DATE: Sunday, July 6, 1997                  TAG: 9707060052

SECTION: LOCAL                   PAGE: B5   EDITION: FINAL 

SOURCE: ASSOCIATED PRESS 

DATELINE: RICHMOND                          LENGTH:   65 lines

ENVIRONMENTAL AGENCY DEPUTY BRINGS BAGGAGE, STATE AUDIT SAYS THE NEW NO. 2 MAN HAD A HAND IN A CASE INVOLVING IMPROPER OVERTIME, REPORT SAYS

The new deputy director of the state's environmental agency had a hand in the improper authorization of an overtime payment that cost his predecessor his job, according to a state auditor's report.

James L. McDaniel was named to the Department of Environmental Quality's No. 2 post Tuesday, just over two weeks after T. March Bell resigned.

The report by state internal auditor Merritt L. Cogswell is the second to criticize the $7,846 payment to former DEQ spokesman Michael McKenna. But it is the first to criticize McDaniel, DEQ's former human resource director.

``We believe the deputy director, with the concurrence of the human resource director, improperly authorized the payment of state funds to Mr. McKenna,'' Cogswell's report said. It also said the overtime hours were not properly documented, and that McDaniel concurred that the payment be made even after a fellow manager warned him it might be improper.

The report, dated June 24, recommended that Thomas L. Hopkins, DEQ's director, ``take appropriate disciplinary actions concerning the members of management who neglected to safeguard assets of the Commonwealth.''

Hopkins, however, said the wrongdoing was Bell's, not McDaniel's, and added that McDaniel, ``had very limited involvement, in my opinion.''

Bell resigned June 16, hours after the first report on the payment - by the state auditor of public accounts - was made public.

DEQ has been the subject of considerable controversy of late, with its planned reorganization - a plan devised by Bell and McDaniel - coming under fire from lawmakers, conservationists and business and local leaders who claim the changes go well beyond what a watchdog agency had recommended.

The reorganization calls for the elimination of 30 jobs and the creation of 35, with laid-off employees eligible for the new positions. Last week, DEQ said 12 of the employees let go in the first round of cuts had been rehired.

``Promoting someone so intimately involved with this impropriety . . . shows how pervasively dysfunctional the leadership of the agency has become,'' said Joseph H. Maroon, Virginia director of the Chesapeake Bay Foundation, an environmental group. ``The state deserves better.''

McKenna, who resigned Jan. 10 after embarrassing Gov. George F. Allen's administration with a memo suggesting a series of press leaks to discredit Allen foes, billed DEQ for 261 hours of overtime worked during 1995.

In his report, Cogswell also criticized McDaniel for authorizing a change in the DEQ's personnel policy in 1996. The change did away with a requirement that compensatory time, or overtime, be approved in advance in writing.

The change violated state policy, the report said, and may have contributed to the the improper authorization of the overtime payment.

McDaniel said his role in authorizing the payment was limited to advising Bell that it abided by DEQ's personnel policy. He said the keys to preventing overtime abuses are forms employees fill out every two weeks showing when and where they worked the extra time.

McKenna did not fill out those forms, McDaniel said.

The attorney general's office advised the DEQ not to pay McKenna if his overtime wasn't approved in advance in writing, the report said. It also said DEQ Administration Director John Cunningham ``raised several concerns (with McDaniel) about the propriety of this payment'' before it was made.

Hopkins said he is exploring trying to get the money back, and added that he hopes to meet next week with Cogswell and Charles E. James, director of the state's personnel department, to resolve questions about McDaniel.

``If this is the only thing people can find to drag around like a dog with an old shoe, we must be doing a good job down here,'' Hopkins said.

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