Several divisions of the Arkansas Department of Human Services have failed repeatedly -- and in one case purposely -- to properly track spending and manage some federally funded programs, legislative auditors reported Friday.
Human Services Department officials blamed high staff turnover and technology changes for many of the 20 deficiencies found in an annual audit report on expenditures of federal awards. They pledged to work hard over the next fiscal year to ensure that infractions are corrected.
Lawmakers on Friday called the report "shocking," "concerning" and "egregious," questioning whether the state may owe money to the federal government for the more than $126 million in questioned costs flagged by auditors.
"I'm sure this panel is aware that this country owes $21 trillion in debt, and even though the feds may have printing presses, I don't think they're going to be as gracious with the funds," said state Sen. Gary Stubblefield, R-Branch. "And I think this agency needs to get its house in order, and they need to do it quickly because we're talking about a $9 billion agency here. We could be in trouble real quick."
Asked whether she could assure legislators that the state won't get into financial trouble with the federal government, Misty Bowen-Eubanks, the department's interim chief fiscal officer, said it wasn't likely, based on the early stages of the reconciliation process.
"Early indications show that we will not be in a situation where we owe back money," Bowen-Eubanks said. "In fact, we may be able to make additional withdrawals."
The findings were part of a yearly report, compiled by auditors, examining the programs that receive the bulk of federal dollars flowing to state government.
Auditors found 23 instances of noncompliance during fiscal 2017 across four state entities -- the Arkansas Department of Education, Department of Career Education, the University of Arkansas for Medical Sciences and the Human Services Department. Thirteen findings were repeated infractions that had remained uncorrected since fiscal 2016.
At a Friday hearing, lawmakers focused on two of the auditors' findings.
The first centered on reimbursements to providers participating in the state's Medicaid and Children's Health Insurance programs. The Human Services Department issued reimbursements to care providers even if the claims had not been filed on time despite the U.S. Centers for Medicare and Medicaid Services declining to grant a waiver to do so.
Department leaders said problems with the agency's computerized claim filing system caused some doctors to miss filing deadlines.
Tami Harlan, deputy director of the Medical Services Division, said the decision was made to pay providers because many were threatening to pull out of the Medicaid program because of the payment lapses caused by the system glitches.
"We were at the point where children, our Medicaid people, were not going to get services," Harlan said. "We were concerned that providers were going to start turning them away."
Lawmakers also grilled department officials about another auditor finding -- that the department "knowingly" reported inaccurate Children's Health Insurance Program expenditures for the quarter that ended in March 2017.
The agency under-reported spending by more than $10.4 million for the quarter because of a communication breakdown between the Medical Services and accounting divisions.
"Because of this breakdown, managerial accounting purposely reported expenditures from the previous quarter and would knowingly adjust the report at a later date," the report reads.
That finding vexed lawmakers.
"How do you knowingly report inaccurate expenses?" said Rep. Fred Love, D-Little Rock.
Bowen-Eubanks said the department is planning more training to ensure the problems don't occur again in the future. She also said that the agency's accounting section has experienced a lot of employee turnover, particularly in supervisory positions.
"We realize we have some deficiencies in the managerial accounting section, and we're working aggressively to address them," she said.
After establishing that several of the audit's findings occurred in divisions with turnover in leadership, Sen. Linda Chesterfield, D-Little Rock, said, "I'm beginning to see a pattern."
Kelley Linck, the department's chief of legislative and governmental affairs and a former legislator, said such a large agency is bound to make mistakes, but its officials hope not to repeat them.
"We have 7,400 employees," Linck said. "We'll be here again. Our goal is not be here where it says 'repeat finding' in front of it."
Metro on 04/14/2018