It’s an accountant’s nightmare: A potential $34 million budget deficit faced by the Alcohol, Drug, and Mental Health Services Department will cost Santa Barbara County substantial funds and may result in further cuts to services, according to the county’s civil grand jury.
On May 6, the jury issued a report revealing the results of its investigation into the agency’s accounting troubles. For the past eight years, according to the report, the computer system used to track state and federal reimbursements to the agency failed to bill MediCal and Medicare for services in a timely manner.
The software problems, combined with poor decisions by the agency’s staff and executives, have resulted in “potentially serious financial problems for the department and the county,” the jury found.
The report states that the county’s CEO and the director of the department sent a letter to the state’s Department of Mental Health in November 2007 stating that they had discovered overcharges to the state in the amount of $9 million. Upon further investigation, the state determined that number was closer to $33.7 million, which would have to be paid back. The repayments will most likely have to come from the county’s general fund, the report states.
Of that amount, the jury found, about $14.4 million of the deficit is a result of improper billing to MediCal for probation and welfare services, which the state claims are ineligible for reimbursement from the health-care provider.
The ADMHS’ budget of $64 million is funded in large part by reimbursements from federal and state funds, according to the report. The California Department of Mental Health has audited ADMHS only up to 2003. This year, the state withheld almost $3 million from the department for alleged past overpayments.
As of June 2008, ADMHS records showed a liability to the state of $17 million, the report said.
The jury said the agency has taken steps to correct the bookkeeping problems, calling the measures “encouraging.” Their investigation discovered that the department had cleaned house in the past year—replacing the employees deemed responsible for the over-billing and hiring a team of new executives.
The jury recommended the department use more-proven software and maintain a backup program. It also recommended that the county’s auditor-controller continue to review and monitor ADMHS accounting practices.
The department has from 60 to 90 days to respond to the grand jury’s report. Requests for comment from ADMHS were referred to the County Executive Office.
In an e-mail to the Sun, County Executive Office Communications Director William Boyer said: “The county is in the process of carefully reviewing the grand jury report and the county will then prepare a response to the grand jury.”
Staff Writer Nicholas Walter contributed to this story. Contact Staff Writer Jeremy Thomas at jthomas@santamariasun.com.
This article appears in May 21-28, 2009.
