Mississippi welfare agency asked current subgrantees to return $1 million in safety net funds

by Anna Wolfe, Mississippi Today
December 7, 2021

Mississippi Department of Human Services Director Bob Anderson says he’s cleaning up the agency.

In the last year, his agency has demanded subgrantees to return nearly $1 million in safety net funds it says the organizations misspent or did not properly document, according to a Mississippi Today analysis of 149 letters.

According to interviews with subgrantees, the accounting issues identified in the last year have much more to do with technical clerical errors and unclear reporting expectations than with outright misspending. Many findings, even final demands, were cleared after negotiations between the parties, without funds being returned.

The agency and its partners are experiencing growing pains as officials implement stricter controls on their spending due to recent scandal and past lackadaisical monitoring at the department.

Mississippi State University, Boys & Girls Clubs of Central Mississippi, Goodwill Industries and various community action agencies — nonprofits designated to carry out federal anti-poverty programs enacted in 1964 — were among the agency partners that received the biggest demands.

Gov. Tate Reeves appointed Anderson in March of 2020, a month after the State Auditor’s Office arrested six people, including the former director John Davis, for allegedly conspiring to steal $4 million in federal funds from the Temporary Assistance for Needy Families (TANF) block grant.

The allegations of theft are just one component of a larger scandal in which independent auditors hired by the agency say the state frittered away $77 million in public assistance dollars from 2016 to 2019. The nonprofit accused of the most egregious misspending and theft was Mississippi Community Education Center, founded by private school owner Nancy New.

State and nonprofit officials had said they were spending the money on programs and activities to help impoverished people, such as parenting and anger management classes, motivational training and after school programs — many of which are legal purchases but, as federal policies experts point out, are not the most effective ways to reduce poverty.

That emphasis has continued today: the state is still primarily issuing TANF subgrants for parenting initiatives and after school programs, as opposed to work supports like child care and workforce training programs.

As an example of its priorities, the first link on the public assistance agency’s website is ”business opportunities,” where private companies can go to find information about how to bid on agency contracts and subgrants. (The department is currently working on redesigning its website).

In the most recent year, from Sept. 1, 2020, to Nov. 10, 2021, the agency questioned nearly $4.5 million spent by its subgrantees — organizations it hired to administer public assistance, such as TANF grants, the Supplemental Nutrition Assistance Program, commonly referred to as food stamps, the Low Income Home Energy Assistance Program (LIHEAP), the Community Services Block Grant (CSBG) and the Child Care Development Fund (CCDF).

Anderson said questioning costs and demanding repayment is how the agency monitors its subgrantees, which receive around $150 million of the agency’s $1 billion in federal public assistance funding each year, past audits show.

“Under John Davis, that process existed, but when the findings were brought to him, often that was all that ever happened to it,” Anderson said in a Facebook interview on Oct. 8 following the release of the independent forensic audit on Oct. 1. “We didn’t actually send the questioned cost letters out to the subgrantees if John said, ‘Don’t worry about it.’ What we’re doing now is, we’re sending those finding letters directly to subgrantees.”

Mississippi Today could not verify this statement. Mississippi Today asked the agency over several weeks to provide the number of letters sent during the Davis administration, to confirm Anderson’s statement, but department wanted the news organization to pay nearly $376 to answer the question. It said it did not keep a record of the questioned cost letters it sent which subgrantees, so it would have to manually pull every subgrantee file to determine whether they received a finding, and charge Mississippi Today the research costs of $17-an-hour for 21 hours.

Davis’ attorney Merrida Coxwell did not return calls for this story.

In many cases, the subgrantees who received initial findings letters responded to the agency with supplemental information that satisfied the agency’s questions, so the agency did not send final demands.

Final demands total over $1 million, but subgrantees still have the option to file appeals.

Mississippi State University received one of the larger demands for repayment: $56,763.68 on April 22, 2021, for money it received through TANF, and $35,043.69 on Sept. 3, 2021, for money it received through CCDF. University spokesperson Sid Salter told Mississippi Today that the welfare agency cancelled the TANF demand after the university submitted additional time sheets to justify the expenditures. As for the CCDF funding, the university has appealed the demand and will attend a hearing on Jan. 28, 2022. Mississippi State University has received MDHS grants for various programs over the last few years, such as the TK Martin Center for Technology & Disability, but the bulk of the funding has gone to the National Strategic Planning and Analysis Research Center, or “NSPARC,” which houses personal data on Mississippians, connected from several state and federal agencies.

Thirteen other organizations also received final demands over $10,000.

Mississippi Department of Human Services said the following entities owed money they received from the TANF block grant:

• Boys & Girls Clubs of Central Mississippi ($88,461.51)
• CompuRecycling Center Inc. ($17,635.55) (A representative said the organization paid the demand in full.)
• Save the Children Foundation ($16,064.38) (The organization charged to its TANF grant portions of two local staffers who were doing work under the TANF contract but whose positions were not included in the grant budget, so the agency found during a routine audit that the costs were unallowable. A managing director for Save the Children, Patrick Iannone, said the organization repaid the costs and the audit was closed.)
• Scientific Research (SR1) ($14,472.11) (Representatives from SR1 said the organization returned the funds to MDHS after learning they did not have the documentation the agency required under the grant. Executive director Tamu Green said MDHS has started offering more technical assistance to subgrantees so no surprises arise after the grant period is over.)
• Jobs for Mississippi Graduates ($12,913.33) (Executive director Ramona Williams said she did not receive the letter until a month after it was sent and that she has requested a hearing to object to the findings. She said she also did not receive the initial letter that questioned over $150,000, which was dated Sept. 2, 2020, more than a year before the final demand. Unlike New’s nonprofit, Jobs for Mississippi Graduates was paid on a reimbursement basis, so Williams said the agency should have questioned expenses when they were submitted for monthly reimbursement, not a year after the fact. She also said the fact that monitors from MDHS have not been able to visit her organization in-person due to COVID has made the process more cumbersome.)

”We’ve been penalized and held to a standard that is just so unfair,” Williams said. “We’ve been in the trenches. We provided the requisite services that were needed. Yet I feel as if we’ve been penalized for something we didn’t do.”

The welfare agency said several community action agencies owed money they received from LIHEAP, CSBG or the federal weatherization assistance program, but many of the final demands arose from issues within the organizations’ budgets grouping certain expenditures, and many of them were cleared.

Some of those entities were:

• Pearl River Valley Opportunity, Inc. ($210,538.58) (Executive Director Helmon Johnson said his organization has submitted more supporting documentation and “we are waiting on a response from the Monitoring Division which should clear up these outstanding cost.”)
• Prairie Opportunity ($121,933)
• Hinds County Human Resources Agency ($121,835.5) (MDHS later administratively cleared these questioned costs, a Nov. 23, 2021 letter shows, which arose from an issue with the way the organization charged its MDHS grant for employee benefits.)
• Jackson County Civil Action Committee ($121,427.89) (Director Vanessa Gibson said the agency sent the demand in error and it eventually cleared the findings, a Sept. 2, 2021 letter shows.)
• South Central Community Action Agency, Inc. ($11,656.83) (Director Sheletta Buckley said in an email that her organization appealed and the state eventually found the demand to be “unsubstantiated.”)
• Northeast Mississippi Community Services ($10,006.72) (A representative from the organization said it sent paperwork justifying its purchases after receiving the initial demand, but due to turnover at the state agency, the paperwork was misplaced and a final demand letter was sent in error. A follow up letter shows MDHS cleared these costs.)

”It was just a matter of them not asking for the right documents. And once they asked for the right documents it all went away,” said Gibson, who runs Jackson County Civil Action Committee. “We have never, ever, ever had any kind of findings that looked anything close to this. We are one of their best programs and we were very distressed that this would even be an issue, because it was a nonissue.”

Goodwill Industries received a final demand on Oct. 12, 2020, for $35,941.72 it received from the SNAP work program grant.

On Oct. 8, Mississippi Today requested all questioned cost letters the agency sent from Sept. 1, 2020 to present. This request was part of an ongoing series of requests Mississippi Today has filed at the Mississippi Department of Human Services in an effort to hold the agency accountable for its spending and internal controls. For the 149 letters, Mississippi paid $161, which was mostly researching costs. Read the questioned cost letters here.

“MDHS has made significant strides in its monitoring function over the past 18 month period,” Anderson said in a written statement to Mississippi Today. ”Monitoring visits are being conducted or desk audits are being completed, questioned costs are being assessed, and subgrantees and other partners are either repaying the questioned costs or availing themselves of the administrative hearing process. That is the way monitoring is supposed to work. Questioned costs do not always translate to recouped funds, if the subgrantee or contractor can provide missing documentation or substantiate questioned costs.”

This article first appeared on Mississippi Today and is republished here under a Creative Commons license.