An article in yesterday's Maryland section about a legislative audit of the Developmental Disabilities Administration incorrectly reported that state Budget Secretary Frederick W. Puddester said it was a shame auditors focused on only the negative aspects of the agency's performance. In fact, Puddester said it a shame news media focus on only negative aspects of the agency's record.

The Sun regrets the errors.

The state agency that cares for developmentally disabled Marylanders lost millions of dollars through mismanagement at a time when thousands of its highly vulnerable clients were languishing on a waiting list for want of money to provide services, legislative auditors have concluded.

In an unusually harsh report, the state Department of Legislative Services gave the Developmental Disabilities Administration a rating of "unsatisfactory" for its compliance with procedures. Only two other agencies, out of more than 200, have such a rating, according to chief legislative auditor Bruce A. Myers.

Auditors concluded that since 1994, the agency made unjustified payments to care providers of more than $2 million, while losing another $1.8 million in interest income because of slow debt collections. The examiners also found that the agency failed to properly monitor care providers and violated state procurement law by awarding two bids without competitive bidding.

The report calls into question the performance of a long-troubled agency that Gov. Parris N. Glendening has been trying to turn around since he took office in 1995.

Glendening, who has received considerable support from advocates for the disabled for his efforts on their behalf, expressed concern about the report through a spokesman. Press secretary Ray Feldmann said the governor has directed state Health Secretary Dr. Martin P. Wasserman to resolve the outstanding issues identified by the auditors.

"This administration has made unprecedented commitments to developmentally disabled individuals throughout the state and we will continue to honor those commitments, operating within the letter of the law," Feldmann said.

The disabilities administration, a unit of the Department of Health and Mental Hygiene, serves an estimated 20,000 people -- about 85 percent of whom are mentally retarded -- through community-based services and state institutions.

The agency received a 10 percent budget increase this year -- to $378 million -- as Glendening pledged to eliminate the state's waiting list for services to the disabled, which by late last year had grown to about 5,300.

One of the key findings in the report was that in fiscal 1997 the agency did not promptly record $21 million owed by the federal government on its closing statement for fiscal 1997. That decision, which forced the state to rely on its general funds that year, apparently delayed efforts to reduce the waiting list.

Dr. Georges C. Benjamin, the state's deputy health secretary, defended the decision to hold the federal funds out of the agency's budget. He said the money was used this year to help ensure a steady revenue stream for the five-year, $68.4 million initiative launched by Glendening to improve services for the developmentally disabled.

One lawmaker said the money should have been used more quickly.

"Now the waiting list is being addressed, but it could have been one or two years earlier," said State Sen. Patrick J. Hogan, a Montgomery County Republican who sits on the committee that oversees legislative audits.

The audit notes that the agency closed its fiscal 1997 books with more than $1.6 million in a fund set up to pare the waiting list, but spent $74,603 of it that year.

But the chief executive of a leading organization for the disabled said it was not clear that money spent more quickly would have been spent efficiently.

"We're actually pleased that it's being done in a more thoughtful, deliberate way under a comprehensive policy initiative," said Christine Marchand, executive director of the ARC of Maryland, known at one time as the Association for Retarded Citizens.

The audit covers a period from September 1994 to June 1997 -- a period that includes the final months of the Schaefer administration and the first 2 1/2 years Glendening was in office.

Marchand said many of the backlogs addressed in the report date to the Schaefer administration. She said the new management team brought in by Glendening has improved the agency's performance.

Marchand said the finding that disturbed her was that the state has not kept up with its audits of care providers. Legislative auditors found that at its current pace, it would take 10 years for the agency to audit each of 114 care providers with contracts worth more than $100,000.

In his June 23 letter replying to the audit, Wasserman said some of the deficiencies have been corrected. But he provided few explanations for the lapses.

"Their response is pretty weak," Hogan said. The senator added that the agency has been slow to adopt technology that could help it keep tabs on care providers, but he declined to criticize its delivery of services.

The key question, he said, is "did the developmentally disabled receive the best bang for their buck and, in my opinion, they did."

Among the auditors' specific findings:

The agency's budget reconciliations -- which compare the amounts of money paid to providers with the amounts actually due -- had not been started for fiscal 1994, 1995 and 1996. The auditors said that as of December, the agency was still working on 1992 and 1993.

The agency failed to see that the contractor hired to oversee payments to caregivers completed all the required reviews of the 6,600 people whose cases should have been examined.

Even when the contractor did recommend reductions in a provider's payments, the agency frequently did not make the cuts. The auditors said a sampling of cases indicated the amount lost was significant.

The agency failed to cut providers' payments to reflect vacancies and clients' unauthorized absences. Auditors estimated the cost of those omissions at $2.5 million in 1997.

Two contracts totaling $4,406,721 were awarded without competitive bidding to former employees of groups that held state contracts. According to the auditors, the agency disregarded advice from the attorney general's office that such contracts would violate state procurement law.

Benjamin said the agency realizes it was wrong and won't repeat the error. He also said the state had adopted a new process to expedite federal reimbursements and has brought in new staff to deal with the backlog of audits and other paperwork. He said the agency hopes to be caught up by June.

Frederick W. Puddester, the state budget secretary, said it was a shame auditors focused on bureaucratic lapses instead of on improvements in the agency.

"I applaud the work the health department does. They make extraordinary efforts to maximize our federal fund recoveries," he said. "They've done an excellent job working with the governor and the legislature and coming together with the disability community to put together an initiative to reduce the waiting list."

Pub Date: 8/13/98