By Glynis Kazanjian and Len Lazarick, Glynis@marylandreporter.com
(December 01, 2011)—Health Department officials told a Senate committee Wednesday the department would immediately begin to provide emergency assistance to those in the top tier of the Developmental Disabilities Administration waiting list.
The step is the first of four major steps outlined by the department to make up for a $34 $38 million budget blunder that left thousands on the DDA waiting list without services for a period of at least two years.
Department of Health and Mental Hygiene Secretary Joshua Sharfstein also said the Department would hire an outside auditor to conduct a forensic investigation of DDA’s internal accounting system. CORRECTION: The auditor will try to determine the causes of a major accounting failure that left $34 $38 million in community services funding unspent. Of that, $25 million had to be returned to the state general fund. (In Wednesday’s testimony, officials revised the amount of federal dollars left over from $12.6 down to $8.8 million that will be rolled over.)
“There is an underlying problem which is a profound weakness in DDA’s financial accounting system,” Sharfstein testified. “DDA has a unique accounting system in that it estimates payments in advance and then reconciles at the end of the year. The goal is to fix the DDA financial system.”
State officials including Sharfstein, DDA Director Frank Kirkland and Inspector General Tom Russell made a presentation to members of the Senate Finance and Budget and Taxation Committees.
The officials also addressed the same issues at a town hall meeting at a Severna Park church Wednesday evening that brought out 200 people representing caregivers, advocates and nonprofit agencies.
Uncertain timeframe for audit
Thomas Kim, deputy secretary for operations, said he did not know long the outside audit would take.
DHMH will also hire a consultant to evaluate DDA’s financial operations structure and determine if a new system if necessary.
The three additional steps in Sharfstein’s plan include:
-- Addressing immediate needs within the DDA support services infrastructure, including acquiring equipment, transportation vehicles and items associated with information technology;
-- Transitioning “care coordination” services so that they become eligible for federal funding matches, which could bring in $10 million more per year in federal funds.
-- Hiring a consultant to develop federal waivers for services that are now funded by the state, which is expected to bring in an additional $5 million in federal funds per year.
The four initiatives are expected to cost the state $14 million. There was no estimate for the cost of the outside auditor and accounting consultant.
Sharfstein promised a diligent oversight process moving forward.
“This problem was identified by our staff,” Sharfstein told the senators. “We brought it to the inspector general. We’re coming forward and explaining what the problem is. We’re going to explain what our plan is and work with you to make this right.”
Town hall meeting
At the hearing and the later town hall meeting, Sharfstein said that even with the solutions he was proposing, there remained “an enormous gap between the needs of people with disabilities and the resources” the department had to help them.
Inspector General Tom Russell told the town hall meeting that DDA had an antiquated system for payments, much of it still done manually. “What $800 million corporation would prepay for services and then chase someone else for reimbursement?” he asked, referring to the federal match from the Medicaid program.
For more than two hours, the health officials took dozens of questions and comments from the audience, which generally praised the officials for being proactive in trying to solve the problem. Many offered suggestions for ways the agency could improve.
One board president of a nonprofit agency said the unspent money by DDA was making it more difficult to raise money from other sources.
Sharfstein said that Gov. Martin O’Malley was upset at the budget situation but “is very supportive of our efforts” to solve the problems at the agency.
The secretary said that while he was not positive that the $25 million would be given back to DDA, “I think we’re going to wind up with a lot more” by improving processes and changing programs that will provide more federal matching funds.
Richard Dean, a member of the board of the ARC of Maryland, said 30 members of the legislature had written to the governor asking him to restore the DDA funding. “We need to get the governor’s attention,” Dean said, urging him and the legislature to return the $25 million that went unspent.