

The U.S. Department of Labor Inspector General’s Office declined to comment on the audit.

Purchasing limits exceeded

More than $80,000 was spent at Chick-fil-A alone, and labor employees dined on the catered barbecue from Fox Bros. 20 times to the tune of $44,000, according to McAfee’s letter to Kemp.

The DOAS audit focused on the use of state-issued credit cards, known as P-cards, to buy the lunches. The P-card program is a shortcut for state departments making small purchases, such as buying gas for a state vehicle or a single meal for a worker on the go, that don’t require a more time-consuming bidding process.

ExploreFrom 2020: Georgia struggles to pay out jobless claims as labor dept overwhelmed

State officials can use a P-card buy meals for a larger group of state employees, so long as those purchases stay within predetermined limits. Exceeding those limits for an requires permission from DOAS, which labor department officials claimed they thought they had.

According to the audit, Labor Commissioner Butler personally called DOAS Commissioner Atwood to ask about buying meals for his employees using P-cards. In a response to the audit, the labor officials claimed that call gave them permission to treat the meals as “urgent” and free from the state’s normal requisition process.

DOAS admitted giving guidance in March 2020, but said the meals became “routine planned events” at labor offices across the state that exceeded the limited request.

In the interview, Butler said his agency sent the invoices of the meal purchases to DOAS every day. “They knew exactly how many lunches were being ordered,” he said.

He noted that despite the steps he took to shield the virus from his employees, there were more than 180 positive cases that caused 94 separate shutdowns of offices and divisions. There were also 14 hospitalizations of staff members and nine deaths.

How we got the story

This story is based on public government records, which the AJC obtained from a confidential source. The AJC protects the confidentiality of sources who assist in newsgathering to keep government transparent and accountable.

Meals often were more expensive than the $9 per diem allowed under state regulations, and one of every six exceeded the limit, auditors found. In addition, auditors found labor allowed sales tax to be charged in 25% of the orders, despite the fact that state agencies do not pay sales tax on purchases.

Butler acknowledged that “human error” accounted for some of these mistakes. “That’s going to happen,” he said.

The meal program might still be ongoing had a labor department official not contacted DOAS this past January asking for its credit limit to be increased to buy more food. When DOAS began asking questions, the unnamed official dropped the request, but the questions from auditors kept coming.

According to the audit, DOL began offering shifting descriptions of the program, at first reporting that 60 employees were receiving the free meals. Later, department officials admitted all 1,026 employees received the meals at 41 locations across the state. Likewise, DOL first told auditors that the program lasted 150 days, but later said “employees were fed every day.”

Criticism from opponents

The department continued to buy meals even while the audit progressed. From April through June, labor department employees received $109,142 in catered meals. In June, DOAS finally had Bank of America block all food purchases for the labor department’s P-cards for “noncompliance with statewide policies.”

State Sen. Bruce Thompson, who is running to unseat Butler in the Republican primary next year, said the revelations undermine the public’s already shaky trust in government. Thompson said the pandemic has shown the labor department is “broken” and needs new leadership.

“Why are you seeking permission to buy lunch for your employees with taxpayer money?” he said. “If you think that’s OK, therein lies the problem. If you knew it was not OK and you did it anyway, that’s a problem with your integrity.”

Democratic State Rep. William Boddie, who also is running for labor commissioner in 2022, said he was “outraged” at the report.

“Georgians who lost their jobs, through no fault of their own, could not afford lunch for themselves or their families during the pandemic because their employment benefits were unreasonably delayed,” he said. “The people of Georgia had to follow the policy and procedure to get unemployment compensation, however, under the leadership of Mark Butler, DOL staff took guidance from DOAS and used it as a blank check to spend close to a million dollars of taxpayers money for food.”