Tardiness by the Minnesota Department of Military Affairs in seeking federal reimbursement for tens of millions of dollars has put added strain on state finances, auditors said Thursday.

In its response, the department said it was taking steps to correct the situation and expected to be caught up shortly.

Delays in seeking reimbursement for Minnesota National Guard expenses tied up state cash longer than needed and deprived the state of potential earnings, said Deputy Legislative Auditor Cecile Ferkul.

"I was really surprised by this," Ferkul said. "We don't generally see agencies running accounts negative like this."

"It just seems to me that at a point in time when the state is in a difficult budget situation and cash flow situation that ... the department of military affairs would have been watching this and making sure they were getting the resources back," she said. "The [state] general fund is really footing the bill on this."

Another option, she said, was for the state department of Management and Budget to better monitor the military spending and reimbursements.

The Department of Military Affairs paid about $65.3 million for the federal share of its National Guard costs through last August, but as of January had received reimbursement of only about $37.3 million, the audit said.

States can seek reimbursement monthly. "They're five months behind right now," Ferkul said.

In a written response to the audit, Minnesota Adjutant General Larry Shellito said the department "experienced a series of 'unusual' events that consumed staff time and a series of employee absences and turn-over that we mistakenly thought we could overcome and catch up on outstanding claims.

"Unfortunately, we discovered too late that this is actually the 'new normal' pace of work for the department and we have to make further adjustments."

The department said it expected to be caught up with submitting claims by April 1.

Ferkul said she understood that deployments reduced staffing used to process the reimbursement claims.

Pat Doyle • 651-222-1210