By Deena Winter | Nebraska Watchdog
LINCOLN — Nebraska sent $7.7 million in federal energy assistance to residents who weren’t eligible to get the money directly, and some of those $250 and $500 checks were cashed at Walmart, grocery stores, restaurants, paycheck advance stories and a keno parlor.
State auditors had “serious concerns” that the majority of the 19,000 payments “were never used to pay utility bills,” as intended.
Auditors also found 261 payments totaling nearly $112,000 were sent to dead people — some who had been dead for well over a year and many whose deaths were known to the state before they issued the payments. State officials said those payments were allowable, since they were meant for the household.
“It’s not a pretty picture,” State Auditor Mike Foley said Monday.
The problems began in late August 2011, when the Department of Health and Human Services unexpectedly received $20 million in federal funds for the Low Income Home Energy Assistance Program, which helps low-income people pay utility bills. HHS employees dithered rather than make decisions, and then rushed to spend the money five weeks before the close of the fiscal year.
Auditors questioned $17.6 million in payments, particularly $7.7 million that went to households that had received prior “crisis assistance” with their bills. HHS rules required that any further payments to be made directly to the utility companies, but since there wasn’t time to identify the utilities serving each eligible household, the department sent 19,000 payments of $250 or $500 directly to individuals.
HHS CEO Kerry Winterer acknowledged “errors were made” with regard to the $7.7 million being sent directly to people rather than utility companies. Winterer said the department had been told in October 2010 that it would receive $20 million in LIHEAP assistance for the winter season, but then got word in January 2011 that it would be receiving another $20 million in unspent federal dollars.
The department erred by delaying decisions on how to distribute the money until late 2011, putting the squeeze on the department to spend the money before Oct. 1 or return it to the feds. Since the winter season had passed, and the department didn’t have enough time to identify the utilities serving each household and make the payments by Oct. 1, so it made the payments directly to consumers.
Winterer said federal officials have said other states commonly use the same practice to distribute LIHEAP money before they expire, as long as they go to eligible households.
Auditors reviewed some of the participants’ utility bills and found the LIHEAP money could be traced to the payment of their utility bills “in only a small handful of instances.”
Often the participants spent less than $100 of the money on their utility bills, according to the state auditor. In some cases, the participants weren’t behind on their utility bills and had credit balances, but still got the LIHEAP payments and spent them, even though state regulations require the money only go to those who need help paying their energy bills.
“It wasn’t spent for utility bills and that’s the purpose of the fund,” Foley said. “You can’t just take it to Walmart and go shopping.”
When 135 payments were randomly tested, auditors found one was cashed at Ralston Keno, 19 at Walmart, 24 at grocery stores, restaurants and paycheck loan stores. Winterer noted that just because a check was cashed at a particular store doesn’t mean it was spent there, especially since some people don’t have checking accounts and normally cash checks at businesses.
And Winterer said since the winter season had already passed, the payments were meant as reimbursement for payments the people had already made on energy bills.
One recipient who died in May 2011 had his August 2011 payment cashed at an Omaha liquor store months after his death. Another who died in March 2011 had his payment cashed at Walmart six months after his death. Other payments to dead people were cashed at a grocery store, a paycheck advance company and funeral homes.
Dozens of those payments were “signed” by the deceased person, raising the prospect of forgery.
“We think law enforcement should look into some of these cases,” Foley said.
Winterer said LIHEAP payments are made to households, and when a member of the household dies that doesn’t necessarily mean the household is no longer eligible for the program.
Foley said the “systemic breakdown at DHHS did not end there,” because in June 2012 the department issued another $9.5 million in supplemental LIHEAP payments to more than 38,000 recipients, including dozens who were dead.
In addition, HHS retained nearly $1 million in unspent LIHEAP funds, more than is allowed to be carried over into the next fiscal year. Auditors also found nearly 1,300 payments totaling more than $500,000 that were never cashed, but rather than cancel the payments and recycle them back into the LIHEAP program or return the money to the feds, the state converted them into state general funds, “the legality of which is suspect,” according to the audit.
Winterer said steps already have been taken to ensure the problem doesn’t happen again, with new leadership in the division that delayed decisions, plans to amend the state rules to clarify how to spend such supplemental payments and LIHEAP on a new computer program that gives more information about households.
“We have new leadership in the Children and Family Services Division who understand the importance of making timely decisions,” Winterer said.
In an unusual move, Foley and Winterer appeared together at a news conference where Foley released his audit findings and Winterer responded. Foley said the two met around Christmas and although they’ve had their differences over past audits, agreed to work together.
It was Foley’s idea to appear together at a news conference, which he began by saying being head of HHS is an “extremely difficult job” and “inevitably, things will go wrong” but he has “great confidence in his abilities.”
“Kerry Winterer is a no-nonsense guy and he will take care of these problems,” Foley said.
Winterer thanked Foley for allowing him to participate in the news conference and said he hopes “this is the beginning of a more cooperative attitude” between the two offices.
“We are essentially on the same side,” Winterer said.
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