Oregon potentially spent more than $10 million in federal money on impermissible expenses and failed to accurately report data related to several federally funded social services programs during the 2021 fiscal year, state auditors said this week.

Auditors from the Oregon Secretary of State’s Office identified $4.8 million that was spent in violation of federal rules and another $5.2 million that might have also been misspent based on a random sample of expenditures for 18 federal programs, according to the annual Statewide Single Audit released in July and a summary of the audit results released this week.

The federal government uses the findings of Oregon’s annual statewide single audit to ensure compliance with program requirements, determine whether any money used for impermissible expenses must be repaid and decide if any sanctions should be imposed.

Roughly 85% of the questionable spending occurred when the Oregon Health Authority and Department of Administrative Services potentially misused Coronavirus Relief Funds allocated by the federal government, the reports said. Auditors found that the health authority provided grants to over 400 government and non-government organizations, but did not conduct timely or adequate monitoring of those recipients to ensure compliance with federal regulations or verify that grantees weren’t leaving money unspent.

The Oregon Health Authority agreed with the findings and promised that unspent funds would be returned to the U.S. Department of Treasury.

Auditors also determined that there weren’t adequate safeguards in place to ensure that two programs administered by the state – Temporary Assistance for Needy Families and Low-Income Home Energy Assistance – complied with federal guidelines.

The Department of Human Services remained out of compliance with federal requirements related to the Temporary Assistance for Needy Families program for a fourth consecutive year, auditors found. The program provides cash assistance and services to help low-income families with children become self-sufficient.

Auditors found multiple problems with the reports that the department submitted to the federal government. The department improperly excluded several hundred cases a month that should have been included, included thousands of cases a month that shouldn’t have been included and, in one month, only reported 44% of the child welfare cases they were supposed to report, auditors said.

They also found that the department failed to verify household income before providing the benefits, increasing the risk of providing benefits to ineligible individuals.

The faulty reports and the issues with income verification appeared to be a product of the state’s transition in 2021 to the Oregon Eligibility system, an integrated application for medical, food, cash and child care assistance. The Oregonian/OregonLive reported last month on another problem – erroneous denials of long-term care benefits to low-income people in dire need – created by the Oregon Eligibility program’s faulty operations.

In response to auditors’ findings, the Department of Human Services said it would develop a workgroup with policy and business analysts, staff members who worked with the agency’s previous technology system and staff from Deloitte, the lead developer for the Oregon Eligibility system, to ensure that the system, known as ONE, produces accurate data and reports. They said they would also update policies to ensure the income verification process is correctly implemented.

Auditors also identified significant deficiencies with other programs now administered through the ONE system, which was deployed statewide in February 2021.

They found that the department failed to verify the accuracy of the ONE system’s calculations and eligibility determinations after the Supplemental Nutrition Assistance Program was integrated into the system. They found that staff occasionally overrode the determinations that the ONE program made regarding family food assistance, which they said could indicate errors in the system’s calculations. Auditors found that the department ultimately overstated its SNAP federal revenue and expenditures by approximately $2.9 million during fiscal year 2021, a mistake that they said likely occurred due to the transition to the ONE system.

Auditors also found that Oregon Housing and Community Services was out of compliance with federal guidelines because it failed to submit reports on grantees who received funding through the Low-Income Home Energy Assistance Program. The agency agreed with the finding and said it would hire additional staff to ensure that it is adhering to reporting requirements.

— Jamie Goldberg

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