Audit seeks changes for detention center reimbursements

DES MOINES – State Auditor David Vaudt called on state lawmakers Thursday to consider revamping a system of reimbursing juvenile detention centers for operating expenses to ensure that funds are distributed equitably and consistently with program goals.

But a spokesman for the state Department of Human Services (DHS) said new proposed rules already are in place to take effect in July that address the issue and were worked out in conjunction with Vaudt's office.

“We have worked with the auditor's office to craft rules that would address the issues that the auditor raises,” said DHS spokesman Roger Munns.

The issue came to light when Vaudt released an audit indicating that the current reimbursement system rewards detention centers that spend the most money, but don't necessarily provide the most services.

Munns said the proposed rules that were approved by the Iowa Council on Human Services and a legislative oversight panel would redefine eligible and ineligible costs, require centers to submit detailed income and expense ledgers, and require them to use approved cost allocation processes. The new system will make certain that money distributed on a pro-rated basis would go only for detention-related expenses, he added.

Vaudt pushed for changes after an audit during a 28-month period ending in November 2009 raised concerns about disbursements of money from the juvenile detention home fund administered by DHS officials. Juvenile detention centers currently are located in Cedar Rapids, Chariton, Cherokee, Council Bluffs, Davenport, Dubuque, Eldora, Des Moines, Montrose, Sioux City and Waterloo.

The state auditor said his office's analysis of the program determined that current reimbursement procedures as mandated by Iowa law and managed by the department “are not effective in equitably distributing juvenile funds.” The audit report also concluded that DHS officials did not perform adequate oversight to ensure costs submitted by centers were allowable.

Each year fees collected by the state Department of Transportation for the reinstatement of suspended or revoked driver's licenses for certain offense are deposited in the fund. DHS officials distributed nearly $3.8 million from the fund to the juvenile detention centers in fiscal 2009, bringing the overall total of reimbursements since fiscal 2003 to more than $24.6 million, according to the state audit.

Under Iowa law, DHS officials are required to reimburse the centers for at least 10 percent, but not more than 50 percent, of total costs related to the “establishment, improvements, operation and maintenance” of the juvenile detention homes. The funds are allocated to the centers based on their prorated portion of total submitted costs, the audit stated.

Vaudt reported the current funding process results in an inequitable distribution of funds if actual services are considered, not just expenditures. He said current law rewards centers for incurring the most expense without regard for the actual volume of services rendered. In addition, he said, the state audit determined that reimbursements are based on total expenditures rather than net expenditures, which allows centers to submit costs for juvenile fund reimbursement that already are funded by other sources.

The state audit report – posted at http://auditor.iowa.gov/specials/index.html Web site -- also identified inaccurate and questionable cost submissions from centers which resulted in improper allocation of funds.

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