REPORT OF WHISTLEBLOWER INVESTIGATION DEPARTMENT OF SOCIAL AND HEALTH SERVICES DIVISION OF CHILDREN AND FAMILY SERVICES NO.

05-061 JANUARY 30, 2007 Notice of Filing and Transmittal January 30, 2007 Attached is the official report on whistleblower case No. 05-061 with the Department of Social and Health Services. This report is transmitted by the State Auditors Office pursuant to Chapter 42.40 of the Revised Code of Washington, the Whistleblower Act. Questions about this report should be directed to Senior Investigator Sandra Miller at (360) 902-0378, or Jim Brittain, Director of State Audits at (360) 902-0372. BRIAN SONNTAG, CGFM STATE AUDITOR cc: Robin Arnold-Williams, Secretary Kathy Brockman, Chief Administration Officer Ginny Heim, Special Assistant

The State Auditors Office received assertions of improper governmental activity at the Department of Social and Health Services. These assertions were submitted to us under the provisions of Chapter 42.40 of the Revised Code of Washington, the Whistleblower Act. We investigated the assertion independently and objectively through interviews and by reviewing relevant documents. This is the result of our investigation. Assertion 1: An Area Administrator continued to approve a monthly payment for respite foster care even though no services were rendered. We found reasonable cause to believe an improper governmental action occurred. RCW 42.52.160 Use of persons, money, or property for private gain. (1) No state officer or state employee may employ or use any person, money, or property under the officers or employees official control or direction, or in his or her official custody, for the private benefit or gain of the officer, employee, or another. Documentation showed that from December 1, 2001 to January 31, 2005, the provider was paid $300 per month to provide respite foster care without a contract or agreement in place. On August 1, 2003, a respite agreement was drafted between the Port Angeles Division of Children and Family Services, Department of Social and Health Services and a respite foster care provider. The agreement stated that starting August 1, 2003 the provider would be paid a $300 monthly retainer to keep her home available for respite foster care. The provider would be paid a daily rate of $22 per child. The agreement, which never was signed by the Division or the provider, stated that in order to continue receiving the retainer, certain guidelines had to be followed: Respite care was to be provided to a minimum of eight children per month or an average of 16 days per month. It stated that should the provider not be needed to provide respite care, the agreement

would be terminated. Starting August 1, 2003, the provider was to be paid $22 per child per day to provide services to children age birth through 17. The provider was to be paid $38 per child per day for those children who require more intensive supervision than normally provided to children in foster care. Respite placements were to be reviewed at three-month intervals. If respite had not been provided for an average of 16 days per month or for an average of eight children per month, the retainer fee was to be rescinded. A Social Work Supervisor approved paying the provider a flat monthly retainer fee of $300 on August 18, 2003, with an ending date of January 31, 2004. Documentation obtained showed the provider received monthly payments of $300 between December 1, 2001 and January 31, 2005. From December 1, 2001 through December 31, 2002, the provider was paid $5,867.00 The provider cared for 26 children during this time. From September 1, 2002 through December 31, 2002, the provider did not care for any children but was still paid $300 per month. From January 1, 2003 through December 31, 2003 the provider was paid $4,436.00 to care for seven children. The provider did not care for any children from February 1, 2003 through September 31, 2003 but was still paid a monthly retainer of $300. From January 1, 2004 through January 31, 2005 the provider was paid $5,549 to care for 30 children. The provider cared for children two to three days each month. The provider did not care for children during December 2004 and January 2005 but was paid a retainer of $300. We found no records to show that this providers services were used after January 31, 2005. The subject stated in an interview that she felt paying a monthly retainer of $300 was less expensive then paying the provider a retainer fee per bed and a better deal for the state. She also stated she did not know how often the provider met the criteria listed in the agreement. Therefore, we found reasonable cause to believe an improper governmental action occurred. Because the Department was unable to supply documentation to show how much the provider would have been eligible for each month, we are unable to determine how much was overpaid. AGENCY PLAN OF RESOLUTION Between April 2004 and April 2005, six new positions (payment specialists) were created to cover field offices within Region 6. In addition, the specialists were trained on proper payment methods and recently have received written directions that no payments are to be made that are exceptions to current guidance without Region Administrator (RA) approval. RA approval is required and must be documented when negotiating one time special contracts or arrangements with providers. The individual directly involved with the assertion has been counseled on appropriate approval processes and the need for formal documentation. Assertion 2: A Social Work Supervisor at the Department of Social and Health Services approved and paid higher rates then allowed under the contract. We found no reasonable cause to believe an improper governmental action occurred.

The State Administrative and Accounting Manual, 16.10.30(a) states: All contracted client services require a written document specifying the agreement between the agency and the contractor. Required elements in a client service contract are identification of the parties, scope of services, compensation terms, period of performance, payment mechanism, and signatures of responsible parties. The State Administrative and Accounting Manual, Guide to Client Service Contracts 1.4 states: Dont instruct the contractor to begin work before the contract is executed and approved. Dont change the Description, Scope of Work, Period of Performance or Maximum Dollar Amount of the contract without processing a written amendment. On September 8, 2004, the Division of Children and Family Services, Department of Social and Health Services entered into a $40,000 Client Service Contract with the First Step Family Support Center. The Center was to provide in-home services to families. The total maximum contact amount was $40,000. The work was to begin on July 1, 2004 and was to end on June 30, 2005. The Departments Contract Administrator did not sign the contract until September 20, 2004. On February 3, 2005, the Division and the Center agreed to a contract amendment increasing the contract amount by $10,000. The Departments Contract Administrator signed the contract on February 8, 2005. No other amendments were made. The contracts statement of work said counseling time would be charged at $65 per hour and consulting time would be charged at $110 per session. Between June 21, 2004 and February 28, 2005, the vendor charged the Department for 59 consulting sessions at $122.65 per session. The subject stated as the manager she was responsible for approving the invoices for services rendered, not for an hourly rate of pay as she was not aware of a maximum hourly rate. She knew only that the maximum contract amount was $50,000. We found the Department was billed and paid $746.35 more than allowable under the contract between June 21, 2004 and February 28, 2005. We further found the Department was in violation of The State Administrative and Accounting Manual, Guide to Client Service Contracts 1.4 when it made payments to this vendor three months before the contract was signed. Because the subject was not made aware of the financial terms of the contract and approved invoices based on the maximum contract amount, we found no reasonable cause to believe an improper governmental action occurred. AGENCY CONCLUDING REMARKS Although there is no reasonable cause found under Assertion 2, steps have been taken, including the ones above, to help prevent this situation from re-occurring. AUDITORS CONCLUDING REMARKS We appreciate the cooperation and courtesies extended to our Office by the Department during this investigation. We commend the Department for its planned resolution. We will follow up on the planned resolution pursuant to state law (RCW 42.40.040(10 and (11)).