December 22, 2014

State audit discloses DHHS failed to file for nearly $2M in federal funds (AUDIO)

A state audit has uncovered that the Department of Health and Human Services failed to secure nearly two million dollars in federal reimbursement funds for programs dating back to 1996.

State Auditor Mike Foley says the issue came to light when his audit team discovered DHHS failed to request more than $650,000 in federal reimbursement for an adoption assistance program.

“And they passed it off as a clerical error and we said, ok fine, but we’re going to dig deeper,” Foley tells Nebraska Radio Network. “As we dug deeper, we discovered that this has been a recurring problem and in recent years we found about $1.8 million of federal funds that were owed to the state and we simply didn’t file a request for reimbursement.”

The initial $656,489 in lost federal reimbursement would have helped fund the state adoption assistance program in 2006. The state audit discovered DHHS failed to request federal reimbursement for adoption assistance programs in 1998, 1999, 2004 and 2006. The audit stretched back to 1996 to uncover $46,230 in federal reimbursement the state failed to secure for its Child Support Enforcement program.

The audit claims DHHS also failed to seek federal reimbursement for its Foster Care Title IV-E program in 2002 and 2003; a total of nearly half a million dollars.

Foley says DHHS either failed to ask for reimbursement or failed to meet federal deadlines.

“At this point, it’s gone,” Foley says. “Hopefully, they can get their accounting system straightened out so that they don’t do it again. But, the money’s lost. It’s just money lost. It’s too late now. And we’ve got to move forward.”

Foley expressed concern about current programs.

“Well, there are pending contracts and they need to watch those very carefully to make sure that all the pending federal dollars that are due to us are requested promptly and within the timeframe allotted,” Foley states.

Statistics from the state audit:

Grant Year Grant Program Amount Lost

1996 Child Support Enforcement $46,230

1998 Adoption Assistance 76,096

1999 Adoption Assistance 417,194

2001 Child Support Enforcement 27,140

2002 Foster Care Title IV-E 210,713

2003 Foster Care Title IV-E 243,919

2004 Adoption Assistance 123,419

2006 Adoption Assistance 656,489

2006 State Survey and Certification of Health Care Providers 20,741

Total Federal Funds Lost $1,821,941

Nebraska Radio Network contacted DHHS for response to the audit’s finding.  The department sent the following statement via email:

DHHS first reported these unclaimed federal dollars as part of the State’s 2012 Comprehensive Annual Financial Report (CAFR) for the State fiscal year which ended June 30, 2012. At that time, DHHS put a process in place to review all receivable federal dollars to reduce the likelihood of this happening again.

Of the $116 million federal dollars awarded for these programs in those eight years, $114.2 million were claimed and received. In addition, some of the federal funds that weren’t claimed may not have been allowed by the federal government.

DHHS in no way minimizes the possible loss of any federal dollars. It is our commitment to be good stewards of taxpayers’ funds. Since 2009, DHHS has placed a higher priority on accounting and finance. DHHS now uses a more efficient and effective accounting system. Also, DHHS created an internal audit position in 2011 to review the department’s processes and procedures.

A copy of the management letter, including the response from DHHS, can be found on the State Auditor’s website under “What’s New”: auditors.nebraska.gov

AUDIO: State Auditor Mike Foley discusses DHHS audit. [1 min.]