The state's executive branch may be circumventing hiring procedures by creating questionable "exempt" positions and deploying employees from one agency to work in another, according to a state audit released yesterday.

While the executive branch is operating within the law, liberal interpretation has allowed for the creation of 934 "unauthorized" positions, the audit said.

Because these positions bypass legislative approval, lawmakers are unable to control how more than $30 million is spent on these positions, according to State Auditor Marion Higa. "Since it's the Legislature's responsibility to appropriate money, if they knew where this $30 million was, they might have chosen to spend it in a different way," she said.

The audit was requested by the state Legislature last session after lawmakers questioned hiring practices within the executive branch, which includes departments in charge of public services such as transportation, public safety and health, as well as the agencies in charge of the state budget and human resources.

The executive departments have the discretion to create exempt positions for pilot or demonstration projects, those needing special expertise and those requiring higher compensation to attract qualified candidates. In some cases the jobs last for extended periods and perhaps should be made into regular civil service positions, Higa said. "The very definition of 'project' says there's an end date. It's not indefinite," she said.

The audit also questioned the executive branch's practice of hiring and paying employees in one branch, but actually having them work in another, such as three employees paid by the Department of Human Services to work in the governor's and lieutenant governor's offices.

While agencies are granted the latitude to do this, the audit says, "in some ways the legislative approval process seems to be thwarted."

The audit calls for written criteria for creating, filling and approving exempt positions, including limiting the length of service. It also suggests submitting requests to the Legislature for needed positions, rather than creating unbudgeted positions.

In addition, because auditors could not determine whether any cost savings resulted from vacancies within the executive branch, the audit suggests the Legislature ask for an annual report on vacancies and cost positions.

In response to a draft of the audit, state Budget and Finance Director Georgina Kawamura said the executive departments need flexibility to create positions, especially since budgets are put together two or three years before they are implemented.

"Flexibility is required to ensure that opportunities, as well as problems, can be handled in an efficient manner," she wrote in a letter included in the final audit. "We believe that flexibility in managing resources, including personnel resources, is a critical component of our operations."

However, Kawamura agreed that the agencies should consider limits on the length of special projects, as well as exercise more discretion in deploying employees to other agencies and direct agencies to request needed positions from the Legislature.

Higa, who noted that employees in her own department are exempt from civil service, said there are many legitimate reasons for exempting positions. "Some of them are obviously very necessary for being outside of civil service," she said.

However, the agencies need to be more accountable to the Legislature. "There is a statute that allows the executive branch to move monies around, but I think the Legislature's expectations is that it will be given information when it asks for it, or even better yet, not to have to ask, but to have it routinely given over," Higa said.