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Audit Report

Department of Human Resources


Social Services Administration

March 2005

OFFICE OF LEGISLATIVE AUDITS


DEPARTMENT OF LEGISLATIVE SERVICES
MARYLAND GENERAL ASSEMBLY
• This report and any related follow-up correspondence are available to the public. Alternate
formats may also be requested by contacting the Office of Legislative Audits as indicated at
the bottom of the next page or through the Maryland Relay Service at 1-800-735-2258.

• Please address specific inquiries regarding this report to the Audit Manager listed on the
inside back cover by telephone at (410) 946-5900.

• Electronic copies of our audit reports can be viewed or downloaded from the Internet via
http://www.ola.state.md.us.

• The Department of Legislative Services – Office of the Executive Director, 90 State Circle,
Annapolis, Maryland 21401 can also assist you in obtaining copies of our reports and related
correspondence. The Department may be contacted by telephone at (410) 946-5400 or (301)
970-5400.
March 18, 2005

Delegate Charles E. Barkley, Co-Chair, Joint Audit Committee


Senator Nathaniel J. McFadden, Co-Chair, Joint Audit Committee
Members of Joint Audit Committee
Annapolis, Maryland

Ladies and Gentlemen:

We have audited the Department of Human Resources - Social Services


Administration (SSA) for the period beginning March 29, 2001 and ending May
2, 2004.

Our audit disclosed that, based on SSA’s case review system used to monitor
local departments’ compliance with service requirements established in State
regulations, many children in foster care were still not receiving the required
services necessary for their emotional, physical, and educational well-being. For
example, SSA records reflect that 35 percent of these children were still not
attending school. Additionally, SSA had no assurance that federal funds had been
recovered for all eligible foster care children. According to SSA’s records, 232 of
the 8,869 foster care cases were not receiving Title IV-E benefits as of April
2004.

Our review also disclosed that SSA had not determined whether funds paid to
group care providers were used for allowable expenses, whether the most cost-
effective providers were used, and the extent of any overpayments made to these
providers. Finally, SSA issued licenses and license renewals to group home
providers without always obtaining the required documentation, such as evidence
of criminal background checks.

Respectfully submitted,

Bruce A. Myers, CPA


Legislative Auditor
2
Table of Contents

Executive Summary 5

Background Information 7

Agency Responsibilities 7
Current Status of Findings From Preceding Audit Report 7

Findings and Recommendations 9

Foster Care Programs


* Finding 1 – Many Foster Care Children Were Not Receiving Critical 9
Services
Finding 2 – SSA Had No Assurance that Federal Funds Were 12
Obtained for All Eligible Foster Care Children
* Finding 3 – SSA Did Not Determine the Extent of Overpayments 13
and Whether Funds Paid to Group Care Providers Were Used for
Allowable Expenditures
* Finding 4 – Procedures Were Not Established to Ensure That Group 14
Care Providers Were Used in the Most Cost-Effective Manner
Finding 5 – Required Documentation Was Not Always Obtained Before 15
Licenses and License Renewals for Group Home Providers Were
Issued

Contract Monitoring
Finding 6 – SSA Did Not Adequately Monitor a Management Services 16
Contractor for Services Provided to Family Support Centers

Audit Scope, Objectives, and Methodology 17

Agency Response Appendix

* Denotes item repeated in full or part from preceding audit report.

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4
Executive Summary
Legislative Audit Report on the Department of Human Resources (DHR)
Social Services Administration (SSA)
March 2005

• While SSA’s records reflected that there have been some improvements
in the delivery and monitoring of certain critical services to children in
foster care, many children were still not receiving the required services.
For example, SSA records disclosed that 35 percent of the children were
still not attending school.

SSA should ensure that all children in foster care are receiving vital services
necessary for their emotional, physical, and educational well-being in a safe
environment as required by State regulations.

• SSA had no assurance that Federal Funds had been recovered for all
eligible foster care children. According to SSA’s records, 232 of the 8,869
foster care cases that were potentially eligible were not receiving Title IV-
E benefits as of April 2004.

SSA should establish procedures to ensure that the local departments identify
all foster care children eligible for Federal Title IV-E benefits and that
appropriate actions are taken to obtain those benefits.

• SSA did not determine in a timely manner whether funds paid to group
care providers for fiscal years 2002 and 2003 were used for allowable
expenses and the extent of overpayments made to providers.

SSA should take the specific recommended actions to effectively monitor


funds paid to group care providers.

• SSA did not establish procedures to ensure that local departments of


social services were placing foster care children with preferred group
providers, when available. These providers generally had lower rates per
child.

SSA should establish procedures to ensure that foster care children are placed
with preferred group providers, when available.

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• Licenses and license renewals for group home providers were being
issued without obtaining the required documentation, such as evidence of
criminal background checks.

SSA should ensure that all providers submit documentation required by State
regulations before issuing licenses or license renewals to group home
providers. SSA should also ensure that all required documentation is obtained
for those providers currently licensed.

• SSA did not adequately monitor a contractor providing management


services to ensure those services were being effectively provided to family
support centers located throughout the State.

SSA should obtain and review required documentation from the contractor to
substantiate that effective services are being provided.

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Background Information

Agency Responsibilities

The Social Services Administration (SSA) supervises, directs, and monitors the
social services programs (including the foster care program) conducted by the
local departments of social services, which are located in each of the State’s 24
local subdivisions. These programs are designed to prevent or remedy abuse,
neglect, and exploitation of children and families.

Current Status of Findings From Preceding Audit Reports

Our audit included a review of the current status of the two fiscal/compliance
findings contained in our preceding audit report dated November 20, 2001, and
selected findings contained in our May 14, 2002 performance audit report on SSA’s
out-of-home care program. Specifically, we reviewed the status of many of the
critical findings that are currently monitored by SSA through its Child Welfare and
Adult Services Performance Review System (CAPS). We determined that SSA did
not satisfactorily address any of these findings; therefore, they are repeated in this
report. The performance audit items are presented as one finding (Finding 1) in this
report.

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Findings and Recommendations

Foster Care Programs

Background
The Family Law Article, Sections 5-524 through 5-532 of the Annotated Code of
Maryland, requires the Social Services Administration (SSA) to establish a
program of foster care for minor children and to adopt rules and regulations to
carry out foster care services. SSA, through the Department of Human Resources
(DHR), also functions as the single state agency for child welfare services under
federal regulations. Accordingly, it has been designated with sole responsibility
for the statewide administration of foster care and with the authority to make
governing rules and regulations.

The foster care program provides an alternative setting for children who cannot
remain in the care of their parents as a result of various factors, such as
abandonment and neglect. The local departments of social services arrange for
placement of children either in individual foster care homes or in group care
facilities. According to SSA’s records, as of June 30, 2004, there were 8,973
children in SSA’s foster care programs, and payments to group care and family
care providers totaled approximately $180.7 million and $35.7 million,
respectively, in fiscal year 2004.

Finding 1
SSA’s records reflected that, while there have been some improvements in
the delivery and monitoring of critical services to children in foster care,
many children were still not receiving the required services.

Analysis
While SSA’s records reflected improvements in the delivery and monitoring of
certain critical services to children in foster care since we issued our May 14,
2002 performance audit report on SSA’s out-of-home care program (such as in
annual health and sanitary inspections), many children were still not receiving
these services. According to SSA’s records that we did not verify, the case files,
which are the primary means to document services and the children’s histories,
did not always contain documentation that children were receiving services
necessary for their emotional, physical, and educational well-being. For example,
SSA records disclosed that 35 percent of the children were still not attending
school—the same level of noncompliance disclosed in our May 14, 2002 audit
report.

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Our May 14, 2002 performance audit report on SSA’s out-of-home care program
contained numerous findings that raised concerns about the delivery and the
monitoring of critical services to be provided to the approximately 11,000
children that were in the State’s out-of-home care program at that time. To
address many of these findings, SSA modified its Child Welfare and Adult
Services Performance Review System (CAPS) in calendar year 2003. CAPS is a
statewide case review process that is SSA’s primary means to monitor compliance
with service requirements established in State regulations. As part of the annual
review process at each local department of social services, CAPS was modified to
include monitoring for the deficiencies identified in findings 1 through 5 and
findings 8 through 10 in our performance audit report.

On October 16, 2003, we issued a special report on our follow-up review of the
actions taken by SSA to address the findings in our May 14, 2002 performance
audit report. At the time of our follow-up review (May 2003), SSA had
completed CAPS reviews at seven local departments, and 341 case records had
been reviewed by the quality assurance unit at the Baltimore City local
department. Our follow-up review disclosed that SSA had made an effort to
address each finding, but corrective action was still in progress for virtually every
issue.

During our current audit, we computed an overall rate of noncompliance based on


the results of the 24 finalized CAPS reviews at each local department for calendar
year 2003, which included a review of 412 cases, as well as the results of 1,036
case files reviewed by the Baltimore City local department. SSA acknowledged
that continuing improvement is necessary and has advised that they plan to
prepare a formal improvement plan in response to a federal review conducted in
2003.

The noncompliance rates reported in our May 14, 2002 and October 16, 2003
reports and the rates reported in CAPS at the time of our current audit are
presented in Table 1 on the next page.

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TABLE 1
Out-of-Home Care Program—Rates of Noncompliance
Attributes With Noncompliance Noncompliance Noncompliance
Reported Deficiencies Rates Reported in Rates Reported in Rates Identified
Identified During May 14, 2002 October 16, 2003 During
Performance Audit Audit Report Follow-up Current Audit
Required Annual Well-Child
Exam Received 33% 32% 20%
Specific Health Needs
Addressed 14% n/a n/a
Required Dental Exams
Received 69% 67% 40%
Recommended Therapy
Received 28% 48% 13%
Child Was Attending School 35% 18% 35%
Monthly Face-to-Face
Contact With Child 44% 22% 31%
Meeting With Child At
Provider Every 3 Months 20% 16% 37%
Face-to-Face Meetings With
Provider Every 3 Months 17% n/a n/a
Monthly Contact With the
Provider 38% 27% 26%
Concurrent Permanency
Plans Prepared 26% 13% 13%
Case Reassessment
Performed Timely 24% n/a n/a
Evidence of Criminal
Background Check and/or
Review of Child Abuse
Registry 46% 22% 34%
Annual Fire Safety
1 1
Inspection Performed 77% 18% 15%
Annual Health and Sanitary
Inspections Performed 69% 21% 19%
Timely, Comprehensive
Reevaluations Performed 37% 24% 20%
Source: OLA audit report dated October 16, 2003, SSA CAPS reviews, and Baltimore City case reviews

1
Comparison of the October 16, 2003 and the current fire inspection noncompliance rates with the rate reported as of May
14, 2002 is misleading due to a change in regulations, which are now less stringent. The Code of Maryland Regulations
(COMAR) previously required the approval of the State Fire Marshall or local fire officials or an authorized individual,
agency or private organization that the foster home meets the safety requirements of the local fire department for the initial
and annual fire inspections. Current COMAR regulations require the same level of approval for the initial inspection only.
For the annual fire inspection, an inspection form completed and signed by the provider and case worker is acceptable.

n/a - Not applicable since this attribute is not currently monitored by CAPS.

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Recommendation 1
We again recommend that SSA continue efforts to ensure that all children in
foster care are receiving the vital services necessary for their emotional,
physical, and educational well-being in a safe environment as required by
State regulations.

Finding 2
SSA did not ensure that Federal funds were being obtained for all eligible
foster care children.

Analysis
SSA had not established adequate follow-up procedures to ensure that local
departments identified all foster care children eligible for federal funding of
benefits (Title IV-E benefits) and that appropriate actions had been taken to obtain
these benefits.

According to the SSA’s records, which we tested and found to be reliable, Title
IV-E benefit eligibility determinations had not been made for 232 of the 8,869
foster care cases that were potentially eligible for Title IV-E benefits as of April
2004; 79 of these 232 children had been in foster care for over six months. SSA
provides local departments with periodic reports of foster care cases with pending
or missing Title IV-E eligibility status codes generated from the Foster and
Adoption Child Tracking System (FACTS); however, the local departments were
not required to, and did not always, notify SSA of the appropriate actions taken to
resolve these cases. We noted that many of the local departments with larger
caseloads were not advising SSA of the resolution of these cases. SSA
management advised us that annual on-site reviews are performed to test a sample
of Title IV-E cases to evaluate the local departments’ efforts in determining initial
eligibility; however, SSA was unable to provide documentation regarding the
specific cases tested or the results of these reviews.

Furthermore, once eligibility was established, SSA did not ensure that re-
determinations were performed every six months as required by State regulations.
Re-determinations are performed to determine that the child continues to remain
eligible for federal benefits. An April 2004 FACTS report identified 1,000 foster
care cases currently eligible for Title IV-E benefits that were overdue for Title IV-
E eligibility re-determinations; over half of these cases were overdue for three
months or longer.

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The failure to identify all eligible children and claim Federal benefits results in
payments from the State General Fund that could be covered by the Federal
government. The failure to perform re-determinations within the federally-
mandated 12-month requirement could result in the termination of Federal
benefits for eligible children. In calendar year 2003, the State received
approximately $109 million in Federal Title IV-E benefits.

Recommendation 2
We recommend that SSA establish follow-up procedures to ensure that the
local departments identify all foster care children eligible for Federal Title
IV-E benefits and that appropriate actions are taken to obtain these benefits.
We also recommend that SSA ensure that eligibility re-determinations are
performed every six months in accordance with State regulations.

Finding 3
SSA did not determine the extent of overpayments and whether funds paid to
group care providers were used for allowable expenditures in a timely
manner.

Analysis
SSA did not determine in a timely manner whether funds were appropriately used
by group care providers and whether any overpayments had occurred.
Overpayments occur when monthly estimated payments made to providers exceed
allowable expenditures and are identified in annual audit reports due from
providers. As of June 30, 2004, SSA had not obtained and reviewed the audit
reports to identify any overpayments for fiscal years 2002 and 2003. Specifically,
8 of the 189 annual audit reports due from providers for these two fiscal years had
not been received and the remaining 181 audit reports received had not been
reviewed.

In accordance with the State Finance and Procurement Article, Section 7-404 of
the Annotated Code of Maryland, and contracts with providers, foster care
providers are required to submit annual audit reports of their financial records to
SSA. SSA’s review of the fiscal year 2001 audit reports received disclosed that
SSA was due refunds, totaling $233,360, for overpayments made to 36 providers.
In addition to identifying overpayments, annual audit reports also indicate
whether funds paid to providers were used for allowable program expenditures
and whether certain overpayments were properly retained by providers. Providers
can retain overpayments, totaling up to 10 percent of the annual payments
received, for certain allowable purposes such as for future years’ operating
expenses and for expanding services. The remaining overpayments are to be

13
refunded to SSA after the annual reports are reviewed and requests for repayment
are sent to the providers. According to SSA’s records, payments to group care
providers totaled approximately $180.7 million during fiscal year 2004.

Similar conditions were commented upon in our two preceding audit reports.

Recommendation 3
We again recommend that SSA effectively monitor the funds paid to group
care providers. Specifically, we recommend that SSA obtain and review all
required annual audit reports for fiscal years 2002 and 2003 to determine the
extent of overpayments to be refunded to SSA and whether funds were
appropriately used by providers. Finally, we again recommend that, in the
future, SSA ensure that all required reports are received and reviewed in a
timely manner.

Finding 4
SSA did not monitor decisions of case workers to place foster care children
with non-preferred providers which generally charged higher rates.

Analysis
SSA did not establish procedures to ensure that local departments of social
services were placing foster care children with preferred group providers when
available. These providers generally charged lower rates per child. Under the
rate-setting procedures implemented by the Interagency Rates Committee in July
2000, group foster care providers were designated as preferred or non-preferred
providers based on the calculated annual payment rate per child. Providers with
lower annual rates were generally designated as preferred group providers.

Although case workers at the local departments were responsible for


documenting, in the case files, their decisions to place foster care children with
non-preferred group providers, this information was not provided to SSA.
Consequently, the local departments may be making foster care placements with
non-preferred group providers when lower rates are available from preferred
group providers offering similar services. For example, fiscal year 2005 annual
payment rates established for one preferred group provider and one non-preferred
group provider offering similar services were $111,276 and $201,713 per child,
respectively. According to SSA’s records, as of June 30, 2004, at least 297
children were placed with non-preferred providers. Due to a lack of sufficient
documentation at SSA, we could not readily determine the extent to which the
local departments unnecessarily used non-preferred group providers.

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This condition was commented upon in our preceding audit report. In response to
that report, SSA stated that DHR is currently developing a child welfare case
management automated system (MD CHESSIE) that will include the capability to
match potential foster care children with appropriate placement resources in cost
order (that is, preferred group providers before non-preferred group providers).
We were advised that this automated system would not be operational until late in
calendar year 2006.

Recommendation 4
We recommend that SSA establish procedures to ensure that the local
departments of social services are using group care providers in the most
cost-effective manner.

Finding 5
Licenses and license renewals for group home providers were being issued
without always ensuring that the required documentation, such as evidence
of criminal background checks, had been obtained.

Analysis
SSA was issuing licenses and license renewals to group home providers without
always obtaining documentation required by State regulations. Specifically,
documentation of adequate insurance, timely fire and health inspections,
emergency preparedness plans, performance measures and goals, and quality
improvement plans was not always included in the provider files maintained by
the licensing coordinators. Additionally, documentation of critical provider
employee records such as criminal background checks, child protective services
checks, and annual medical evaluations was not always included in the files. For
example, our review of 20 provider files disclosed that 11 files did not contain
documentation of current fire and health inspections, and 6 files did not contain
evidence that criminal background checks and child protective services checks
were obtained for all employees. Under State regulations, providers who fail to
submit the required documentation may be denied a license to operate or continue
to operate their facilities.

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Recommendation 5
We recommend that SSA ensure that all documentation required by State
regulations has been submitted before issuing licenses or renewal licenses to
group home providers. We also recommend that SSA ensure that all
required documentation is obtained for those providers currently licensed.

Contract Monitoring

Finding 6
SSA did not adequately monitor a contractor to ensure that effective
management services were being provided to the family support centers
located throughout the State.

Analysis
Our review of a management services contract for the family support centers
located throughout the State disclosed that, as of June 2004, SSA had not obtained
documentation, as provided for in the contract, to substantiate that the contractor
was providing effective management services to these centers. This
documentation includes an annual self-evaluation, designed to assess the overall
effectiveness of the services provided by the family support centers, as well as
audited financial statements of the contractor’s records, designed to substantiate
the contractor’s fiscal integrity. In addition, SSA was not adhering to its
procedures which require that semiannual reviews of the contractor’s records be
performed to substantiate the validity of the statistical data reported by the
contractor regarding the services provided at the family support centers.

Family support centers provide various services to young parents and their
children, including developmental, educational, health, and other support. The
contractor is responsible for providing management services to 27 family support
centers. These services include grants management, technical assistance,
monitoring, training, and evaluation. A three-year contract was awarded to the
contractor for approximately $15.4 million beginning July 1, 2003.

Recommendation 6
We recommend that SSA obtain the required documentation to substantiate
that, since the inception of the contract, the contractor has been providing
effective management services to the family support centers located
throughout the State. We also recommend that SSA adhere to its procedures
by performing semiannual reviews of the contractor’s records to substantiate
the validity of the statistical data reported by the contractor regarding the
services provided by the family support centers.

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Audit Scope, Objectives, and Methodology
We have audited the Department of Human Resources (DHR) - Social Services
Administration (SSA) for the period beginning March 29, 2001 and ending May
2, 2004. The audit was conducted in accordance with generally accepted
government auditing standards.

As prescribed by the State Government Article, Section 2-1221 of the Annotated


Code of Maryland, the objectives of this audit were to examine SSA’s financial
transactions, records, and internal control, and to evaluate its compliance with
applicable State laws, rules, and regulations. We also determined the current
status of selected findings contained in our May 14, 2002 performance audit
report on SSA’s out-of-home care program. Specifically, we reviewed the status
of many of the critical findings that are currently monitored by SSA through its
Child Welfare and Adult Services Performance Review System (CAPS).

In planning and conducting our audit, we focused on the major financial-related


areas of operations based on assessments of materiality and risk. Our audit
procedures included inquiries of appropriate personnel, inspection of documents
and records, and observation of SSA’s operations. We also tested transactions
and performed other auditing procedures that we considered necessary to achieve
our objectives. Data provided in this report for background or informational
purposes were deemed reasonable, but were not independently verified. In
addition, our reported assessment of level of compliance in the delivery and
monitoring of critical services to children in foster care (Finding 1) was based
solely on monitoring efforts documented by DHR; our audit did not include a
verification of those results.

Our audit did not include certain support services provided to SSA by the DHR –
Office of the Secretary. These support services (such as payroll, purchasing,
maintenance of accounting records and related fiscal functions) are included
within the scope of our audit of the Office of the Secretary. In addition, we did
not audit SSA’s Federal financial assistance programs for compliance with
Federal laws and regulations because the State of Maryland engages an
independent accounting firm to annually audit such programs administered by
State agencies.

SSA’s management is responsible for establishing and maintaining effective


internal control. Internal control is a process designed to provide reasonable
assurance that objectives pertaining to the reliability of financial records,
effectiveness and efficiency of operations including safeguarding of assets, and
compliance with applicable laws, rules, and regulations are achieved.

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Because of inherent limitations in internal control, errors or fraud may
nevertheless occur and not be detected. Also, projections of any evaluation of
internal control to future periods are subject to the risk that conditions may
change or compliance with policies and procedures may deteriorate.

Our reports are designed to assist the Maryland General Assembly in exercising
its legislative oversight function and to provide constructive recommendations for
improving State operations. As a result, our reports generally do not address
activities we reviewed that are functioning properly.

This report includes findings relating to conditions that we consider to be


significant deficiencies in the design or operation of internal control that could
adversely affect SSA’s ability to maintain reliable financial records, operate
effectively and efficiently, and/or comply with applicable laws, rules, and
regulations. Our report includes findings regarding significant instances of
noncompliance with applicable laws, rules, or regulations.

DHR’s response to our findings and recommendations, on behalf of SSA, is


included as an appendix to this report. As prescribed in the State Government
Article, Section 2-1224 of the Annotated Code of Maryland, we will advise DHR
regarding the results of our review of its response.

18
Legislative Audit of
Department of Human Resources’
Social Services Administration
March 29, 2001 through May 2, 2004

Finding #1: SSA’s records reflected that, while there have been some improvements
in the delivery and monitoring of critical services to children in foster care,
many children were still not receiving the required services.
Recommendation: We again recommend that SSA continue efforts to ensure that all
children in foster care are receiving the vital services necessary for their emotional,
physical, and educational well-being in a safe environment as required by State
regulations.
Departmental Response: SSA is continuing its efforts to provide the necessary services
for children in out-of-home placement. The provision of these services has been
addressed in Maryland’s Performance Improvement Plan (PIP) as required by the
U.S. Department of Health and Human Services (HHS) which is designed to improve
outcomes for children in the care and custody of the Maryland Child Welfare system.

Finding #2: SSA did not ensure that Federal funds were being obtained for all
eligible foster care children.
Recommendation: We recommend that SSA establish follow-up procedures to ensure that
the local departments identify all foster care children eligible for Federal Title IV-E
benefits and that appropriate actions are taken to obtain these benefits. We also
recommend that SSA ensure that eligibility re-determinations are performed every six
months in accordance with State regulations.
Departmental Response: The Department is committed to ensuring that all children
entering out-of-home care are identified and adequately determined for Federal Title
IV-E benefits. Social Services Administration (SSA) has establish an efficient and
effective procedures to monitor the actions of local departments of social services
(LDSS) on the following lists of children generated from the child welfare database
(Client Information System Foster and Adoption Child Tracking System CIS-
FACTS):

1. Monthly listing of children that entered foster care the previous month on
FACTS based on the foster care application date. The purpose of this list
is to provide the LDSS IV-E eligibility specialists with a complete list to
match referrals obtained from caseworkers for a given month. The IV-E
specialists are required to respond monthly to SSA and indicate action
taken to complete eligibility determination and update FACTS on cases
with pending code or no data on the IV-E status field.

2. Monthly list of children in foster care over sixty days from the date of
foster care application with pending code or no data on the IV-E status
field. The purpose of this list is to provide the LDSS IV-E eligibility
specialists with a complete list of cases overdue for IV-E determination
according to FACTS. The IV-E specialists are required to respond
monthly to SSA and indicate action taken to complete eligibility
determination and update FACTS.

3. Monthly list of Title IV-E eligible children due for six-months re-
determination in the previous month. The purpose of this list is to provide
the LDSS IV-E eligibility specialists with a complete list of cases due for
IV-E re-determination according to FACTS. The IV-E specialists are
required to respond monthly to SSA and indicate action taken to
completed re-determination.

4. Monthly list of Title IV-E eligible children 18 years of age or older as of


the CIS-FACTS run date. The purpose of this list is to provide the LDSS
IV-E eligibility specialists with a complete list of children potentially
ineligible for IV-E benefits when they are still in foster care at 18 or older
and expected to graduate from high school before their 19th birthday. The
IV-E specialists are required to respond monthly to SSA and indicate
action taken to discontinue IV-E benefits or continue if the child is
expected to graduate from high school before their 19th birthday.

5. Monthly list of Title IV-E eligible children due and overdue for six-
months re-determination for the next three months by page by caseworker
identification number. The purpose of this list is to provide the LDSS IV-
E eligibility specialists with a complete list of cases due and overdue for
IV-E re-determination according to FACTS. The IV-E specialists are
required to provide caseworkers with their individual lists to complete
questionnaires needed for IV-E re-determination.

Social Services Administration (SSA) federal funding central staff will follow-up
the responses with reminders, questions and clarifications by telephone calls and
emails to the IV-E specialists. SSA executive will follow-up inadequate responses
with memoranda and letters to local departments supervisors and executive staff.
SSA recently completed site review visits to the four largest local departments
comprising of 80% of the caseload and will continue inspection visits to the other
local departments in preparation for the Federal Title IV-E Foster Care Eligibility
Review in 2005.

Finding #3: SSA did not determine the extent of overpayments and whether funds
paid to group care providers were used for allowable expenditures in a timely
manner.
Recommendation: We again recommend that SSA effectively monitor the funds paid to
group care providers. Specifically, we recommend that SSA obtain and review all
required annual audit reports for fiscal years 2002 and 2003 to determine that extent
of overpayments to be refunded to SSA and whether funds were appropriately used
by providers. Finally, we again recommend that, in the future, SSA ensure that all
required reports are received and reviewed in a timely manner.
Departmental Response: The Social Services Administration continues to work with the
DHR Office of the Inspector General to ensure that all group care providers submit
annual audits of their fiscal operations which are then reviewed by State Auditors to
ensure that the provider’s fiscal operations are in accordance with Generally
Accepted Accounting Principles (GAAP).

Finding #4: SSA did not monitor decisions of case workers to place foster care
children with non-preferred providers which generally charged higher rates.
Recommendation: We recommend that SSA establish procedures to ensure that the local
departments of social services are using group care providers in the most cost-
effective manner.
Departmental Response: All local departments have been instructed to use Preferred
Provider Organizations first for the out-of-home placement of children if the
available resource is appropriate to the child’s needs. Further, documentation must
exist in each case record to justify the placement selection, especially those
placements made with non-preferred providers.
The Interagency Rates Committee, through analysis performed by the
Maryland State Department of Education (MSDE), designates some Provider
Organizations as “Non-Preferred” Providers because their rates fall beyond one
standard deviation from the established rates of peer licensed organizations
providing similar services. These higher rates may result from the Provider
organization’s higher regional costs or more intensive staffing model. Although a
local department may try to place a child with a “Preferred” Provider, the
department must also meet the requirements of placing a child in close proximity to
family to facilitate visits and, if appropriate, eventual re-integration with the family.
Most importantly, the local department must ensure that the Provider organization
offers the particular range of services needed by the child as reflected in that child’s
Service Plan. Placement with a “Non-Preferred” Provider may be necessary
because other “Preferred” resources are full and/or because the “Non-Preferred”
Provider offers the range of services most appropriate to the child’s specific needs.
If a child must be placed with a “Non-Preferred” Provider, local departments must
clearly document this decision and its rationale in the child’s case record.
The Department believes that the implementation of the MD CHESSIE
automated system will substantially enhance the Department’s ability to mange the
use of “Non-Preferred” Provider organizations. As designed, the system will
specifically guide caseworkers in their placement decisions through (1) identifying
all available, appropriate licensed “Preferred” Providers with vacancies, (2)
showing established IRC rates, and (3) indicating those under contract with the
Department. The “Non-Preferred” Providers can only be examined after this
process is complete and a viable match is not found. Additionally, the system
design requires supervisors to approve the placements so that we can better ensure
appropriate matching, utilization, and cost-effective choices. MD CHESSIE is
scheduled for full implementation by December 2006.
Finding #5: Licenses and license renewals for group home providers were being
issued without always ensuring that the required documentation, such as
evidence of criminal background checks, had been obtained.
Recommendation: We recommend that SSA ensure that all documentation required by
State regulations has been submitted before issuing licenses or renewal licenses to
group home providers. We also recommend that SSA ensure that all required
documentation is obtained for those providers currently licensed.
Departmental Response: Code of Maryland Annotated Regulations (COMAR) 01.04.07
requires that licensed programs obtain criminal background checks and medical
examinations for all employees. Also required are fire and health inspections and
insurance information. The regulations contain many such requirements for
documents that are not reproduced and kept in the licensed program’s file at the
Social Services Administration (SSA). It would be impossible to capture all of the
required information in this manner, since the files are already extensive and
demand expanding filing space. In addition, new programs licensed for the first
time do not usually have a complete staff hired at the time of the site visit. In those
cases, only the hired staff persons are required to obtain criminal background
checks, protective services checks, and medical examinations. During monitoring
site visits licensing coordinators examine personnel files.
If the program is not providing necessary documentation, it is notified in
writing, with a copy to the file, of a COMAR violation. During a licensure or re-
licensure process, the site visit is recorded on an evaluation form maintained in the
SSA file on the program. The evaluation form, completed and signed by the
licensing coordinator, indicates whether the licensed program meets COMAR
requirements, including criminal background, child protective services, and medical
checks for agency staff persons. In addition, licensing coordinators require copies
of fire and health inspections and insurance documents as well as other extensive
documentation for placement in the record maintained at SSA. If a new program
does not comply with COMAR requirements, it will not be licensed. During the
audit, it would be useful if the auditor would point out items that seem to be
missing. It is possible the items are in process or placed in a separate file.
To further ensure that licensing coordinators comply with the requirements of
COMAR and SSA Licensing policy, SSA administrative staff will conduct random,
periodic inspections of the licensing files maintained at SSA to assure that the
evaluation form contains documentation of criminal background checks, protective
services checks, and medical examinations of employees and that copies of fire and
health inspections as well as insurance documents and other required items are
contained in the files.

Finding #6: SSA did not adequately monitor a contractor to ensure that effective
management services were being provided to the family support centers
located throughout the State.
Recommendation: We recommend that SSA obtain the required documentation to
substantiate that, since the inception of the contract, the contractor has been
providing effective management services to the family support centers located
throughout the State. We also recommend that SSA adhere to its procedures by
performing semi-annual reviews of the contractor’s records to substantiate the
validity of the statistical data reported by the contractor regarding the services
provided by the family support centers.
Departmental Response: Effective SFY 2006, management and oversight of the Family
Support Center network is being re-assigned to the Maryland State Department of
Education where it is to be refocused toward early childhood invention. As part of
the effort to provide young children with a supportive, nurturing, and stable family
environment, the Family Support Center programs will better correspond to
MSDE’s mission of providing educational initiatives for young children.
AUDIT TEAM

James P. Shevock, CPA


Audit Manager

Heather A. Warriner
Senior Auditor

Menachem Katz, CPA


Staff Auditor