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NE audit of DHHS child care subsidy program exposes as much as $12.8M in improper payments • Nebraska Examiner

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NE audit of DHHS child care subsidy program exposes as much as $12.8M in improper payments • Nebraska Examiner


LINCOLN — A new probe of Nebraska’s child care assistance program has uncovered what the state auditor calls rampant abuses that led to as much as $12.8 million in improper payments to child care providers.

A 33-page audit released Tuesday looked at a sample of nearly $93 million in federal and state funds spent by the Nebraska Department of Health and Human Services on child care subsidies during a nine-month period starting in July 2023.

Mike Foley, Nebraska state auditor. (Rebecca S. Gratz for the Nebraska Examiner)

State Auditor Mike Foley said his team found that some providers took advantage of the state’s “lax oversight” of billings submitted through the Nebraska Family Online Client User System (NFOCUS). 

He said offending providers were “startlingly successful” in bilking DHHS out of payments in excess of those to which they were entitled. The public agency subsidizes child care centers and home care providers on a sliding scale basis for the care of children from low-income families.

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“Some of the spurious billings were so wildly excessive that one wonders whether anyone at DHHS took even the most cursory glance at them before authorizing their payment,” Foley said. 

Millions in billings were at least “inordinately inflated” by various providers, he said, and may be “outright fraudulent.”

‘People tiptoe a little’

Overall, Foley said, it appeared that invoices to the NFOCUS system were routinely processed and paid with little, if any, meaningful oversight. Foley said the audit reflects a “classic problem” in cases of financial abuse.

“People tiptoe a little, fudge the number and nobody says anything. Then it gets bigger and bigger and bigger,” he said.

Among examples of improper billing cited by the audit team:

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  • DHHS at times paid double and triple billings for the same child during the same period of service. In one instance, a provider billed and was paid by the agency a “toddler” rate for a child and then again, for that same child, a preschool rate for the same two weeks during February. The audit team cited another child care provider for 13 instances of similar multiple billings.
  • Billings were processed and paid for child care services supposedly provided to 210 children on Thanksgiving Day 2023, when the child care centers were not even open for business.
  • Some child care providers billed for more days than were in the month covered. For instance, Foley said in a news release, one provider billed DHHS and was paid for 168 partial days of service during February, yet only 29 partial days would have been possible. Another provider billed DHHS and was paid for 120 partial days of service during January when only 31 billing days would have been possible. In another situation, the provider billed and was paid for 40 full days of service and 78 partial days in a single month.
(Marcio Jose Sanchez/The Associated Press)

The audit covers July 2023 through March 2024, and the sampling of cases reviewed found $328,997 in questionable costs due to various regulation violations, including claims not agreeing with attendance records and parents’ employment that did not appear to meet a requirement for economic self-sufficiency. 

With the dollar error rate for the random sample being 13.85%, the team estimated potential dollars at risk, or loss, for the audit period to be $12.87 million.

The auditing team provided DHHS managers opportunity to review and respond to its comments and recommendations, and an agency response is included in the report. 

DHHS also released a media statement, saying it agrees with the audit findings and has started processes to recoup funds questioned in the audit. 

‘Tireless efforts’ appreciated, CEO says

It also said that an investigation already is underway for one of the providers noted in the audit. 

DHHS said that its practices include “internal targeted high-risk reviews” of provider invoices. When a review identifies billed units that exceed authorization, the agency can refer the matter to its fraud unit and can recover full or partial payments. Child care providers also are trained, and refreshed, on billing procedures.

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CEO Steve Corsi said that he appreciated Foley’s “tireless efforts to safeguard taxpayer dollars.”

Corsi said that since being appointed as DHHS’ top administrator less than a year ago, the agency’s primary focus has been to put in place effective guards to ensure taxpayer dollars are allocated properly.

“These efforts will be continued aggressively,” Corsi said. “We look forward to the ongoing collaboration with the State Auditor’s Office.”

Foley said that discussions with Corsi left him confident that problems would be fixed.

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That is where they’re dropping the ball. They go in after the fact and spot check — but not very thoroughly.

– Mike Foley, Nebraska state auditor

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As noted in the audit, Nebraska’s child care subsidy program uses state and federal funds to assist qualified families with the cost of child care. Applicants must meet requirements, including income eligibility, outlined in federal Child Care and Development Block Grant regulations.

Financial help is available on a sliding fee scale to eligible families according to a child’s age and special needs. If a family requests a child care subsidy to facilitate a parent’s employment, the family is required to document that the subsidy helps them retain a job that leads to economic self-sufficiency.

Wrong rates, overlapping times, no attendance logs

The audit released Tuesday delved into payments made to providers who submitted billings through the NFOCUS system.

Providers are supposed to keep detailed attendance logs for children, and the government subsidy is generally granted on a partial- or full-day basis up to a maximum of 60 hours a week.

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Among other examples of improper billings that Foley and the audit team said violated administrative requirements that are to be enforced by DHHS:

  • Numerous provider billings exceeded the allowable rate for the child. Generally, child care rates for infants and toddlers are higher than those for older, preschool-aged kids. The audit team found 690 instances of DHHS paying rates that exceeded what was allowed based on age.
  • Some providers failed to reduce billings by the amounts of the co-payments made by families served, resulting in overpayments by DHHS.
  • Provider billings were found to overlap with times when the child already was being cared for by another provider.
  • Billings were made for times with little or no attendance log information to document the presence of the child. 
  • Providers billed for families whose low work pay, according to the audit team, could not have given the family the self-sufficiency required to receive subsidies for employment purposes.
  • Billings were paid to providers that had exceeded their licensed capacity. 
  • One owner operating two separate centers under two different licenses billed DHHS for a partial day of service for six children at each location, even though less than five hours of service in total was provided. Of the six kids, one received only a single hour of service at each location, but the owner billed and was paid for two partial days of service.

Foley said in an interview the crux of the problem is that DHHS “spot checks” cases after providers plug the billing information into the online system used for the child care subsidy program. 

He said the NFOCUS system is not set up to audit and relies on human oversight.

“That is where they’re dropping the ball,” Foley said of DHHS workers. “They go in after the fact and spot check — but not very thoroughly.”

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Gov. Pillen’s property tax tour across Nebraska didn’t lead to feedback for many lawmakers • Nebraska Examiner

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Gov. Pillen’s property tax tour across Nebraska didn’t lead to feedback for many lawmakers • Nebraska Examiner


LINCOLN — Gov. Jim Pillen’s pressure campaign in 26 communities in May and June didn’t lead to an influx of calls or emails to Nebraska lawmakers, as he might have hoped.

Gov. Jim Pillen, right, speaks at a town hall on his property tax reform ideas with State Sen. Rob Clements of Elmwood at the Columbus Area Chamber of Commerce on June 26, 2024. (Zach Wendling/Nebraska Examiner)

Between May 3 and June 28, Pillen hosted events from Scottsbluff and Chadron in the west to Auburn and South Sioux City in the east. Each event was held in a different county, with Pillen holding town halls in counties that are home to a total of 38% of the state’s population, based on the 1.96 million residents in the 2020 census.

The 26 counties accounted for about 36% of total property values statewide and 36% of all $5.3 billion in property taxes collected last year.

At a more granular level, Pillen directly visited communities where almost 407,000 people live, according to population estimates from the Nebraska Department of Revenue for 2023 municipalities. Omaha had almost 492,000 residents in 2023.

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‘With business leaders in Omaha and Lincoln nonstop’

Lancaster and Douglas Counties, which include Lincoln and Omaha respectively, accounted for about 46% of the state’s population based on the latest census report. They accounted for 33.4% of all property valuations and 40.5% of the total property taxes in 2023.

Pillen indicated this week he might have purposefully left those cities off his tour schedule. 

“I think I spend 65 [percent] to 70 percent of my time in Lincoln and Omaha,” Pillen told reporters at a Wednesday event. “I’m with business leaders in Omaha and Lincoln nonstop.”

Pillen would need support from at least 33 of the state’s 49 lawmakers for his property tax reform goals, requiring at least some lawmakers from Lincoln or Omaha.

 

Of his town halls, 20 were held in Nebraska’s 3rd Congressional District and six in the 1st Congressional District. No town halls were hosted in the 2nd Congressional District, which includes Saunders and Douglas Counties plus the western part of Sarpy County.

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Ten senators represent parts of Lancaster County, in the 1st District, and 16 represent parts of Douglas County. The legislative districts for seven lawmakers in Lancaster and 14 lawmakers in Douglas are totally within the counties.

Should Pillen expand his tour list to Lincoln and Omaha, he would have toured counties where about 84% of the state’s residents live ahead of an expected special session. The total property valuations for the 28 counties is 69.4%, and the total amount of property taxes is 76.5%.

‘It just doesn’t make any sense’

At many of his town halls, Pillen urged those in attendance to call or email as many lawmakers as they could so their voices could “drown out the lobbying groups.” If they didn’t, in a more expletive-ridden speech, he said they shouldn’t complain next year.

But those calls and emails didn’t come, according to multiple senators who had town halls in their legislative districts.

State Senators Terrell McKinney and Justin Wayne are shown speaking on the floor of the Legislature on two different days in a photo composite. The pair has criticized "zero-sum games" by some in the Legislature.
State Sens. Terrell McKinney, left, and Justin Wayne, goth of Omaha. (Zach Wendling/Nebraska News Service)

Multiple lawmakers, including Omaha State Sens. Justin Wayne and Terrell McKinney, told the Nebraska Examiner they have concerns about no town halls being held in Lincoln or Omaha.

“Property taxes aren’t just high in western Nebraska,” McKinney said. “The people in Omaha and Lincoln are dealing with it, too, and just to not engage with those populations, it just doesn’t make any sense.”

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Wayne said Pillen’s lack of engagement makes it seem as though Wayne’s constituents don’t matter.

State Sen. Beau Ballard of Lincoln said that property taxes remain a top issue for his voters and that he’s connecting with as many constituents as he can.

Ballard said his district, which includes Davey, Malcolm, Raymond, Waverly and northwest Lincoln, would likely welcome “any opportunity for getting more community involvement, because this has the potential to be one of the biggest policy discussions in generations.”

Concern for renters

State Sen. Jane Raybould of Lincoln, who missed much of the spring regular legislative session as she battled a rare form of non-Hodgkin’s lymphoma, said it is “really disturbing” to think Pillen won’t host or doesn’t feel comfortable hosting town halls “where he will get honest feedback.”

State lawmakers from Lancaster County join for a town hall for the county with the Lincoln Chamber of Commerce, which included discussion about local tax policy
Nine of the 10 Lincoln and Lancaster County state lawmakers joined for a town hall at Union College on Monday, Dec. 18, 2023, in Lincoln. Back row, from left, are State Sens. Beau Ballard, Carolyn Bosn, Eliot Bostar, Myron Dorn, George Dungan and Lincoln Chamber of Commerce president and CEO Jason Ball. Front row, from left, are State Sens. Jane Raybould, Anna Wishart, Danielle Conrad and Tom Brandt. Not pictured: Sen. Rob Clements. (Zach Wendling/Nebraska Examiner)

A former Lincoln City Council member and Lancaster County commissioner, Raybould said property tax increases over time don’t tell the whole story, such as when the state was “slowly choking off” state aid to public education, municipalities and counties.

“That’s a message I don’t think [Pillen] is conveying to people who are hardworking Nebraskans who watch every penny that they make, and when they see these valuations jump up, they think that somebody is making out like a bandit on spending their money,” Raybould said.

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State Sen. Merv Riepe of Ralston, who has been working with Pillen and a group of 16 other lawmakers on property tax reforms this summer, said he has concerns for his district and other urban areas where more people live in apartments. 

Riepe said renters might not get a direct tax advantage from any plans and asked how much power a renter might have to say to a landlord, “I know you got some relief. Do I get some?”

“They say, ‘Well, the landlord will lower their rent,’” Riepe said. “That remains to be seen.”

Ag senators continue to voice opposition

State Sen. Merv Riepe of Ralston talks with legislative staff on the floor of the Nebraska Legislature. March 15, 2023. (Zach Wendling/Nebraska Examiner)

A similar caution on how tax changes will affect renters has been made from some farmers serving in the Legislature. They are concerned that a Pillen suggestion to add sales taxes to certain agricultural inputs — the raw materials used in ag production — would raise overall taxes without providing other spending cuts.

Among those opponents is State Sen. Myron Dorn of Adams, who said he’s visited with many people since Pillen hosted a town hall in his district, in Beatrice. He said he has gotten some feedback that people want action but doesn’t know if that’s because of the town hall.

Added State Sen. Barry DeKay of Niobrara: “Taxing the inputs is going to be the death of some or maybe a lot of young farmers, especially the ones that don’t have land.”

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State Sen. Julie Slama of Dunbar said Pillen’s suggestion on taxing ag inputs is “universally opposed” after she got a few dozen emails from farmers.

Slama said two people contacted her after the town halls in Auburn and Nebraska City in support of Pillen. One of them walked back the support after finding out the “plan” would raise taxes and not cut spending, she said.

“Moreover, four people reached out after the town hall to oppose different parts of Pillen’s tax increase and tactics he used at the event,” Slama said.

State Sen. Julie Slama of Dunbar. Feb. 22, 2024. (Zach Wendling/Nebraska Examiner)

Those tactics included what Slama described as “potshots” directed at her, where Pillen suggested that the southeast Nebraska senator — the chair of the Legislature’s Banking, Commerce and Insurance Committee — needed to “understand balancing a checkbook and what it takes.”

Slama said she’s also heard concerns that if the state took over K-12 funding, it would immediately lead to further rural school district consolidations, “crippling our communities.”

Most senators reported ‘hardly any’ feedback

State Sens. Ray Aguilar of Grand Island, Joni Albrecht of Thurston, Carol Blood of Bellevue, Rob Clements of Elmwood, Steve Erdman of Bayard, Teresa Ibach of Sumner and Lynne Walz of Fremont all said they had “hardly any” or no feedback from the town halls in their districts.

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“Nobody has told us to support Pillen’s special session,” Blood said in a text.

State Sen. Barry DeKay of Niobrara. Dec. 6, 2023. (Zach Wendling/Nebraska Examiner)

Over time, such as from Pillen’s earliest town halls in Bellevue and Grand Island to his latest in McCook and Lexington, the governor has drastically shifted his proposals toward property taxes, not sharing more concrete ideas until about halfway through.

State Sen. Jana Hughes of Seward said her feedback has been “all over the board,” ranging from one constituent worried about losing local control if K-12 funding shifts to the state to another worried about the fairness in how tax rates and valuations are currently set.

Erdman said people are fired up, but not because of Pillen’s town halls.

“They stop by my house,” Erdman said. “All of our taxes are too high.”

State Sen. Lou Ann Linehan of Elkhorn, the Legislature’s Revenue Committee chair, has not had a town hall in her district but said she has been to town halls in more populated areas. She said that they generally became more like campaign rallies and that advocates of different viewpoints tried to get as many people as they could to attend.

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“I’m all for town hall meetings, don’t get me wrong, but they won’t be like the ones in small towns,” Linehan said, cautioning that a different format might be necessary.

‘No longer a rural-urban issue’

State Sen. Mike Jacobson of North Platte, center, meets with, from left, State Sens. Dave Murman of Glenvil, Barry DeKay of Niobrara, Steve Halloran of Hastings, Steve Erdman of Bayard and Brian Hardin of Gering. Feb. 23, 2024. (Zach Wendling/Nebraska Examiner)

DeKay and State Sen. Mike Jacobson of North Platte, who said he got limited feedback after Pillen’s visit there, said their constituents are looking for an answer that will help the entire state.

“I think at this stage of the game, this is no longer a rural-urban issue,” Jacobson said.

Jacobson, who is also part of the governor’s task force, said some people have tried to argue that people in Lincoln or Omaha would pay more under tax changes being discussed, but he said that’s not true.

DeKay said lawmakers need to work with their “compadres across the aisle” but also with one another. In his view, everyone should pay a little, instead of a few paying a lot.

“It doesn’t matter what party you’re affiliated with, property tax is going to be playing a part of everybody’s life,” DeKay said. “We’ve got to try to figure out what’s going to work for everybody.”

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Nebraska Little League Majors State Tournament begins in Kearney

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Nebraska Little League Majors State Tournament begins in Kearney


KEARNEY, Neb. (KSNB) – For Nebraska teams, the journey to Williamsport and the Little League World Series goes through Patriot Park in Kearney. The winner of the tournament represents the state at the Little League Midwest regionals.

In the first round of action, Hastings fell to South Sioux City, 2-0.

The hosts, Kearney defeated Blair, 12-2 in four innings of play.

Grand Island is also competing in the tournament and received a bye in the opening round of play.

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Children removed from filthy home, two charged with child abuse in southeast Nebraska

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Children removed from filthy home, two charged with child abuse in southeast Nebraska


WILBER, Neb. (KOLN) – Two arrests have been made after deputies found meth and children living in filthy conditions at a Wilber home.

Saline County deputies arrested 36-year-old Quentin Teeters and 32-year-old Cortney Connelly on July 5. The pair have since been charged with child abuse and multiple drug related counts.

The sheriff’s office had been looking to arrest Teeters after he allegedly violated the parameters of his sex offender registry. Deputies were looking for him at a home in Wilber and spoke to the woman who lived there on July 5 just before 8 p.m.

The woman, later identified as Connelly, confirmed Teeters lived at the home but wasn’t there at the time, according to an arrest affidavit. But deputies were let inside and found Teeters in the basement.

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Teeters was taken into custody, and deputies discovered he was in possession of methamphetamine, court records show. The people inside the home were asked to step out as deputies then executed a search warrant.

The affidavit shows they discovered an unknown amount of methamphetamine along with multiple items of drug paraphernalia.

They also discovered a 1-year-old infant who’d been left with a completely filled diaper. Deputies wrote that the diaper was “soaked to the touch full of urine.” No other diapers were found in the home, the affidavit shows.

Deputies think Connelly, the child’s mother, and Teeters would only buy the infant new diapers once the diaper they had on became “extremely full.”

The home was also in filthy conditions, according to deputies. They said dog feces was smeared across the home and covering a bedroom floor. They also found moldy food and drinks scattered across the house.

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Three other children, aged 10, 14 and 15, were found living in the home. Deputies said all of the children could have accessed any of the drugs or drug paraphernalia that was seized.

The sheriff’s office suspects the home was a well-known hub for both selling and using controlled substances, the affidavit shows.

The four children were removed from the home and placed into custody with Child Protective Services. Connelly and Teeters were both arrested and lodged in the Saline County Jail.

The pair faces a total of nine charges, and they’re expected to be arraigned on July 23.

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