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An audit by the Secretary of State's Office found employee morale might be a problem at the Department of Energy.

SALEM — Employee morale is low and turnover is high at the Oregon Department of Energy, according to interviews conducted by auditors at the Secretary of State’s Office.

The energy agency attracted public scrutiny in recent months for its handling of energy tax incentives. Now, the auditors’ notes released by the Secretary of State’s Office suggest the Department of Energy is also struggling internally with workplace problems.

Auditors began an investigation into the Department of Energy’s handling of renewable energy and efficiency tax credits in June, after someone filed an anonymous complaint through the Secretary of State’s waste, fraud and abuse hotline.

The complainant alleged that energy officials gave preferential treatment to the consulting firm Blue Tree Strategies, by allowing the firm to negotiate deeper discounts on energy tax credits than allowed under state law.

The Audits Division ultimately concluded that the Department of Energy never publicized its 2012 decision to lift restrictions on discounting tax credits, so few finance firms knew they could negotiate such deals.

Many recipients of energy tax credits are government entities or companies that do not owe state taxes, so the state has allowed them to sell the tax credits in order to raise cash. However, lawmakers wanted to ensure most of the benefit from the tax credits went to the energy project owners, so the Legislature passed a law that required the Department of Energy to adopt price regulations for the sales.

According to notes auditors took in early August, two employees at the Department of Energy said the employee turnover rate at the agency had reached as high as 50 percent and morale has been low during the last five years. Rachel Wray, a spokeswoman for the agency, said turnover was at 32 percent during the 2009-2011 biennium, 50 percent during the 2011-13 biennium and 22.3 percent from April 2013 to April 2014.

Auditors did not reveal the names of the employees who made the allegations. However, they wrote that an employee in the energy loan program said the human resources manager wanted to request “an agency-wide performance audit” but would not request it until she left the agency out of fear of retaliation. The employees told auditors that staff who raised questions were “told to mind their own business and just do as told,” according to the auditor’s notes.

Donna Archambault, who was the energy agency’s human resources manager until the end of this week, wrote in an email that the employee’s statement to auditors that Archambault wanted to request an audit was incorrect.

“I have never requested an agency-wide performance audit nor have I ever had any fear of retaliation either under the current or any past Department of Energy director – for any reason,” Archambault wrote. “I did talk with Director Kaplan about a classification review of the positions in the tax credit and loan programs and that’s currently on HR’s ‘to do’ list.”

Both energy employees said Anthony Buckley, the chief financial officer at the energy agency, was a common denominator for problems at the agency and “the way he organizes staff and reporting duties would allow him to hide anything he wants,” according to the auditors’ notes.

In a written statement, Wray disputed the allegation that the Department of Energy would hide anything.

“We haven’t shied away from acknowledging and trying to take on the many problems here at ODOE, and I reject the suggestion and believe it’s misleading to suggest that we’re hiding issues,” Wray wrote. “We’ve been upfront about the need to improve and rebuild the agency, including challenges like our budget (2015-17 budget reflects 21 percent cut), morale and retention, the performance of our tax credit programs, and our data and reporting.”

Wray wrote that it is a “heavy lift to address these issues, but we’re working on them one by one, and we don’t pretend that problems that developed over years can be solved overnight ... Our director’s expectation is that as an agency, down to each and every individual employee here at ODOE, we take accountability and responsibility for our decisions and actions, and we figure out ways to constantly improve.”

Buckley, who oversees the agency’s tax incentive, energy grant and loan programs, said there were a couple reasons for high turnover in the division he manages. Some of the positions were temporary, such as jobs related to federal economic stimulus initiatives, and the Legislature’s decision to phase out the business energy tax credit meant the division could function with fewer employees. Buckley wrote in an email that he restructured the division to increase accountability, by empowering an accountant to report problems directly to Buckley.

“The first change had the energy loan program accountant position report directly to me instead of the loan program manager,” Buckley wrote. “This was done to increase internal controls and enhance the integrity of the program. Prior to this change accounting transactions were localized within the program. This resulted in weak internal controls and a higher propensity for errors and risk exposure.”

According to Buckley, accountants who worked in the division left because of a forecasted deficit in the energy loan program and “lack of resources.”

“We have actually reduced the potential for issues to be hidden,” Buckley wrote. He added, “ It is important to me that staff know they are empowered to raise issues when appropriate and trust that those issues will be addressed.”

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