Monterey County

MONTEREY COUNTY Audit Report SERIOUSLY EMOTIONALLY DISTURBED PUPILS: OUT-OF-STATE MENTAL HEALTH SERVICES PROGRAM Chapter 654, Statutes of 1996 July 1, 2003, through June 30, 2006 J C OHN HIANG California State Controller October 2008 J C OHN HIANG California State Controller October 17, 2008 The Honorable Fernando Armenta, Chairman Board of Supervisors Monterey County 168 West Alisal Street, 2nd Floor Salinas, CA 93901 Dear Supervisor Armenta: The State Controller’s Office audited the costs claimed by Monterey County for the legislatively mandated Seriously Emotionally Disturbed Pupils: Out-of-State Mental Health Services Program (Chapter 654, Statutes of 1996) for the period of July 1, 2003, through June 30, 2006. The county claimed $139,837 for the mandated program. Our audit disclosed that $135,135 is allowable and $4,702 is unallowable. The county claimed the unallowable costs primarily because it claimed travel costs that have been claimed under the Handicapped and Disabled Students Program, omitted out-of-state treatment costs, and claimed unallowable in-state costs. The State paid the county $47,295. The State will pay allowable costs claimed that exceed the amount paid, totaling $87,840, contingent upon available appropriations. If you have any questions, please contact Jim L. Spano, Chief, Mandated Cost Audits Bureau, at (916) 323-5849. Sincerely, Original signed by JEFFREY V. BROWNFIELD Chief, Division of Audits JVB/sk:vb Fernando Armenta -2- October 17, 2008 cc: Wayne Clark, Ph.D., Director Behavioral Health Division Monterey County The Honorable Michael J. Miller, Auditor-Controller Monterey County Todd Jerue, Program Budget Manager Corrections and General Government Department of Finance Stacey Wofford Special Education Program Department of Mental Health Cynthia Wong, Manager Special Education Division California Department of Education Monterey County Seriously Emotionally Disturbed Pupils: Out-of-State Mental Health Services Program Contents Audit Report Summary............................................................................................................................ 1 Background........................................................................................................................ 1 Objective, Scope, and Methodology................................................................................. 2 Conclusion.......................................................................................................................... 2 Views of Responsible Official........................................................................................... 2 Restricted Use.................................................................................................................... 3 Schedule 1—Summary of Program Costs............................................................................ 4 Findings and Recommendations........................................................................................... 5 Attachment—County’s Response to Draft Audit Report Monterey County Seriously Emotionally Disturbed Pupils: Out-of-State Mental Health Services Program Audit Report Summary The State Controller’s Office (SCO) audited the costs claimed by Monterey County for the legislatively mandated Seriously Emotionally Disturbed (SED) Pupils: Out-of-State Mental Health Services Program (Chapter 654, Statutes of 1996) for the period of July 1, 2003, through June 30, 2006. The county claimed $139,837 for the mandated program. Our audit disclosed that $135,135 is allowable and $4,702 is unallowable. The county claimed the unallowable costs primarily because it claimed travel costs that have been claimed under the Handicapped and Disabled Students (HDS) Program, omitted out-of-state treatment costs, and claimed unallowable in-state costs. The State paid the county $47,295. The State will pay allowable costs claimed that exceed the amount paid, totaling $87,840, contingent upon available appropriations. Background Government Code section 7576 (added and amended by Chapter 654, Statutes of 1996) allows new fiscal and programmatic responsibilities for counties to provide mental health services to Seriously Emotionally Disturbed (SED) pupils placed in out-of-state residential programs. Counties’ fiscal and programmatic responsibilities including those set forth in California Code of Regulations section 60100 provide that residential placements for SED pupils may be made out-of-state only when no in-state facility can meet the pupil’s needs. On May 25, 2000, the Commission on State Mandates (CSM) determined that Chapter 654, Statutes of 1996, imposed a reimbursable state mandate under Government Code section 17561 for the following costs: • Payment of out-of-state residential placements for SED pupils; • Case management of out-of-state residential placements for SED pupils. Case management includes supervision of mental health treatment and monitoring of psychotropic medications; • Travel to conduct quarterly face-to-face contacts at the residential facility to monitor level of care, supervision, and the provision of mental health services as required in the pupil’s Individualized Education Plan; • Program management, which includes parent notifications, as required, payment facilitation, and all other activities necessary to ensure a county’s out-of-state residential placement program meets the requirements of Government Code section 7576. The program’s parameters and guidelines establish the state mandate and define reimbursement criteria. CSM adopted the parameters and guidelines on October 26, 2000. In compliance with Government Code section 17558, the SCO issues claiming instructions to assist local agencies and school districts in claiming mandated program reimbursable costs. -1- Monterey County Seriously Emotionally Disturbed Pupils: Out-of-State Mental Health Services Program Objective, Scope, We conducted the audit to determine whether costs claimed represent increased costs resulting from the SED Pupils: Out-of-State Mental and Methodology Health Services Program for the period of July 1, 2003, through June 30, 2006. Our audit scope included, but was not limited to, determining whether costs claimed were supported by appropriate source documents, were not funded by another source, and were not unreasonable and/or excessive. We conducted this performance audit under the authority of Government Code sections 12410, 17558.5, and 17561. We did not audit the county’s financial statements. We conducted the audit in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. We limited our review of the county’s internal controls to gaining an understanding of the transaction flow and claim preparation process as necessary to develop appropriate auditing procedures. Conclusion Our audit disclosed instances of noncompliance with the requirements outlined above. These instances are described in the accompanying Summary of Program Costs (Schedule 1) and in the Findings and Recommendations section of this report. For the audit period, Monterey County claimed $139,837 for costs of the SED Pupils: Out-of-State Mental Health Services Program. Our audit disclosed that $135,135 is allowable and $4,702 is unallowable. For the fiscal year (FY) 2003-04 claim, the State made no payment to the county. Our audit disclosed that $87,840 is allowable. The State will pay allowable costs claimed that exceed the amount paid, totaling $87,840, contingent upon available appropriations. For the FY 2004-05 claim, the State paid the county $47,295. Our audit disclosed that $47,295 is allowable. Views of We issued a draft audit report on June 13, 2008. The Honorable Michael J. Miller, Auditor-Controller, responded by letter dated July 17, 2008 Responsible (Attachment), agreeing with the audit results. This final audit report Official includes the county’s response. -2- Monterey County Seriously Emotionally Disturbed Pupils: Out-of-State Mental Health Services Program Restricted Use This report is solely for the information and use of Monterey County, the California Department of Finance, and the SCO; it is not intended to be and should not be used by anyone other than these specified parties. This restriction is not intended to limit distribution of this report, which is a matter of public record. Original signed by JEFFREY V. BROWNFIELD Chief, Division of Audits October 17, 2008 -3- Monterey County Seriously Emotionally Disturbed Pupils: Out-of-State Mental Health Services Program Schedule 1— Summary of Program Costs July 1, 2003, through June 30, 2006 Actual Costs Allowable Audit Cost Elements Claimed per Audit Adjustment Reference 1 July 1, 2003, through June 30, 2004 Direct costs – vendor reimbursements: Out-of-state costs (SED pupils) $ — $ 87,840 $ 87,840 Finding 1 In-state costs 78,834 — (78,834) Finding 1 Travel costs 13,708 — (13,708) Finding 2 Total program costs $ 92,542 87,840 $ (4,702) Less amount paid by the State — Allowable costs claimed in excess of (less than) amount paid $ 87,840 July 1, 2004, through June 30, 2005 Direct costs – vendor reimbursements: Out-of-state costs (SED pupils) $ — $ 60,000 $ 60,000 Finding 1 In-state costs 36,310 — (36,310) Finding 1 Travel costs 10,985 — (10,985) Finding 2 Subtotal 47,295 60,000 12,705 Less allowable costs that exceeds claimed costs 2 — (12,705) (12,705) Total program costs $ 47,295 47,295 $ — Less amount paid by the State (47,295) Allowable costs claimed in excess of (less than) amount paid $ — Summary: July 1, 2003, through June 30, 2005 Direct costs – vendor reimbursements: Out-of-state costs (SED pupils) $ — $ 147,840 $ 147,840 In-state costs 115,144 — (115,144) Travel costs 24,693 — (24,693) Subtotal 139,837 147,840 8,003 Less allowable costs that exceeds claimed costs 2 — (12,705) (12,705) Total program costs $ 139,837 135,135 $ (4,702) Less amount paid by the State (47,295) Allowable costs claimed in excess of (less than) amount paid $ 87,840 _________________________ 1 See the Findings and Recommendations section. 2 Government Code section 17561 stipulates that the State will not reimburse any claim more than one year after the filing deadline specified in the SCO’s claiming instructions. That deadline has expired for FY 2004-05. -4- Monterey County Seriously Emotionally Disturbed Pupils: Out-of-State Mental Health Services Program Findings and Recommendations FINDING 1— The county understated payments to service vendors by $32,696 for the audit period. Understated payments to service vendors The county omitted $147,840 for treatment costs incurred by eligible out-of-state service vendors. Of that amount, $60,000 was claimed in error under the Handicapped and Disabled Students (HDS) II Program. The county also claimed $115,144 for treatment costs incurred by in- state service vendors, which already was correctly claimed under the HDS Program. The program’s parameters and guidelines (section IV, Reimbursable Activities) specify that the direct and indirect costs of eligible services for SED pupils in out-of-state residential placements are reimbursed as specified in Government Code section 7576; California Code of Regulations, Title 2, subdivisions 60100 and 60110; and California Welfare and Institutions Code section 11460, subdivision (c), (2) and (3). The following table summarizes the understated vendor payments: Fiscal Year 2003-04 2004-05 Total Vendor reimbursements: Out-of-state treatment costs $ 87,840 $ 60,000 $ 147,840 In-state treatment costs (78,834) (36,310) (115,144) Audit adjustment $ 9,006 $ 23,690 $ 32,696 Recommendation We recommend that the county ensure that the claimed costs are for eligible services in accordance with the program’s parameters and guidelines. County’s Response The county agreed with the audit finding. -5- Monterey County Seriously Emotionally Disturbed Pupils: Out-of-State Mental Health Services Program FINDING 2— The county overstated travel costs by $24,693 for the audit period. Overstated travel costs The county claimed travel costs that were included in the cost report formula and reimbursed under the mandated HDS Program. The parameters and guidelines specify that only actual increased costs incurred in the performance of the mandated activities and adequately documented are reimbursable. The following table summarizes the overstated travel costs: Fiscal Year 2003-04 2004-05 Total Travel costs $ (13,708) $ (10,985) $ (24,693) Audit adjustment $ (13,708) $ (10,985) $ (24,693) Recommendation We recommend that the county ensure that it claims only eligible costs incurred as a result of the mandate. County’s Response The county agreed with the audit finding. -6- Monterey County Seriously Emotionally Disturbed Pupils: Out-of-State Mental Health Services Program Attachment— County’s Response to Draft Audit Report State Controller’s Office Division of Audits Post Office Box 942850 Sacramento, CA 94250-5874 http://www.sco.ca.gov S08-MCC-015