- Associated Press - Friday, May 13, 2016

LINCOLN, Neb. (AP) - The commission that oversees Nebraska’s state tourism agency suspended its director with pay on Friday in the wake of a scathing state audit.

Kathy McKillip was told to turn in her keys and files and was forbidden from having contact with the office while members of the Nebraska Tourism Commission investigate widespread financial mismanagement within the state office.

Commission members met in closed session before voting 7-0 to impose the suspension. They also imposed a new requirement that the commission approve any expenses of more than $1,000 as well as personnel decisions. McKillip left the meeting without comment, but has previously said the audit was a “learning experience.”

Earlier this month, the commission appointed a subcommittee to investigate the financial problems. Commission Chairman John Chapo said he couldn’t discuss the decision to suspend McKillip because it’s a personnel matter.

“We can’t share any details,” Chapo said.

Gov. Pete Ricketts and former Gov. Dave Heineman have called on the commission to fire McKillip, saying she wasted state money.

Suspensions such as the one imposed on McKillip are commonly used to prevent an employee from hindering an investigation, but they don’t guarantee that a worker will be fired, said Bo Botelho, chief operating officer for the Nebraska Department of Administrative Services.

Botelho said the commission will want to gather as many facts as possible about the situation before taking any action against McKillip, who is protected by collective bargaining rules for state employees.

“I think the commission is taking this very seriously,” Botelho said. “Obviously, they want to make sure they come to a conclusion that’s fair to the director, fair to the commission and fair to taxpayers.”

A spokeswoman for the Nebraska attorney general’s office said Friday that state lawyers were still reviewing the audit to determine if any laws were broken.

The audit found that Nebraska tourism officials used state money to reimburse a marketing firm for alcohol and cigarettes, accepted meals from contractors and paid $44,000 in speaking fees for a 90-minute speech by a corporate executive.

Many of the auditors’ criticisms focused on McKillip and a promotional photo shoot near Valentine, which was intended to market the state to millennials. According to the report, Bailey Lauerman requested more than $5,200 in reimbursement for travel costs that weren’t properly documented. Because the state didn’t have adequate documentation, auditors obtained financial records directly from the firm.

Those records revealed that Bailey Lauerman requested more than $350 in repayment for alcohol and cigarettes, including bottles of wine, gin and Crown Royal Canadian whisky. In addition, Bailey Lauerman hired McKillip’s daughter as a model for the shoot. Auditors expressed concern that using McKillip’s daughter may have run afoul of a law that prohibits “improper personal gain” by public officials, employees and their family members.

McKillip has said none of the activity was illegal or fraudulent, and the marketing firm has repaid all of the money that was not reimbursable under state rules.

The audit questioned a $44,000 payment to Shawn Achor, the CEO of GoodThink Inc., to speak for an hour and a half at an October tourism conference that included chair massages and extra meals. In a written response, commission officials said Achor had spoken at several other national tourism events, and argued that many national speakers wouldn’t consider Nebraska.

McKillip had one defender at Friday’s meeting: Former University of Nebraska Regent Nancy Hoch, a distant relative of McKillip’s from Nebraska City who has worked in economic development. Hoch’s daughter, Hannah Hoch, read a letter on her mother’s behalf praising McKillip for her work with the state.

“There’s no one with more integrity than Kathy McKillip,” Hannah Hoch said after reading the letter. “This is outrageous.”

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