State agencies lent employees millions without being repaid, officials say

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State agencies have handed out millions of dollars in interest-free salary and travel advances to state employees without collecting repayment, according to audits from the state controller’s office.

Gov. Jerry Brown issued an executive order Tuesday halting the practice and is working with state Controller John Chiang to determine how widespread it has been -– and how much money the state is owed from employees who never paid back loans.

“This situation reinforces the worst stereotype of ineffective and inefficient government,” Brown said in a statement. “I have ordered state agencies to immediately investigate the backlog of uncollected debts, and find every penny owed to taxpayers. State agencies must regain control of this program.”

Brown’s office pointed to a 2009 state audit that found $13.3 million in advances had not been collected at various state agencies.

“In most cases, employees were granted advances and agencies were either slow to collect funds or failed to collect at all,” according to a statement from Brown’s office.

Brown’s office said they are reviewing the books at the California Department of Corrections and Rehabilitation, where they expect to find millions more in unpaid state loans to public employees.

Chiang spokeswoman Hallye Jordan said she could not comment on ongoing audits or investigations.

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