Nebraska State Auditor Mike Foley announced last Wednesday that the federal government had sent two notices to Nebraska asking for the repayment of $22 million within the next 30 days.

If the federal money is not repaid within that time, the federal government will add annual interest expenses of over ten percent. The federal funds were to aid the Nebraska effort to privatize child welfare services, which began in 2009 at Gov. Dave Heineman’s behest.

“Time and time again, the Nebraska Department of Health and Human Services (DHHS) has squandered millions in state and federal dollars,” Foley said. “The agency’s refusal to adhere to sound business practices for the proper expenditure of funds will now result in Nebraska taxpayers having to pick up considerably more of the cost for its foster care program.”

Nebraska began the privatization of the child welfare services with five companies. However, all but one dropped or lost their contracts due to costs rising.

In 2011, a state audit showed that child welfare costs had risen by 27 percent, the state was overpaying contractors and contractors were still failing to meet requirements. A separate audit from the legislature declared the reform was not working.

According to the federal notice, Nebraska owes nearly $8 million from 2012 and $14 million from 2011 in wrongly-spent monies. The letter stated that Nebraska improperly included certain maintenance and administrative costs that were not allowable, as well as failed, and continues to fail, to produce documentation of payments made to foster parents for allowable expenses.

Foley added that these most recent developments only confirm his suspicions that the DHHS is “in turmoil” and “in desperate need of an overhaul.”
He had also called out the DHHS last month for failing to take $5.8 million in federal funds that could have helped make homes more energy-efficient or reduce utility bills.

The Nebraska State Audit Office is still working on the 2013 report, so it is unknown whether the state will owe the federal government more after that report is filed.

Presently, it is not known if the state has paid the federal government or not.
Quotes courtesy of watchdog.org.