State Auditor Pola A. Buckley notified Gov. Paul LePage, Attorney General Janet Mills and several state legislators on Tuesday that the Maine Department of Health and Human Services “improperly managed” more than $13 million in federal welfare funding.

Though the Temporary Assistance for Needy Families funds that were transferred to a Social Services Block Grant program were returned to the federal government in July 2016, Buckley said in a two-page letter dated Oct. 18 that she considered the matter serious enough to bring to their attention.

“We consider the matter involving the use of TANF transfers to the Social Services Block Grant to be significant because it involves $13.4 million,” Buckley wrote. “We consider this matter to be improper management of funds at the agency level that should rise to the attention of the governor, the attorney general, and the Legislature.”

A four-page audit finding attached to Buckley’s letter says that DHHS used the federal funds, which had been earmarked for children or families whose income is less than 200 percent of the poverty level, to fund contracts for the Home Based Care program, which supports the elderly and adults with disabilities.

The document says the funds were transferred to the Social Services Block Grant program and used “for unallowable purposes.”

“The department took an overly aggressive approach to maximize federal funds,” it states.

Buckley said she intends to include the finding in her statewide audit report to the federal government, which is due by March 31, 2017.

The audit report said the Department of Administrative and Financial Services encouraged DHHS to seek written federal approval for its plan for the use of the TANF funds. The department did not obtain this approval even though it knew the use was questionable, the report said. Instead, DHHS relied on its “ability to return the federal funds if the use of these funds was later questioned, rather than first determining if the intended use was allowable.”

Attempts to contact representatives for the governor, attorney general, the DHHS, and the legislators who were made aware of the situation were unsuccessful Tuesday evening.

The Press Herald was able to reach Sen, Eric Brakey, R-Auburn, who serves as co-chairman of the Legislature’s Committee on Health and Human Services. He said he had been campaigning Tuesday and had not had the opportunity to read Buckley’s report. His co-chair, Rep. Drew Gattine, D-Westbrook, did not return a message left on his cellphone Tuesday night.

Attempts to reach DHHS Commissioner Mary Mayhew and her spokeswoman were unsuccessful Tuesday night, but in documents that were attached to Buckley’s letter, DHHS management said it disagrees with the state auditor’s finding.

DHHS management met with the auditor’s staff in August.

“We question the timing of the finding outside the normal schedule of state auditor reports. Such timing raises serious concerns abut the politicization of the state auditor process and of this matter,” DHHS management stated in the audit finding attached to Buckley’s letter.

DHHS management said it was unable to obtain formal guidance from federal officials permitting more flexible use of TANF dollars. They also pointed out that the funds that were transferred to pay for community based services contracts were replaced by general fund dollars.

Management at DHHS said there were no questioned costs in the auditor’s report, and that the transfer of funds “had no net effect.”

“The decision to spend federal funds on costs unallowed by federal regulations with the intent of returning the funds to the federal government if and when the unallowed costs are questioned, does not represent a valid system of internal control over federal awards,” the Office of the State Auditor concluded. “Furthermore, there is no allowable time period where DHHS is permitted by the federal government to spend grant funds on unallowable costs. The fact that DHHS considers this acceptable is troublesome.”

Buckley indicated that there we no violations of state law by the agency, only saying that the transfer of funds for one designated purpose to another use would be reported as a “material weakness” once the statewide audit is complete.

Dennis Hoey can be contacted at 791-6365 or at:

dhoey@pressherald.com