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State Auditor Says DHHS Accounting Lapse Cost Taxpayers Over $1.8 Million

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State AuditorMike Foley has issued an audit management letter to the Nebraska Department ofHealth and Human Services citing the failure of DHHS simply to ask for federal reimbursement funds owed to the state in a timely manner – thus costingNebraska taxpayers over $1.8 million.

The issue came to light when Foley's audit team examined the accounting for anadoption assistance program managed by DHHS. It was found that DHHS paidfor those program expenses and then failed to seek $656,489 in federalreimbursement funds during the five-year grace period for doing so.

Realizing that Nebraska taxpayers had been short-changed by what DHHS called a"clerical error," the auditors dug deeper and discovered the problem to be afar more serious one that has been occurring for years.

As of June 30, 2012, DHHS failed to collect $1,821,941 in Federal receivablefunds relating to child welfare and protection – all of which should have beencollected by the state from the federal government.

Federal law allows aState agency five years after the period of availability in which to request federal funds for certain program expenditures incurred by the state. Byfailing to make such a request for federal reimbursement during theconsiderable time allotted, DHHS missed the opportunity for the federalfunds. Consequently, program costs were pushed onto Nebraska taxpayers.

The failure of DHHS to pursue almost two million dollars in available federalfunds resulted in child welfare and protection costs being paid for insteadwith state tax dollars, which could have been used for some other purpose.

The breakdown of the funds lost by DHHS was:

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

To clarify, DHHS spent the $1,821,941 and did not properly seek thereimbursement monies the state was entitled to from the Federalgovernment. Aside from placing partial blame on an alleged "clericalerror," nobody at DHHS could explain the agency's failure to initiate, atany time during the long five-year grace period, the process of claiming theavailable federal funds.

According to Foley, "For five whole years, the federal money was literallythere for the asking. All the state needed to do was to file a timelyrequest for reimbursement. As a result, the citizens of Nebraska paid theprice for those glaring errors – this time to the tune of roughly two milliondollars."

Courtesy- State Auditor Mike Foley

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