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Follow-up, Federal Government finds Nikki Haley Gov. office contributed to the mismanagement of Federal Funds for the Low-income Home Energy Assistance Program

 

 

nikki haley weatherization program

 

nikki haley weatherization program pt2

nikki haley weatherization program pt3

Update from a previous blog dated July 17, 2014 of an SC Auditor’s Document showed under Nikki Haley that several programs for the low-income, homeless prevention, communities service, etc. didn’t receive proper allocation of Federal funds. After further investigation the Federal Government finds that the Governor’s office played a role in money not being properly allocated.

I’ve included the Federal Governments investigation and findings along with prior South Carolina Auditor findings mentioned in previous blog

sc gov office2

sc gov office

The Following contains the complete findings and recommendations:

 

 

 

The following comes from previous blog written back in July  17, 2014: A 2014 SC Auditor Document show under Nikki Haley that several programs for the low-income, homeless prevention, communities service, etc. didn’t receive proper allocation of Federal funds

Summary of Auditors’ Results:
The auditors’ report expresses an unmodified opinion on the financial statements of the South
Carolina Governor’s Office.
Internal control over financial reporting:
 Material weaknesses identified? yes X no
 Significant deficiencies identified? yes X none reported
Noncompliance material to financial statements noted? yes X no
Federal Awards
Internal control over major programs:
 Material weaknesses identified? yes X no
 Significant deficiencies identified? X yes none reported
Type of auditor’s report issued on compliance for major programs: Qualified
Any audit findings disclosed that are required to be reported in
accordance with
section 510(a) of OMB Circular A-133? X yes no
Identification of major programs:
CFDA Number(s) Name of Federal Program or Cluster
93.568 Low Income Home Energy Assistance Program (“LIHEAP”)
93.569 Community Services Block Grant (“CSBG”)
81.042 Weatherization Assistance for Low Income Persons (“WAP”)
14.231 Emergency Solutions Grant Program (“ESG”)
14.262 ARRA – Homeless Prevention and Rapid Re-Housing Program (“HPRP”)
Dollar threshold used to distinquish between type A and type B programs: $ 1,500,560
Auditee qualified as low-risk auditee? X yes no

61

We believe that our audit provides a reasonable basis for our opinion on compliance for each major
federal program. However, our audit does not provide a legal determination of the Office’s
compliance.

58
Basis for Qualified Opinion on Low Income Home Energy Assistance, Community Services
Block Grant, Weatherization Assistance for Low Income Persons, Emergency Solutions Grant
Program, and ARRA-Homeless Prevention and Rapid Re-Housing Program
As described in Findings 2013-001 through 2013-006 in the accompanying schedule of findings and
questioned costs, the Office did not comply with requirements regarding the following:

Finding # CFDA# Program Name Compliance Requirement
2013-001 81.042 Weatherization Assistance for Low Income Persons Cash Management
2013-001 93.568 Low Income Home Energy Assistance Cash Management
2013-001 93.569 Community Services Block Grant Cash Management
2013-002 93.568 Low Income Home Energy Assistance Special Reporting
2013-003 81.042 Weatherization Assistance for Low Income Persons Reporting
2013-004 14.231 Emergency Solutions Grant Program Sub-Recipient Monitoring
2013-004 14.262 ARRA-Homeless Prevention and Rapid Re-Housing Program Sub-Recipient Monitoring
2013-005 14.231 Emergency Solutions Grant Program Matching, Level of Effort, Earmarking
2013-006 81.042 Weatherization Assistance for Low Income Persons Reporting
2013-006 93.568 Low Income Home Energy Assistance Reporting
2013-006 14.231 Emergency Solutions Grant Program Reporting
2013-006 93.569 Community Services Block Grant Reporting

Compliance with such requirements is necessary, in our opinion for the Office to comply with the
requirements applicable to that program.

Qualified Opinion on Low Income Home Energy Assistance, Community Services Block
Grant, Weatherization Assistance for Low Income Persons, Emergency Solutions Grant
Program, and ARRA-Homeless Prevention and Rapid Re-Housing Program
In our opinion, except for the noncompliance described in the Basis for Qualified Opinion
paragraph, the Office, complied, in all material respects, with the types of compliance requirements
referred to above that could have a direct and material effect on Low Income Home Energy
Assistance, Community Services Block Grant, Weatherization Assistance for Low Income Persons,
Emergency Solutions Grant Program, and ARRA-Homeless Prevention and Rapid Re-Housing
Program for the year ended June 30, 2013.

The Office’s response to the noncompliance findings identified in our audit is described in the
accompanying schedule of findings and questioned costs. The Office’s response was not subjected
to the auditing procedures applied in the audit of compliance and, accordingly, we express no
opinion on the response.

Report on Internal Control Over Compliance
Management of the Office is responsible for establishing and maintaining effective internal control
over compliance with the types of compliance requirements referred to above. In planning and
performing our audit of compliance, we considered the Office’s internal control over compliance
with the types of requirements that could have a direct and material effect on each major federal
program to determine the auditing procedures that are appropriate in the circumstances for the
purpose of expressing an opinion on compliance for each major federal program and to test and
report on internal control over compliance in accordance with OMB Circular A-133, but not for the
59

purpose of expressing an opinion on the effectiveness of internal control over compliance.
Accordingly, we do not express an opinion on the effectiveness of the Office’s internal control over
compliance.
A deficiency in internal control over compliance exists when the design or operation of a control
over compliance does not allow management or employees, in the normal course of performing their
assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance
requirement of a federal program on a timely basis. A material weakness in internal control over
compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such
that there is reasonable possibility that material noncompliance with a type of compliance
requirement of a federal program will not be prevented, or detected and corrected, on a timely basis.
A significant deficiency in internal control over compliance is a deficiency, or a combination of
deficiencies, in internal control over compliance with a type of compliance requirement of a federal
program that is less severe than a material weakness in internal control over compliance, yet
important enough to merit attention by those charged with governance.
Our consideration of internal control over compliance was for the limited purpose described in the
preceding paragraph and was not designed to identify all deficiencies in internal control over
compliance that might be material weaknesses or significant deficiencies and therefore, material
weaknesses or significant deficiencies may exist that were not identified. We did not identify any
deficiencies in internal control over compliance that we consider to be material weaknesses.
However, we identified a deficiency in internal control over compliance, as described in the
accompanying schedule of findings and questioned costs as item 2013-007 that we consider to be a
significant deficiency.
The Office’s response to the internal control over compliance finding identified in our audit is
described in the accompanying schedule of findings and questioned costs. The Office’s response
was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we
express no opinion on the response.
The purpose of this report on internal control over compliance is solely to describe the scope of our
testing of internal control over compliance and the results of that testing based on the requirements
of OMB Circular A-133. Accordingly, this report is not suitable for any other purpose.

Columbia, South Carolina

February 27, 2014
60 SOUTH CAROLINA GOVERNOR’S OFFICE

SCHEDULE OF FINDINGS AND QUESTIONED COSTS – JUNE 30, 2013

Summary of Auditors’ Results:
The auditors’ report expresses an unmodified opinion on the financial statements of the South
Carolina Governor’s Office.
Internal control over financial reporting:
 Material weaknesses identified? yes X no
 Significant deficiencies identified? yes X none reported
Noncompliance material to financial statements noted? yes X no
Federal Awards
Internal control over major programs:
 Material weaknesses identified? yes X no
 Significant deficiencies identified? X yes none reported
Type of auditor’s report issued on compliance for major programs: Qualified
Any audit findings disclosed that are required to be reported in
accordance with section 510(a) of OMB Circular A-133? X yes no
Identification of major programs:
CFDA Number(s) Name of Federal Program or Cluster
93.568 Low Income Home Energy Assistance Program (“LIHEAP”)
93.569 Community Services Block Grant (“CSBG”)
81.042 Weatherization Assistance for Low Income Persons (“WAP”)
14.231 Emergency Solutions Grant Program (“ESG”)
14.262 ARRA – Homeless Prevention and Rapid Re-Housing Program (“HPRP”)
Dollar threshold used to distinquish between type A and type B programs: $ 1,500,560
Auditee qualified as low-risk auditee? X yes no

61
SOUTH CAROLINA GOVERNOR’S OFFICE

SCHEDULE OF FINDINGS AND QUESTIONED COSTS – JUNE 30, 2013

-CONTINUED-

Financial Statement Findings

No financial statement findings.

Federal Awards Findings and Questioned Costs

Finding 2013-001
Programs Affected:
81.042 – Weatherization Assistance for Low Income Persons (Grant number DOE-EE0006183)
93.568 – Low Income Home Energy Assistance (Grant numbers G-11B1SCLIEA, G-12B1SCLIEA,
G-13B1SCLIEA)
93.569 – Community Services Block Grant (Grant numbers G-11B1SCCOSR, G-12B1SCCOSR,
G-13B1SCCOSR

Questioned Costs: None

Criteria: In accordance with U.S. Department of the Treasury regulations at 31 CFR part 205, the
Office should ensure that the time elapsing between the transfers of Federal funds from the Office to
the disbursement of funds for program purposes by the sub-recipient is minimal.

Condition and Context: During our audit of the programs above we noted that certain amounts
provided to sub-recipients were not being disbursed by the sub-recipient for program purposes in a
timely manner. Some sub-recipients were holding over $500,000 for more than six months without
using the funds. Additionally, the Office continued to provide funding for the new program year
before all funding from the prior program year was expended by the sub-recipient.

Cause: Management of the Programs failed to ensure that federal funds were being expended by the
sub-recipients before sending additional funding to the sub-recipients.

Effect: The effect of the above is a compliance finding over Cash Management.

Recommendation: We recommend that management improve policies and procedures to ensure
that funds provided to a sub-recipient are spent for program purposes in a minimal time after
transfer. Additionally, we recommend that management ensure that the sub-recipients understand
that the funds will still be allocated to them as they have been in the past, but if they are not able to
disburse the funds for program purposes then the Office should be notified immediately so that the
funds can be reallocated to other Community Action Agencies that can use the funding.

Management’s Response: Management acknowledges that in some cases the cash management act
has not been followed. Management is creating new policies and procedures to comply with federal
regulations while working with the Community Action Programs to minimize any negative effect the
policy change could have on their ability to operate. Also at the time of initial disbursement the
62 SOUTH CAROLINA GOVERNOR’S OFFICE

SCHEDULE OF FINDINGS AND QUESTIONED COSTS – JUNE 30, 2013

-CONTINUED-

Office of Economic Opportunity (“OEO”) had a new fiscal director and interim executive director
and followed procedures that had been done in prior years. OEO has enacted policies to recapture
unexpended funds and re-allocate them as federal guidelines allow. According to CSBG legislation
all CSBG funds are sub grantees and OEO is obligated to disburse regardless of funds on hand.
63 SOUTH CAROLINA GOVERNOR’S OFFICE

SCHEDULE OF FINDINGS AND QUESTIONED COSTS – JUNE 30, 2013

-CONTINUED-

Finding 2013-002
Programs Affected:
93.568 – Low Income Home Energy Assistance (Grant numbers G-11B1SCLIEA, G-12B1SCLIEA,
G-13B1SCLIEA)

Questioned Costs: None

Criteria: The LIHEAP Carryover and Reallotment Report (OMB No. 0970-0106) – Grantees must
submit a report no later than August 1 indicating the amount expected to be carried forward for
obligation in the following fiscal year and the planned use of those funds. Funds in excess of the
maximum carryover limit are subject to reallotment to other LIHEAP grantees in the following fiscal
year, and must also be reported (42 USC 8626).

Condition and Context: During our testing of the Low Income Home Energy Assistance program
we noted that the LIHEAP Carryover and Re-allotment Report was not submitted by the deadline of
August 1, 2012 for the 2012 grant funds.

Cause: Management of the Programs failed to ensure that the LIHEAP Carryover and Re-allotment
Report was submitted by the deadline of August 1, 2012 for the 2012 grant funds.

Effect: The effect of the above is a compliance finding over Special Reporting.

Recommendation: We recommend that management ensure that all deadlines for reporting
information to federal agencies are met.

Management’s Response: Management did not file the LIHEAP Carryover and Re-allotment
Report by the August 1, 2012 deadline. The report was filed on August 3, 2012 by former fiscal
manager. Office of Economic Opportunity has a new director since that time, as well as a new
senior manager for fiscal services. Filing deadlines are now being met for these reports. OEO has
also instituted a new tracking system of all federal reports to be monitored by Director and
administrative staff to help ensure timely submission.

64 SOUTH CAROLINA GOVERNOR’S OFFICE

SCHEDULE OF FINDINGS AND QUESTIONED COSTS – JUNE 30, 2013

-CONTINUED-

Finding 2013-003
Programs Affected:
81.042 – Weatherization Assistance for Low Income Persons (Grant number DOE-EE0006183)

Questioned Costs: None
Criteria: In accordance with OMB-Circular A-133 requirements, the Office should ensure that the
SF-425, Federal Financial Report is filed as required.
Condition and Context: During our testing of the Weatherization Assistance Programs we noted
that the financial reports for March and June 2013 were not submitted in a timely manner to the US
Department of Energy and were in fact submitted approximately six months after the end of the
period.

Cause: Management of the Programs failed to ensure that the financial reports for March and June
2013 were not submitted in a timely manner to the United States Department of Energy (“DOE”).

Effect: The effect of the above is a compliance finding over Reporting.
Recommendation: We recommend that management ensure that all deadlines for reporting
information to federal agencies are met.

Management’s Response: Required reporting for the Weatherization grants cannot be completed in
the electronic system until DOE has approved the filing of a previous quarter. As of December 4,
2013 the DOE had not approved the March 2013 quarterly submission even though there were no
errors in the report. It appears that DOE is that far behind in approving data.

The Office of Executive Policy and Programs (“OEPP”) is in the process of hiring additional staff
that will assist with the reporting requirements of this grant as well as other areas.

65
SOUTH CAROLINA GOVERNOR’S OFFICE

SCHEDULE OF FINDINGS AND QUESTIONED COSTS – JUNE 30, 2013

-CONTINUED-

Finding 2013-004
Programs Affected:
14.231 – Emergency Solutions Grant Program (Grant numbers E-12-DC-45-0001,
E-13-DC-45-0001)
14.262 – ARRA – Homeless Prevention and Rapid Re-Housing Program (Grant number
S09-DY-45-0001)

Questioned Costs: None
Criteria: In accordance with OMB-Circular A-133 requirements, the Office should perform
procedures to provide reasonable assurance that the sub recipient obtained required audits and takes
appropriate corrective action on audit findings.

Condition and Context: During our testing we noted that the Office has a control to ensure that all
sub-recipients that receive Federal funding submit an audit report if required or a form that states the
reason an audit report was not provided. However, upon further review of the listing of reports and
the listing of agencies receiving funding we determined that the Office is not following up with all
agencies to ensure they have an audit report or a form for each entity as required. Additionally,
while reviewing the files we noted an audit report that had not been reviewed because it was not on
the listing of agencies that are required to send an audit report and the follow-up procedures were
not performed.

Cause: Management of the Programs failed to ensure that all sub-recipients that receive Federal
funding submit an audit report if required or a form that states the reason an audit report was not
provided.

Effect: The effect of the above is a compliance finding over Sub-recipient Monitoring.
Recommendation: We recommend that management ensure that all agencies that are required to
have a single audit performed have provided the reports to the Office and that the submitted reports
are reviewed in a timely manner.

Management’s Response: The control was in place to verify that all required audit reports from
sub-grantees be submitted on a timely basis. Follow up procedures were not performed to obtain
the reports for a limited number of subgrantees. Management concurs that not all audit reports
required from subgrantees were received. The grant award from OEPP to subgrantees did not allow
for penalties when subgrantees did not provide required documents on a timely basis. This oversight
will be corrected on the next grant award to sub-recipients. In addition to this, the agency is hiring
an additional auditor to assist programs in tracking the receipt of required financial documents and is
implementing an electronic filing system that will allow better tracking and retrieval of financial
documents from sub-grantees.
66 SOUTH CAROLINA GOVERNOR’S OFFICE

SCHEDULE OF FINDINGS AND QUESTIONED COSTS – JUNE 30, 2013

-CONTINUED-

Finding 2013-005
Program Affected:
14.231 – Emergency Solutions Grant Program (Grant numbers E-12-DC-45-0001,
E-13-DC-45-0001)

Questioned Costs: None
Criteria: Each grantee must match the funding provided by U.S. Department of Housing and Urban
Development (HUD) under its ESG Program with an equal amount from sources other than those
provided under the ESG Program. These funds must be provided after the date of the grant award.
A grantee may comply with this requirement by providing the supplemental funds itself, or through
supplemental funds or voluntary efforts provided by any State recipient or non-profit recipient (sub
recipient), as appropriate. The exception is that a State grantee is not required to match the first
$100,000 of assistance provided to it, but the benefit of the unmatched amount must be shared with
local governments and other sub recipients (24 CFR section 576.51).

Condition and Context: During our testing we noted that all grant Funds are required to be
matched. Some funds were matched with documentation from invalid sources.

Effect: The effect of the above is a compliance finding over Matching, Level of Effort, Earmarking.
Cause: Management of the Programs failed to ensure that all funds were properly matched.
Recommendation: We recommend that management review match requirements and ensure that
sub-recipients and the Office are matching funds as required.

Management’s Response: Because of the finding by the auditor, OEO has requested that those
agencies which used equity as a portion of match funds determine through appropriate measures the
market value of office rent for the space used by the program and resubmit match amounts based on
the fair value of rent rather than equity.

67 SOUTH CAROLINA GOVERNOR’S OFFICE

SCHEDULE OF FINDINGS AND QUESTIONED COSTS – JUNE 30, 2013

-CONTINUED-

Finding 2013-006
Program Affected:
93.568 – Low Income Home Energy Assistance (Grant numbers G-11B1SCLIEA, G-12B1SCLIEA,
G-13B1SCLIEA)
93.569 – Community Services Block Grant (Grant numbers G-11B1SCCOSR, G-12B1SCCOSR,
G-13B1SCCOSR
81.042 – Weatherization Assistance for Low Income Persons (Grant number DOE-EE0006183)
14.231 – Emergency Solutions Grant Program (Grant numbers E-12-DC-45-0001,
E-13-DC-45-0001)

Questioned Costs: None
Criteria: The Federal Funding Accountability and Transparency Act (“FFATA”) requires all Prime
Grant Recipients awarded a new federal grant greater than $25,000 to submit a subaward report by
the end of the month following the month in which the prime recipient awards any subaward greater
than or equal to $25,000. This report is submitted through the various FFATA Subaward Reporting
Systems (FSRS).

Condition and Context: During our testing we noted that the Office were not submitting subaward
reports for any grants.

Cause: Management of the Office failed to ensure the Subaward Report was submitted through the
FFATA Subaward Reporting Systems.

Effect: The effect is the noncompliance with the Reporting compliance requirement.
Recommendation: We recommend that management of the Office implement policies and
procedures to ensure that all reporting requirements are met in accordance with established
guidelines.

Management’s Response: Management concurs that these reports were not filed on a timely basis.
The agency was unaware of the reporting requirement for these grants prior to the audit discovery.
OEPP is currently working to set the agency up as a user on the website and to begin training on data
to be provided.
68 SOUTH CAROLINA GOVERNOR’S OFFICE

SCHEDULE OF FINDINGS AND QUESTIONED COSTS – JUNE 30, 2013

-CONTINUED-

Finding 2013-007
Program Affected:
93.568 – Low Income Home Energy Assistance (Grant numbers G-11B1SCLIEA, G-12B1SCLIEA,
G-13B1SCLIEA)
93.569 – Community Services Block Grant (Grant numbers G-11B1SCCOSR, G-12B1SCCOSR,
G-13B1SCCOSR
81.042 – Weatherization Assistance for Low Income Persons (Grant number DOE-EE0006183)
14.231 – Emergency Solutions Grant Program (Grant numbers E-12-DC-45-0001,
E-13-DC-45-0001)
14.262 – ARRA – Homeless Prevention and Rapid Re-Housing Program (Grant number
S09-DY-45-0001)

Questioned Costs: None
Criteria: The Office should ensure that current policies and procedures over grants are enforced in
accordance with applicable standards.

Condition and Context: During audit of the programs above we noted that each program has
policies and procedures in place to allow for the proper compliance with grant requirements.
However, due to staffing issues and less than adequate follow-up procedures these policies were not
followed by staff of the Office.

Effect: The effect is the noncompliance with procedures as mentioned in findings 2013-001, 2013-
002, 2013-003, 2013-004, 2013-005, and 2013-006.

Cause: Management of the Office failed to ensure that policies and procedures over grant
compliance requirements are being followed by staff of the Office.

Recommendation: We recommend that management of the Office provide proper staffing and
training to ensure that policies and procedures are being followed and continuously monitor grant
requirements to ensure policies and procedures are updated with any new requirements.

Management’s Response: Management agrees that policies and procedures over grants have not
been enforced in all cases.

During fiscal year 2013 the program director for OEO resigned. In addition to that, in September
2013 three accountants who were heavily involved with grant accounting resigned, leaving the
agency with new staff members who were not familiar with the agency’s grants. Additionally OEO
is currently in the process of filling two new staff positions, one of which will be involved with
submission of timely reports.

Management has made training of staff a priority since that time, and will continue vigorous training
schedules for all accounting staff involved with grants.
69 SOUTH CAROLINA GOVERNOR’S OFFICE

SCHEDULE OF FINDINGS AND QUESTIONED COSTS – JUNE 30, 2013

-CONTINUED-

Status of Prior Year Findings

No prior year findings.

About FREDERICA CADE

Most of the information you will see comes from some Federal/state Government documents or Federal/State Governm Agency. -----------------------------------------------The fellow that can only see a week ahead is always the popular fellow, for he is looking with the crowd. But the one that can see years ahead, he has a telescope but he can't make anybody believe that he has it. ~~~~Will Rogers __The woman who follows the crowd will usually go no further than the crowd. The woman who walks alone is likely to find herself in places no one has ever been before.~ Albert Einstein ~"I never work better than when I am inspired by anger; for when I am angry, I can write, pray, and preach well, for then my whole temperament is quickened, my understandingsharpen​ed, and all mundane vexations and temptations depart.” ~Dr. Martin Luther King Jr. _________________________________________________________________________________________ ~"The bosom of America is open to receive not only the Opulent and respectable Stranger, but the oppressed and persecuted of all Nations and Religions; whom we shall welcome to a participation of all our rights and privileges, if by decency and propriety of conduct they appear to merit the enjoyment".~___________________________________ George Washington, Address to the Members of the Volunteer Association of Ireland, December 2, 1783 Fredericacade@gmail.com

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