Millions of dollars misspent due to miscommunication?

State Audit Finds Big Problems: $1.7 Billion in Question Here
Lisa Cornwell, Cincinnati Post, Sept. 15, 2006, News Page: A2

The state on Thursday questioned $1.7 billion in spending by a county agency that handles child welfare and job services and said the office must repay at least $223 million it spent improperly.

State officials said the Hamilton County Department of Job and Family Services so badly commingled its federal, state and levy income that large sums are virtually unauditable.

What has been determined is that the agency has received millions of federal and state dollars to which it was not entitled, according to an audit of fiscal years 2002 through 2004 released Thursday.

That included $35.6 million that helped fund five county-run children service agencies and $60 million that paid for child welfare administration and training.

Another $52.9 million was questioned in money spent on the county's foster care program.

Barbara Riley, director of the Ohio Department of Job and Family Services, which supervises the county agency, said the amount the state claims Hamilton County owes is the largest in the 20 years her department has been doing audits.

When asked by a reporter whether county officials were playing a "shell game" of moving money among programs so that they could appear to qualify for additional federal dollars, Riley called that "a pretty apt description."

She said that it does not appear any money is missing or stolen, and that the Hamilton County agency's clients were well-served.

While saying it was too soon to cast blame, Riley appeared to lay responsibility for mismanagement of the money at Hamilton County's feet.

In a news Thursday afternoon, Hamilton County Administrator Patrick Thompson called the report startling.

"We have an accounting discrepancy brought against us by the very agency that is charged with telling us how to keep our books," Thompson said.

He said the county saw the audit for the first time Thursday and will have to have time to review it before responding to specific allegations.

"Many of these allegations that are contained within the report, I will tell you are the result of misdirection, ambiguity and the like from the state," said Glenn Whitaker, an outside attorney representing the county.

"We have consistently maintained that we have complied with what the state told us to do," he said.

Riley said she believes her department has fulfilled its responsibility of supervising counties. She said it is the county's responsibility to adhere to state and federal law, regardless of the degree of state oversight.

She said Jobs and Family Services relies heavily on audits of the program conducted annually by the state auditor's office, which she said failed to detect the scope of the problem in Hamilton County.

Ohio Auditor Betty Montgomery said that accusation is "simply not true," noting that the single state audit conducted each year looks at all federal dollars distributed by the state.

"When distributing federal dollars, the federal government requires the administrative agency managing those funds to provide a greater level of scrutiny concerning the expenditure of the funds," she said in a statement. "Thus, ODJFS is responsible for conducting regular and specific programmatic reviews of county Job and Family Services programs."

Riley said it is not yet clear where the money to repay the federal government will come from, but that the state will try to determine what money goes where after the county responds.

The Hamilton County agency, which oversees programs to help the indigent and unemployed as well as children services and child support collections, had an annual budget of nearly $1.27 billion in 2005, with $772 million of that coming from the federal government, $398 million from the state and $99 million from the county.

Under federal law, grants for different purposes must be kept separate to assure that state and local matches are being met properly.

The county also diverted money from its own children services fund to other funds, a violation of state law, the audit said. Because the county merged its public assistance, child support and children services funds, Riley said the $1.7 billion includes some overlapping costs and dollars counted more than once.

Thompson said overlapping findings and the state's acknowledgment that findings could be significantly less show that "this report doesn't know what its findings really are."

The state said the county has 30 business days to respond, but Thompson said the county will request more time to respond to a report that the state worked on for nearly two years.

* The FBI has dropped its inquiry into the matter, but federal officials are still pursuing civil action in the case, Terry said.