When news first broke in February that a Middleton foster-care agency was facing the loss of its license for allegedly overbilling the state $6.1 million, some lawmakers were aghast, including state Sen. Rob Cowles, co-chairman of the Joint Legislative Audit Committee.
The allegations about Community Care Resources using millions to support the lifestyle of its founder and his wife sparked legislative hearings and an audit of the Department of Children and Families’ financial oversight of child-placing agencies. The state Department of Justice began an investigation, and officials say the case file has not been closed.
But last week, the department agreed to settle with CCR for just over $1 million, with the company keeping its license and
acknowledging no wrongdoing. And Cowles wants to know why.
“How do you go from over $6 million to $1 million?” asked Cowles, R-Green Bay. “They (DCF) need to explain what’s going on here.”
While not admitting any mistakes, agency officials said in a statement Friday that the audit of Community Care Resources was the first one the department conducted since state law was changed to allow them to set flat rates and demand financial accountability from child-placing companies such as CCR.
“The original figure was based on the best information available at the time of the original audit,” according to the statement. “As the case ran its natural course, CCR provided additional documentation for expenses that lessened the dollar figure.”
In May, the company filed a 35-page motion seeking to block revocation of its license. In it, the company charged that DCF erroneously listed $4.6 million of the $6.1 million as unallowable expenses because of “indisputable math and accounting errors.”
CCR spokesman Tim Roby added that “there was no fraud or wrongdoing.”
“CCR provided required accountings on an annual basis for decades and was never told they were doing anything wrong, or specifically, misclassifying items of an expense,” Roby said.
The largest single questioned expense involved a $3.1 million payment for administrative services between Community Care Resources and a related nonprofit, Community Care Partners.
The state insisted there was no documentation to support the charges.
But a forensic accountant hired by CCR concluded that “each and every transfer from CCP to CCR was appropriately charged,” according to the motion.
Under terms of the agreement finalized last week, CCR will implement new financial controls, including hiring an outside auditor to determine which costs are allowable.
For the roughly 130 children whose foster homes are managed by CCR, there will be no change. The company continued operating throughout the dispute and no longer faces revocation of its license.
“The violations that caused the department to initiate a license revocation were not related to the quality of the foster care services provided by CCR,” the department said. “With these new practices in place, the department believes that the foster children and parents who CCR serves are better off if they are able to retain their license.”
But questions about DCF’s oversight of child-placing agencies remain. On Wednesday, the Legislative Audit Bureau reported that the agency continued to get incomplete financial information from some of the 24 for- and nonprofit companies that provide licensed foster homes for roughly 900 hard-to-place children.
A spot check by auditors of expenses from five companies found $1 out of every $7 spent was questionable. Most of those flagged expenses came from a single agency that allegedly maintained an excessive number of vehicles, gave top employees bloated bonuses and racked up thousands of dollars in expenses for staff parties.
The audit also revealed that DCF failed to seek reimbursement for $470,000 from the federal government.
The agency said it would comply with the audit’s recommendations to tighten oversight and seek available federal funding.
Cowles said he was baffled by the discrepancy between how much the state was seeking from CCR and the final settlement, saying, “We thought they (DCF) had it locked down.”