Federal officials won't reimburse Maryland's Department of Human Resources for nearly $10 million in foster care-related expenses that the state had expected to recoup, according to a legislative audit released Wednesday.
The funds would have paid Maryland for in-home, "pre-placement" services, provided to children with the aim of preventing them from being removed to foster care placement.
The U.S Department of Health and Human Services denied the claim because DHR did not have a process to document that the children it served were in imminent risk of entering foster care, the auditors stated in the report.
The state had spent the money from September to December 2008 with the expectation that it would be paid back.
"We had been claiming these funds for years," said DHR budget director Stafford Chipungu. "They had allowed it before. Now … they became strict."
DHR appealed but was denied in October. Now money from the state's general fund will be used to replace the expected reimbursements gradually over future years as it becomes available, he said.
Chipungu and DHR spokeswoman Elyn Garrett Jones stressed, however, that money would not come from program services. "We don't want it to affect direct operations," he said.
State Sen. James C. Rosapepe, a Democrat and a co-chairman of the General Assembly's joint audit committee, was outraged by the report.
"It's pathetic," he said. "Obviously, every state agency should be making sure that when we're owed money from the federal government for cost-sharing programs we should get it."
Rosapepe, who represents Prince George's and Anne Arundel counties, said he planned to sit down with the legislative auditor and department officials to get more information.
He added that this was particularly troubling for human resources, which "helps people with the least." "Frankly, it's those kind of programs that often get pushed the hardest when we're in tough times, even when the need is the greatest," the senator said.
Auditors recommended that state officials immediately amend their spending plan and submit any eligible expenses to the federal government for reimbursement — as well as submit timely amendments in the future.
In a response included in the audit report, DHR officials said its new state plan for foster care funds is expected shortly. As part of this new plan, the department has taken steps to create a plan to document "candidacy" for foster care. If approved, the state should be able to be reimbursed for pre-placement costs.
"The good news is that we will be able to, going forward, be able to claim these dollars," said J. Gregory Holland, DHR's director of cost allocation and revenue management. "All of these things happening, this created the opportunity to do things the right way."