By Megan Poinski
[email protected]
A scathing audit of the Department of Juvenile Services exposed a host of large problems with recordkeeping, financial management, contracts, monitoring and personnel, including the loss of $3 million in federal Medicaid funds. Treatment funds were not recovered, $148 million in contracts did not get the proper approval, millions in other contracts were overpaid and ineligible employees got overtime pay or were paid twice.
The problems are so many and so severe that the General Assembly’s Joint Audit Committee plans a hearing on the report next month, its staff said.
Legislative Auditor Bruce Myers said that the 51-page audit of DJS found some “very serious issues.” The agency provides administrative services for young people in the juvenile justice system, as well as services for juveniles in state facilities.
Very few of the scores of audits done each year generate a hearing before the General Assembly.
“There are a lot of things in there,” Myers said. “A lot of big issues, a lot of money involved, a lot of problems.”
Millions lost or wasted
Several problems with the agency’s policies and procedures – or lack thereof – led to the loss or waste of millions of dollars.
“The state’s in desperate need of funds, and they’re leaving money on the table,” Myers said.
The department never got about $3 million Medicaid because the proper paperwork was never completed. From June 2008 to August 2009, 58% of all claims submitted for reimbursement for young people in residential rehabilitation services were rejected. Almost all of them were disqualified because DJS had not submitted a determination of needs report, which explains why the service is necessary.
There was also no method in place to monitor reimbursements from Medicaid. Auditors found that the department left $511,600 in Medicaid reimbursements languishing for almost a year. It was only claimed after auditors told DJS staff it was there. Auditors estimated the state lost about $18,700 in interest by waiting so long to claim the funds.
DJS also did not follow government contracting laws. Auditors found 52 contracts worth $148 million that had never been submitted to the Board of Public Works for approval, as required by the state constitution for contracts. The department plans to submit all of the contracts to the Board of Public Works for retroactive approval, and Juvenile Services Secretary Donald DeVore wrote that he hopes they will be on the agenda of the board’s next meeting.
Contractors overpaid
Some of the contracts that were implemented properly still had big problems. Auditors found that several contractors were overpaid millions of dollars. The audit specifically pointed out payments to the pharmaceutical contractor, which was paid $360,000 more than it was due in the contract, without proper review of the invoices. All contract modifications this large also need to be approved by the Board of Public Works.
The department’s disorganized records extended to the young people who were in the system as well. Auditors found that records of youth treatment service plans were in disarray. These plans are used to make recommendations to the court, set goals for the young person, and determine what DJS will do for him or her.
Records of 25 youths were examined, and auditors found that 17 of their treatment service plans were filed late, some as long as 10 months overdue. There was no documentation for eight of them. Additionally, files were not updated with information about required face-to-face contacts or progression through rehabilitation programs.
Employee records were also not kept well. Auditors found that 10 employees who were not eligible for overtime hours were paid $90,000 in overtime in 2008 and 2009. Additionally, lack of clear paperwork processing granted 10 employees who transferred jobs from different DJS regions two paychecks for about three months in 2008. The total amount of overpayment is about $18,400. DeVore wrote that all of that money was recovered by the end of June.
Other issues found in the audit include:
· No outside review was done to see if claims sent to Medicaid of the number of days youths spent at residential facilities was accurate.
· Almost a fifth of applications for court determinations necessary for the state to recover federal funds for youths placed in foster care were found ineligible because specific language needed to meet federal requirements was not included. DeVore wrote in his response that the department has submitted draft language to the judiciary that would meet these requirements, and is waiting for a response.
· Contract awards were not always published as required by law.
· No master list was kept of contracts, and they were not audited.
· Too many employees had access to the computer system used to process purchasing and disbursements, setting up a system that could easily allow unauthorized purchases.
· Access to the computer system used for case management was too widespread, and logins and passwords were easy to locate on the server.
· Criminal background checks of new employees were not always done in a timely manner.
· Accounts to hold restitution of stolen or damaged property were also too accessible, and funds were not reconciled.
· Items were not inventoried, recorded or controlled. The last physical inventory of all equipment and records was done in 1993.
· The working fund for small emergency purchases or travel and payroll advances was improperly used to pay $10,700 in parking tickets on DJS vehicles that had taken youth to court hearings. The tickets were initially for $1,600; the amount ballooned because of penalties from failure to pay the tickets. The department had not sought reimbursement from the employees responsible, but DeVore said the agency is working on that now.
· $19,100 issued in travel advances to 126 employees between March 2005 and December 2009 had not yet been paid back or documented with expenses.
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