A state legislative auditor’s report found that the Minnesota Department of Human Services (DHS) failed to ensure the eligibility of participants in large public assistance programs and that it did not always perform timely inspections of child care centers.

The findings mirror those of other recent auditor reports and could fuel calls to reform the way state administrators verify eligibility for programs that together cost nearly $7 billion a year in federal money.

For more than a decade, the legislative auditor has reported flaws in the way the state determines who qualifies for Medical Assistance, which provides health insurance to about 1 million low-income and disabled Minnesotans, and other public assistance programs. For instance, last year the auditor found that 17 percent of 193 people enrolled in public health insurance programs were not eligible for the benefits they received.

Frustrated legislators are proposing changes, such as the hiring of private companies to scrub the state’s public insurance and welfare rolls to identify participants who are not eligible for public benefits.

“We absolutely have to crack down on this,” said Rep. Jim Knoblach, R-St. Cloud, chairman of the House Ways and Means Committee. “If people make too much money and are not eligible, then I don’t think taxpayers should be paying for them.”

In a written response to the report, Human Services Commissioner Lucinda Jesson said that the department generally agreed with the findings and that it had taken steps to reduce errors through improved training and technical assistance to county workers. In addition, the state recently implemented a process for better tracking and monitoring of errors in determining eligibility for Temporary Assistance for Needy Families (TANF), also known as welfare-to-work.

“While we have made significant progress over the last year toward addressing the issues raised in this audit, there is still much work left to do, and we remain committed to fully resolving all the issues,” said Deputy Commissioner Chuck Johnson.

The audit found that the DHS, the state’s largest agency, did not adequately ensure the eligibility requirements for Medical Assistance and four other federally funded programs for low-income families.

In 57 percent of 240 cases reviewed by the DHS, county workers did not follow correct procedures when determining eligibility for federal welfare-to-work benefits. In some cases, the applications lacked adequate verification of household assets, had inconsistent information or lacked key documents, the audit found. About 101,000 people are enrolled in welfare-to-work in Minnesota.

In the last fiscal year alone, the state’s automated system for determining eligibility for welfare-to-work and the Supplemental Nutrition Assistance Program (SNAP), also known as food stamps, identified a huge volume — 346,000 cases — of discrepancies in income and other eligibility requirements. The auditor questioned whether counties had actually resolved all of these discrepancies and recommended more targeted efforts to ensure that only those who are eligible receive benefits.

Minnesota is not alone in its struggle to keep its federally funded programs clean of ineligible participants. Some states, including Illinois and Pennsylvania, have hired private firms to audit their Medicaid case files to identify ineligible beneficiaries. An Illinois audit by a private firm resulted in the state removing more than 140,000 cases from the Medicaid rolls.

Rep. Steve Drazkowski, R-Mazeppa, wants to pursue a similar program here. He has introduced a bill that would require the DHS to contract with an outside vendor to determine the eligibility of Medical Assistance enrollees and those in other federal assistance programs. “We could save tens or hundreds of millions of dollars if our state government simply followed the law,” Drazkowski said.

The auditor also found flaws in the state’s oversight of child care centers. In 21 of 38 cases reviewed by the auditor, the DHS’s licensing staff failed to perform site visits to child care centers within the required two-year period. In some cases, the site visits were up to six months late. Without timely licensing visits, health and safety violations at child care centers may go undetected, according to the auditor’s report.

“These issues are fundamental to what the federal government expects when they give [the Department of Human Services] billions of dollars,” said Cecile Ferkul, the deputy legislative auditor, in an interview. “Resolving these issues is at the core of the department operating effectively.”


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