Audit: More oversight needed for foster care placement agencies

Legislative Audit Bureau report released Wednesday

Published On: Oct 09 2013 09:05:49 AM CDT   Updated On: Oct 09 2013 08:27:35 PM CDT
MADISON, Wis. -

State foster care placement agencies need increased oversight and financial tracking, according to a new state audit that came out Wednesday morning.

The Legislative Audit Bureau did a review of child-placing agencies following concerns raised in February over alleged disallowed expenses and overcharging by Community Care Resources, a Middleton placement agency.

The Wisconsin Department of Children and Families said the agency had charged some $6.1 million to taxpayers for excess salaries, cars and home renovations and other undocumented expenses.

DCF settled last week with CCR for just more than $1 million in payments to the state, and an agreement that CCR "was making no admission of wrongdoing" in the agreement.

The audit reviewed a selection of transactions made by other foster care placing agencies between 2010 and 2012 and found $129,525 in questionable transactions, including car purchases and employee bonuses. Agencies are supposed to track what source of funds are used to make purchases, such as federal, state or monies from the agency's business profits. The audit found many of those expenses weren't being tracked, and recommended increased oversight by the Department of Children and Families.

The Legislative Audit Bureau recommends the money be repaid or justified.

"This agency needs better management," said Sen. Rob Cowles, R-Green Bay, and co-chair of the Legislative Joint Audit Committee. "It looks to me like our state moneys are not being properly accounted for."

The audit is of five out of 24 child placement agencies that DCF is responsible for overseeing. One of those agencies, THRIVE Treatment Services of Watertown, has a number of expenses questioned, including $52,000 in single-year employee bonuses, $5,400 on four holiday parties, and three luxury brand cars owned by the business.

The company defends many of the purchases, saying their for-profit organization is allowed to make money and spend it how they'd like. They say they weren't aware that specific itemization of operating costs charged to the state and their profits needed to be accounted for separately.

"We are not accountants and not attorneys and we were not aware of some of the things that will perhaps not happen again because we know that that's an unallowable expense," said CEO of THRIVE Lou Daniels.

Daniels said he opened a new account Tuesday that will separate the profits the company makes. But his daughter, Executive Director of THRIVE Jenna Daniels, said the state had been signing off on their expenses all along by approving annual audits.

"Our feeling is in the last 10 or 11 years if we were doing something we were not supposed to be doing we wish it were brought to our attention as it occurred so that we could have corrected the problem at the time," said Jenna Daniels.

CCR, who had many of the same reported unallowable expenses in DCF's original accusations in February, was not one of the placement agencies included in the latest audit.

The audit also found that DCF could have received an estimated $470,000 in additional federal funds in 2012 that it did not claim because of inaccurate tracking of expenses.

Gov. Scott Walker said Wednesday that legislative and policy changes may be needed.

"We'll be working with Secretary [Eloise] Anderson or her team to address the findings," said Walker. "We take them as very significant was we do with other audits and we'll continue looking at that."

The audit makes a dozen recommendations for DCF to address.

The Department of Children and Families did not respond to a request for comment by WISC-TV, but said in a rebuttal to the audit that the agency since 2009 and they are still putting policies in place.