Feds demand Nebraska repay $22 million after botched child welfare

By Deena Winter | Nebraska Watchdog

LINCOLN, Neb. – State Auditor Mike Foley said Wednesday that the feds have given the state of Nebraska 30 days to repay nearly $22 million in misspent federal funds related to the state’s botched attempt to privatize the child welfare system.

State Auditor Mike Foley

The state auditor received two letters today indicating the feds agree with the state auditor’s findings regarding how the state Department of Health and Human Services bungled child welfare reforms.

Every year, the federal government requires the state to file an audit report of federal funds, which is then reviewed and occasionally there are “financial consequences.” Foley said the latest development confirms his view that although DHHS has many “fine, dedicated employees, the agency is in turmoil and in desperate need of an overhaul.”

“Time and time again, the Nebraska Department of Health and Human Services has squandered millions in state and federal dollars,” Foley said in a press release. “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.”

The feds are demanding repayment for nearly $8 million in disallowed expenditures in 2012 and $14 million in 2011. The auditor’s office is finishing the 2013 audit, which Foley said could lead to more questioned expenditures.

The demand for $22 million in repayments comes on the heels of a similar $3.2 million repayment demanded from the state in August 2012. Nebraska initially appealed that cost disallowance but, ultimately withdrew its appeal.

Foley said if the state doesn’t repay the money within a month, it will be subject to annual interest expenses of over 10 percent.

“Nebraska taxpayers deserve better than this,” Foley continued.

This is a developing story. Please check back for updates.

Contact Deena Winter at deena@nebraskawatchdog.org. Follow Deena on Twitter at @DeenaNEWatchdog

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