An audit of the Milwaukee County Child Welfare system was completed by state auditors at the direction of the Joint Legislative Audit Committee. The audit found almost $700,000 of questionable and unallowable costs.
The Child Welfare system had 153 full-time employees in June 2005, while outside contractors had about 500 staff members to provide the bulk of the services. From January 2001 through June 2005, the program spent a total of $493.7 million. In 2004 alone, program expenditures totaled $103 million.
The costs charged to the program by nine contractors in 2004 were tested by auditors. The auditors found $677,694 in unallowable and questionable costs charged by six of the contractors.
1,409 transactions totaling $2.8 million were tested, with selection for testing based upon the size of the transaction and the vendor involved. The unallowable and questionable costs total $136,090, plus a duplicate payment to a contractor in the amount of $541,604.
The questionable costs include the following:
- items not supported with receipts ($1,025)
- a penalty charged by a telecommunications company for early termination of a contract ($3,085)
- bank fees ($5,789)
- an excessive severance package for an executive ($46,214)
- legal fees unrelated to child welfare programs ($32,971)
- promotional items distributed to employees, such as pens, mugs, jackets, etc. ($6,253)
- gift cards given to employees or with no receipts ($12,670)
- ….and more
In case you didn’t do the math, $136,090 in inappropriate charges (excluding the larger amount as we’ll assume it was a mistake) represents 4.9% of the $2.8 million in transactions that were tested. Apply that to just the $103 million spent by the Child Welfare system in 2004, and you’ve got an estimated $5 million of (fraud?) problems per year.
Read the full text of the audit.