Conservatively Speaking

State Senator Mary Lazich (R-New Berlin) represents parts of four counties: Milwaukee, Waukesha, Racine, and Walworth. Her Senate District 28 includes New Berlin, Franklin, Greendale, Hales Corners, Muskego, Waterford, Big Bend, the town of Vernon and parts of Greenfield, East Troy, and Mukwonago. Senator Lazich has been in the Legislature for more than a decade. She considers herself a tireless crusader for lower taxes, reduced spending and smaller government.

Overtime audit shows decreased costs, questions about surplus positions


The non-partisan Legislative Audit Bureau today released a report about overtime in state agencies and the UW System. According to the audit, state agencies and the UW System paid $360.5 million for nearly 1.9 million hours of overtime from 2006 to 2010.

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Audit Bureau releases Wisconsin Lottery report


The non-partisan Legislative Audit Bureau today released an annual review of the Wisconsin Lottery. The audit reveals the Wisconsin Lottery provided nearly $700 million in property tax relief during the last five years. 

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Department of Veterans Affairs audit raises concerns


Today, the non-partisan Legislative Audit Bureau released an audit of the Wisconsin Veterans Homes, Department of Veterans Affairs. There are several very troubling findings in the report.

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Legislative Audit Bureau Releases Auditor's Opinion on Employee Trust Funds Financial Statements


According to an auditor's opinion released today by the Legislative Audit Bureau (LAB)  the Wisconsin Retirement System (WRS), the largest program overseen by the Employee Trust Funds (ETF), reported net assets of $70.0 billion at the end of 2009 and provided benefits totaling $3.8 billion during 2009. After experiencing investment losses and a decrease in net retirement assets of $25.2 billion during 2008, the WRS reported positive investment returns and a net increase in retirement assets of $10.6 billion during 2009. At the end of 2009, the WRS was 88.2 percent funded based on the fair value of its assets and 99.8 percent funded based on standard actuarial measures, which smooth investment returns over a five-year period.  Here is a link to the complete auditor's opinion on Employee Trust Funds Financial Statements.

Audit: Health Insurance Risk-Sharing Plan Authority


The Wisconsin Legislative Audit Bureau (LAB) completed a statutorily-required financial audit of the Wisconsin Health Insurance Risk-Sharing Plan (HIRSP) Authority for 2009. The report a) examined financial statements and b) made a recommendation about internal access to the Authority’s pharmacy records.

The HIRSP Authority offers medical and prescription drug insurance to individuals unable to obtain private insurance or who have lost their group coverage provided by an employer. Participants must be Wisconsin residents that are not eligible for employer-sponsored group insurance, Medicaid, or Wisconsin’s BadgerCare Plus standard plan. They must meet certain criteria to be eligible for any of the six plans offered by the Authority that provide the same coverage. However, they differ on the amount of premiums and deductibles.

Policyholder premiums, financial assessments on health insurance companies that do business in Wisconsin, and reduced reimbursements to health care providers pay for the program costs. Tax dollars are not used to fund the programs. Policyholder premiums, by law, provide 60 percent of operating and administrative costs. The remaining 40 percent comes equally from insurers and health care providers.

HIRSP enrollment continues to increase this year. As of August 31, 2010, there were 17,944 policyholders. Increasing enrollment is attributed to reduced premiums, increased income limits for subsidies, and individuals that have lost employer-sponsored coverage exhausting their COBRA benefits.

The LAB reports the HIRSP Authority has kept a sound financial position with a total net asset balance at the end of 2009 of  $27.5 million. Helping the HIRSP Authority remain strong has been a transition to higher-deductible plans, an increased use of generic rather than brand-name drugs, and reduced utilization. The LAB surmises this could be the result of improved health of the policyholders.

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Audit Committee gets updates about Emergency Management


’s Legislative Audit Bureau (LAB) issued a review of Wisconsin Emergency Management during May 2010.  The LAB found the following:

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Legislative Audit Bureau report: Division of Gaming


Tribal revenue from gaming in Wisconsin was approximately $1.3 billion during each year from 2007 through 2009 according to a report by the Legislative Audit Bureau (LAB).  Tribal revenue dwarfs the state’s gaming intake. The LAB reports the state’s revenue from all gaming sources totaled $124 million during fiscal year 2008-09, an increase of $52 million from fiscal year 2006-07. The increase was the result of a one-time $60 million payment to the state by the Ho-Chunk tribe during December 2008.

Under state law, the LAB is required to conduct a performance evaluation of the state Division of Gaming every two years. The Division oversees the gaming operations of tribes that have negotiated compacts with the state.

During 2009, tribal gaming profits, or revenue in excess of expenses, totaled $543.4 million, a decrease of $56.1 million from 2007, or 9.4 percent.

The LAB reviewed financial and compliance audits conducted by the Division of Gaming to ensure the 11 tribes that operate 27 casinos in Wisconsin are following provisions of their negotiated state compacts. From January 2007 through December 2009, the Davisson of Gaming performed 67 financial audits and 50 compliance audits. Upon examination of a random sample of the documents, the LAB determined they were complete and accurate, demonstrating the Division of Gaming followed its procedures.

The LAB suggested the expenditures pertaining to the Division’s full-time legal counsel be monitored closely to ensure they are reasonable and necessary. The Chicago home of the Division staff attorney has been designated his office headquarters. From fiscal year 2006-07 through fiscal year 2008-09, the Division reimbursed him $26,300 for mileage between his home and the Division’s office and for food and lodging while he stayed in Madison.  The LAB reports, “Division officials believe that the experience and specialized knowledge of this employee justify this unusual arrangement, and they
assert that contracting for legal services would have resulted in substantially higher costs.”

The LAB noted the closing of the Dairyland Greyhound Park during December 2009. Money wagered at the park decreased from $56.9 million during fiscal year 2006-07 to $38 million during fiscal year 2008-09.

The Division licenses charitable organizations that conduct bingo and raffles, and it registers crane games. From fiscal year 2006-07 through fiscal year 2008-09, state revenue from bingo totaled $1.5 million, state revenue from raffle license fees totaled $634,100, and state revenue from crane game registration fees totaled $49,100.

You can read the entire LAB report here.

LAB Report: Test Score Data for Pupils in the Milwaukee Parental Choice Program


The Wisconsin Legislative Audit Bureau (LAB) has completed a state statute required analysis of pupil test score data comparing test scores of Milwaukee Public School (MPS) students to test scores of students enrolled in the Milwaukee Parental Choice Program. The key finding is that the data “show no significant difference in the performance of Choice pupils and similar MPS pupils after three years.”

Researchers with the School Choice Demonstration Project that are conducting a five-year study of Choice and MPS students firsts elected during the 2006-07 school year supplied the test score data to the LAB that also interviewed researchers and officials familiar with the Choice program. They indicated the five year study (The LAB’s report is the third of five) is the most comprehensive effort thus far comparing test scores of Choice and MPS students and the LAB reports the sampling techniques are described as “innovative and vigorous.”

THE LAB emphasizes there are limitations on information that can be studied, analyzed, and determined:

“Although we understand that individual pupils cannot be identified, we had initially believed that the project would provide us with data that identified the school attended by each Choice pupil who took the tests. However, citing confidentiality concerns, the project did not provide information on these pupils’ schools. Federal law generally requires written permission from parents or guardians before information about individual pupils may be released. In addition, project researchers signed agreements with their universities stipulating that they would not release information that identified pupils or the schools they attended, and they signed similar confidentiality agreements with Choice schools and the parents and guardians of Choice pupils. Because the data available to us do not identify the Choice pupils and schools, we are limited in what we can report and confirm. For example, these data do not allow us to provide legislators and other policymakers with information about academic performance specific to each of the
127 Choice schools that operated in the 2008-09 school year.”

The School Choice Demonstration Project reviewed  the scores on the Wisconsin Knowledge and Concepts Examination reading and mathematics sections, that are scored separately, for pupils that were in the fifth through eighth grades or the tenth grade during the 2008-09 school year, and who also took the test during the  2006-07 school year. The LAB analyzed the project’s data and generally confirmed the results with some slight differences.

To determine whether enrollment  and participation in the Choice program contributes to academic achievement, the project calculated the average changes in test scores from the 2006-07 to the 2008-09 school years for pupils in the Choice sample and the MPS matched sample. The LAB writes, “For the most part, the researchers did not find statistically significant differences in test score changes. However, they reported that the test scores of seventh-grade pupils in the Choice sample increased more, on average, than those in the MPS matched sample on the mathematics section, and the difference was statistically significant. We did not find any significant differences in the average changes in reading or mathematics scores between the 2006-07 and 2008-09 school years.”

The LAB also found that test scores for Choice and MPS pupils tend to increase as they progress to higher grade levels, regardless of any changes in their performance.

Choice schools will be required during the 2010-11 school year to administer the Wisconsin Knowledge and Concepts Examination to all pupils in the third through eighth grades, as well as to those in tenth grade, and to annually report pupils’ scores to the Department of Public Instruction.

You can read the entire LAB letter report that contains several tables with tests score data here.

Legislative Audit Bureau report: Division of Gaming


Tribal revenue from gaming in Wisconsin was approximately $1.3 billion during each year from 2007 through 2009 according to a report by the Legislative Audit Bureau (LAB).  Tribal revenue dwarfs the state’s gaming intake. The LAB reports the state’s revenue from all gaming sources totaled $124 million during fiscal year 2008-09, an increase of $52 million from fiscal year 2006-07. The increase was the result of a one-time $60 million payment to the state by the Ho-Chunk tribe during December 2008.

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Audit: Use Value Assessment of Agricultural Land


The Legislative Audit Bureau (LAB) has finished a limited review of the use value assessment of agricultural land. Wisconsin’s use value law was adopted as part of the 1995-97 state budget. In its letter report about Use Value Assessment of Agricultural Land, the LAB writes:

“Under Wisconsin’s use value law property taxes on agricultural land are assessed based on the land’s ability to produce farm income. Before the use value law was enacted, agricultural land was assessed according to its full market value, which is the estimated sales price. Taxes on most other real and personal property continue to be assessed at full market value. By reducing assessments on agricultural land, the use value law was intended both to improve Wisconsin’s farm economy by providing property tax relief for farmers and to reduce urban sprawl.

To qualify for use value assessment, land must be devoted primarily to agricultural use. All property that meets this definition qualifies, regardless of the owner’s occupation or the purpose for which the land is zoned.”

The LAB review was spurred by recent news accounts that claimed loopholes in the law were allowing non-farmers to benefit inappropriately from owning land that continues to qualify for use value assessment because of temporary cropping, despite being zoned for residential, commercial, or industrial purposes. Concerns have been raised that the perceived loopholes defeat the law’s purpose of preserving farmland. Another concern is that the use value assessment of this land diverts the property tax burden from real estate developers to other taxpayers.

As part of its probe, the LAB analyzed agricultural land classification and assessments in 14 municipalities statewide.  The LAB’s findings:

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Audit Committee Fiddles


The Legislative Audit Committee today approved three new audits, putting off indefinitely the day taxpayers will get a real look inside the $6 billion MA/BadgerCare program.

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LAB letter: Fraud, Waste, and Mismanagement Hotline


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Audit: State Fair Park


Wisconsin law requires the Legislative Audit Bureau (LAB) perform a yearly audit of State Fair Park in West Allis. The latest analysis is complete following a review of State Fair Park revenue and expenditures, the park’s use of in-kind support, the current status of the Milwaukee Mile racetrack, and the state’s purchase of the Wisconsin Exposition center, located on the Fair park grounds.

First, some good news. During fiscal year 2008-09, revenue exceeded expenditures by $828,000 thanks to increased attendance at the Wisconsin State Fair that led to increased admissions, concessions, and parking revenues. The result is State Fair Park attained positive operating results for the third consecutive year, allowing the park to reduce its accumulated cash deficit on June 30, 2009 to $7.8 million.

The bad news is the deficit reduces funding opportunities for other state programs and reduces the state’s ability to raise revenue from investment earnings. The LAB says State Fair Park must continue to reduce the deficit.

Concerns were raised by the LAB about in-kind support, “businesses providing goods or services to State Fair Park in exchange for admission tickets, parking passes, advertising exposure, and other items.” Though in-kind support can be beneficial to the park, the LAB cautions there is a risk of inappropriateness and notes there are few safeguards in effect to guarantee transparency and accountability.

The LAB examined 122 in-kind agreements from the 2008 and 2009 Wisconsin State Fairs and wrote about its findings:

“In nine instances, a formal written agreement did not exist; instead, the details of the transaction were agreed upon verbally or informally by e-mail. Further, there were inconsistencies between the number of main stage concert tickets provided to businesses and the numbers included in agreements. For example, for the 2008 fair we found that a total of 3,238 main stage concert tickets had been distributed, but documentation in the in-kind support agreements indicate that only 1,450 were to have been provided.”

Another LAB concern: the combination of in-kind support with procurement transactions may have resulted in bidding processes where all businesses may not have had an equal opportunity to participate; in other words, there may have been favoritism. The LAB offers this example:

State Fair Park provided a Milwaukee automobile dealership with storage space on the fairgrounds in 2009, in exchange for a $3,000 credit to purchase a vehicle. State Fair Park used this credit in April 2009 for the purchase of a used vehicle from the dealership. State Fair Park prepared a simplified bid document and made a down payment on the vehicle three days before completing the simplified bid. Officials indicate that State Fair Park had researched online bids before making the down payment but cannot provide supporting documentation. While this in-kind exchange was beneficial for State Fair Park, it may appear as if State Fair Park had intended to purchase a vehicle from this dealership before it obtained the other bids.”

There are problems with managers distributing State fair tickets. The LAB found that “department managers did not submit ticket request forms to the ticket office as required; ticket request forms were not available in 12 of the 22 ticket disbursements reviewed; procedures were not in place to verify the number of tickets requested to a written agreement or other supporting documentation to ensure tickets are being distributed for appropriate purposes; the spreadsheet used to track tickets distributed by managers does not include the business purpose for providing these tickets, limiting its usefulness as a monitoring tool; and accounting staff were unable to reconcile the tracking spreadsheet to the electronic ticket system for the 2008 Wisconsin State Fair. State Fair Park estimated an unreconciled difference of $18,000 remains, indicating that some tickets were likely distributed without a ticket request form.”

Improvements were made to the process, and the LAB determined there was an unreconciled difference of $1,600 remaining it reviewed the 2009 Wisconsin State Fair.

The Milwaukee Mile Racetrack: No national races are being held at the Milwaukee Mile during 2010. State Fair Park projects revenue from racing events will exceed expenditures by $80,900 for the 2010 racing season. This will be offset by track and grandstand improvements. Debt service costs related to the renovation will cost State Fair Park $1.9 million. The LAB has calculated State Fair Park will suffer a net loss on racetrack operations of nearly $2.0 million during 2010.

Wisconsin Exposition Center: The state purchased the facility during December 2009, and State Fair Park assumed ownership during May 2010, anticipating revenue will surpass expenditures during both fiscal year 2009-10 and fiscal year 2010-11.

Recommendations made by the LAB:

State Fair Park should report to the Joint Legislative Audit Committee by March 1, 2011, on steps being taken to improve controls and better monitor the use of in-kind support, steps to improve controls and better monitor the distribution of Wisconsin State Fair tickets by managers, long-term plans for managing the Milwaukee Mile racetrack, and the status of Wisconsin Exposition Center operations.

I commend the outstanding LAB for another thorough review. You can see the full audit here.

WRTL Urges Officials to Determine if UW is Violating Abortion-Funding Law


Wisconsin Right To Life (WRTL) has sent the following memo to the co-chairs of the Joint Legislative Audit Committee that I serve on, expressing concerns about the possibility that the UW Hospital and Clinics Authority Board is violating Wisconsin's abortion-funding law:

"June 7, 2010

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Time to audit UW funding of abortion training


The Wisconsin Department of Justice (DOJ) is recommending the state Legislative Audit Bureau (LAB) investigate whether
the University of Wisconsin is improperly funding abortion training.

The Associated Press reports, “Wisconsin law prohibits state agencies from paying doctors or medical facilities for performing abortions. The University 
of Wisconsin Hospital and Clinics Authority pays medical residents specializing in gynecology to train at Planned Parenthood of Wisconsin, where they can choose to take abortion training. The Alliance Defense Fund, an Arizona-based group  of Christian lawyers, sent a letter in April on behalf of Pro-Life Wisconsin to Republican Atty. Gen. J.B.  Van Hollen alleging the UW Hospital and Clinics Authority has paid nearly $60,000 over the last three years to cover residents' training at Planned Parenthood. The group claims the payments violate  the law and asked Van Hollen for a formal opinion.”

Assistant Attorney General Kevin Potter wrote a letter to the LAB May 25, 2010 that reads, in part:

“Wisconsin law provides that ‘no funds of this state or of …any agency of this state…shall be authorized for or paid to a physician or surgeon or a hospital, clinic or other medical facility for the performance  of an abortion.” Wis. Stat.20.927.  (University of Wisconsin Hospital and Clinics Authority, UWCHA) appears to be an 'agency of this state’ for purposes of Wis. Stat. 20.927, and, cannot, therefore, use its funds in violation of that provision.

Although we have not yet concluded that UWCHA has violated section 20.927, the information contained in the April 16, 2010, letter (sent from Alliance Defense Fund to Attorney General Van Hollen) does raise concerns that we believe should be brought to your attention. Because e a violation of section 20.927 is not, in and of itself, a criminal offense, the Department of Justice has limited authority to investigate the matter. The Legislative Audit Bureau, on the other hand, is charged with financial oversight of state operations to insure compliance with applicable law.”

Assistant AG Potter then suggests the LAB examine the following: Records reflecting the activities performed by UWCHA residents assigned to Planned Parenthood facilities or other facilities abortions are performed; a copy of all contracts, agreements, memoranda of understanding, or similar documents between UWCHA and any organization that performs abortions or operates a facility that performs abortions; and internal UWCHA records pertinent to this matter.

As a member of the Joint Legislative Audit Committee, I wholeheartedly support the DOJ request 
for this audit.

Read the letter from the DOJ to the LAB 
and the Associated Press article.

Audit: Emergency Management


The Legislative Audit Bureau (LAB) has completed a review of Wisconsin’s Emergency Management, finding that the Department of Homeland security awarded the state $318.5 million from fiscal year (FY) 2004-5 through FY 2008-09.

Federal funding can be used to prepare for, prevent, respond to, and recover from terrorism and other disasters. Most of the federal funding Wisconsin received from fiscal year (FY) 2004-5 through FY 2008-09 was spent on equipment such as radios, security
cameras, and emergency medical supplies. The LAB found that Wisconsin used its appropriated funds properly under federal rules.

However, the LAB has concerns about communications and preparing for emergencies in Wisconsin.

The LAB reports the state does not have “an interoperable communications system that would allow all emergency responders statewide to communicate with one another during a large-scale emergency.” Four regional interoperable programs have been created.  The Office of Justice Assistance (OJA) that disburses most of the Homeland Security funding the state receives is establishing a statewide interoperability plan with the anticipation that a statewide system could be operating during 2011. Initiation radio coverage will be provided to 95 percent of the state, but, as the LAB reports, “only for in-vehicle radios with strong antenna ranges.”  That means many local units of government will need to buy equipment capable of gaining access to the system. The costs are unknown. 

Local governments contacted by the LAB worry that the system depends on the VHF band that does not penetrate buildings as well as other radio bands and can be difficult to use in urban areas with heavy radio traffic. The portable radios used by emergency responders lack strong antenna ranges and may not be able to gain access to the system from all locations. Since costs are unknown, local government officials worry the future cost will be significant.

Another LAB concern relates to planning for emergencies. Wisconsin Emergency Management (WEM) has yet to complete the Wisconsin Emergency Reponses Plan and share it with all county and tribal emergency management departments. WEM has also failed to establish an electronic system for tracking all emergency management resources statewide that could be beneficial during emergencies involving multiple counties. WEM intends to implement the system sometime this year.

The LAB also reports:

“While the State and local governments have made progress in improving some aspects of emergency preparedness, responses to two recent and significant natural disasters indicate that additional efforts are needed, particularly to achieve interoperable communications among all responders to large emergencies.”

Here are the details about those two natural disasters:

“In February 2008, a severe winter storm stranded hundreds of
motorists for more than 12 hours on Interstate 90 in Dane and Rock counties. The Adjutant General’s March 2008 written assessment of the response noted that county staff and Wisconsin National Guard units were unable to communicate with one another during the storm, state emergency management officials lacked an accurate and timely assessment of the incident’s magnitude, and the public was not adequately informed about the ongoing incident.

In June 2008, flooding resulted in the declaration of a state of emergency in 30 counties in southern Wisconsin. WEM’s internal post-incident report noted that improved communication was

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More reasons to audit MA


The Milwaukee Journal Sentinel
reports a crackdown on child-care fraud has saved the state $45 million.

The Racine Journal Times says fraud is rampant in the state’s Food Shares program.

Imagine the amount of fraud that could be uncovered at a savings to taxpayers if an audit was conducted of the state’s $6 billion Medical Assistance program.

Audit: Wisconsin Lottery


State law requires an audit of the Wisconsin Lottery. The nonpartisan Wisconsin Legislative Audit Bureau (LAB) has finished its financial review and found that the Wisconsin Lottery fully complied with statutory spending limits pertaining to prizes, advertising, compensating retailers, and operating expenses.

The LAB examined financial statements for fiscal year (FY) 2008-09 and FY 2007-08. Here are some of the LAB’s findings:

During FY 2008-09, there were $473.4 million in lottery ticket sales, constituting a 4.3 percent decline from the prior year, or $21.3 million in sales, primarily due to the economy.

Administrative expenses were $344.5 million during FY 2008-09, 2.5 percent less than during FY 2007-08.  Note the decline in administrative costs was lower than the decline in ticket sales. The LAB explains, “Some expenses do not fluctuate with sales. Since FY 2007-08, informational advertising expenses have been permitted to total no more than $7.5 million annually, which is an increase of $2.9 million from prior years.”

The lottery was designed, in part, to provide property tax relief. During FY 2008-09, property tax relief totaled $132.4 million.

Last October, the Department of Administration and the Legislature’s Joint Finance Committee appropriated $130.2 million in lottery proceeds for property tax relief during FY 2009-10 with this breakdown:

 $115.5 million - the Lottery and Gaming Tax Credit

 $14.7 million -   the Farmland Tax Relief Credit

Management of the Wisconsin Lottery submitted its own report of its financial performance as part of the audit. Lottery Management writes:

“The conventional wisdom is that lotteries are recession-proof: sales will increase
during an economic downturn as people look to change their fortunes overnight. However, the current economic recession has made a myth of the conventional wisdom, as Wisconsin Lottery sales have been affected, although not as much as other sectors of the economy. While not recession-proof, the Wisconsin Lottery appears to be recession-resistant; its sales outlook and its ability to generate funds for property tax relief programs remain strong.”

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Another audit request being stonewalled


As a member of the Legislative Joint Committee on Audit, I have been frustrated at the continuing refusal of the committee co-chairs to schedule an audit of the massive Medical Assistance (MA) program.

Here is another deserving audit that is being stonewalled. The Marshfield News-Herald reports, “
A Gannett Wisconsin Media analysis in March found that only 14 of 98 state agencies, schools and boards listed on the Contract Sunshine site had posted any contract information, as required by a 2006 law. The site is supposed to disclose to the public all spending on contracts worth $10,000 or more. The state Government Accountability Board, which oversees the site, has cited technical issues, a lack of resources and limited enforcement power as reasons the site was missing information. On April 30, Reid Magney, a spokesman for the board, told Gannett the agency actively is working to improve the site.”

More than six weeks ago, my colleague on the Legislative Joint Audit Committee, state Senator Rob Cowles (R-Allouez) requested an audit of the website. The Marshfield News-Herald reports, “As recently as April 28, lawmakers leading the state’s Legislative Joint Audit Committee declined to bring the request to the table for consideration.”

I found this item in the article revealing. The paper writes, “(Committee co-chair, Representative Peter) Barca said the state does not have the resources to conduct every requested audit.”
The state Legislative Audit Bureau has published a scope statement for an audit of MA. That means the Bureau has the wherewithal to conduct a thorough MA review. Yet the Legislative Audit Committee co-chairs refuse to take action.

There needs to be an MA audit and an audit of the Contract Sunshine website.

Read more in the Marshfield News Herald.

More fraud at WI Shares demonstrates need for audit


Investigative reporters at the Milwaukee Journal Sentinel continue to unearth additional scandal and fraud in Wisconsin social service programs. In their latest expose, the newspaper reports:

A Menomonee Falls couple whose child-care center has been under criminal investigation for suspected fraud since at least January continued to collect money from the state's taxpayer-supported Wisconsin Shares program - even getting an $18,000 check that was issued the day after the FBI raided the center.

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Audit: Medical Education, Research, and Public Health Grants


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Audit: WHEFA Executive Director’s compensation


Once again, the nonpartisan Legislative Audit Bureau (LAB) has done an outstanding job uncovering questionable practices in state government, this time following a limited-scope review of the Wisconsin Health and Educational Facilities Authority (WHEFA).

Started during 1979, WHEFA’s primary function is to assist tax-exempt healthcare and certain educational institutions finance capital projects. Revenue bonds are issued on their behalf. 

WHEFA does not have taxing authority and does not receive state appropriations.  Governed by a seven-member board, WHEFA has four full-time employees that receive salaries and fringe benefits, funded by annual fees paid by borrowing institutions.

The LAB expressed concerns about the compensation of WHEFA’S Executive Director. State law restricts the salaries of its employees to specific executive salary groups that are outlined in state statutes. Under statutory limits, the Executive Director’s salary may not exceed the maximum for salary group 4 that is currently $116,001. The salaries of the three other WHEFA employees may not exceed the maximum for salary group 3 that is currently $107,407.

The Executive Director and other WHEFA employees are allowed to use unused vacation and sick leave by carrying the leave forward, receiving a cash payment for a portion of it, or depositing its cash value into the Wisconsin Deferred Compensation Program. While employees have opted to receive cash payment for unused leave, the LAB reports the cash value of the Executive Director’s unused leave has been deposited into his Wisconsin Deferred Compensation Program account.

The LAB discovered that during 2008, WHEFA deposited $19,600 in Executive Director Larry Nines’ deferred compensation account. That represents the cash value of an estimated 44 days of unused leave. Nines’ total compensation reported to the Wisconsin Retirement System was $135,612, an amount that is 16.9 percent greater than the salary limit for his position specified by state law.  Over the past 10 years, the LAB calculates that approximately $162,300 in payments for unused leave have been deposited into the Executive Director’s deferred compensation account.

Upon questioning the policy, The LAB was told by the WHEFA Board Chair that he believes the Executive Director’s compensation package complies with state law because WHEFA’s legal counsel advises the statutory limit addresses only salary, not overall compensation. The Board Chair also asserts that Nines’ compensation package was adopted in order to retain the expertise of staff.

The LAB counters, “However, the Board’s actions have had the effect of circumventing the statutory salary limit” and offers choices the Legislature may wish to contemplate about this issue.

The LAB writes, “If it agrees that the special expertise and experience of the Executive Director warrant a higher salary level, it could amend the Wisconsin statutes and assign the salary of the Executive Director to a higher-paying salary group. However, if it believes the current salary limit is reasonable in light of WHEFA’s staff size and responsibilities, it could direct the WHEFA Board to comply with the executive salary limit established” under state statutes.

I commend the LAB for another outstanding analysis that is of great benefit to lawmakers and the taxpayers they represent.

Audit: Virtual Schools



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There needs to be an audit of the Medical Assistance program


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Audit Committee hears more problems about Wisconsin Shares


The more the state delves into the rampant fraud associated with Wisconsin Shares, the state child care program, the more problems we discover that beg serious questions.

The Joint Legislative Audit Committee that I serve as a member conducted another public hearing this week about the Legislative Audit Bureau's findings about Wisconsin Shares.  The Legislative Audit Bureau (LAB) has done its usual outstanding work in uncovering important information that can and should serve to fix Wisconsin Shares and make the program successful.

Kate Wade of the LAB presented a litany of data about Wisconsin Shares at today’s hearing that continues to raise questions.

Caseloads per specialists have ranged from a low of 23 to a high of 170.  The National Association for the Education of Young Children recommends a caseload of 75 per specialist.

The pattern is that the vast majority of child care applications for licensed and certified providers are approved. During fiscal year 2009, 706 out of 753 licensed providers were approved and 915 of 922 certified providers were approved.

There were 6300 routine visits made to provider facilities during fiscal year 2009, 1300 complaint investigations, and another 1300 visits to see if violations were being addressed appropriately.

In Milwaukee County, 168 licensed facilities had five or more unsuccessful visit attempts during a five-year period as opposed to 13 in the rest of the state. There were 102 unsuccessful visit attempts during a five-year period at certified facilities in Milwaukee County with 118 unsuccessful visit attempts at all other certified facilities in the state. An unsuccessful visit means access to the facility could not be attained. Many times the door isn’t answered. State statutes do not specifically outline a required frequency of visits.

Wade told the committee 617 facilities were overdue for visits.

o distinction is made about the severity of citations made during regulatory visits. A startling statistic Wade told the committee that 30 regulatory visits during a three-year period yielded 40 or more citations. There are huge regional variations. Most of the violations occur in southeastern Wisconsin.

Not all observed violations were reported, recorded, or cited. There were many cases of failure to cite payment errors.

The total number of sanctions has increased over the past five years from 475-976. Sanctions are noted under broad categories as opposed to specific administrative code violations. Licenses are normally revoked for record-keeping errors.

The LAB found eight matches of felons working at facilities with another 317 individuals that had convictions that needed to be reviewed to determine if the individuals posed a danger.

Many facilities are overdue for background checks.

The LAB recommends a severity index be developed, greater documentation be made of unsuccessful regulatory visits, and that tribal facilities fulfill their child care obligations.

Department of Children and Families (DCF) Secretary Reggie Bicha then addressed the committee with a lengthy presentation claiming the department has made “sweeping reforms” and great progress. Secretary Bicha admits he’s not satisfied and should not be.

For example, Secretary Bicha said there have been 124 calls to a special fraud hotline. One of the calls was from a worker at a facility that wanted to know why that particular facility wasn’t suspended since she was the only person working there. I asked Secretary Bicha what his agency did about the hotline call. He said an investigation is still underway and he could not comment further and I understand.

Secretary Bicha said payments have been suspended to 137 providers. Overpayments of $3.5 million have been identified during the past year. Criminal charges have been pursued in two cases during that time.

During my questioning of Secretary Bicha, I noted that the National Association of Child Care Resource & Referral Agencies (NACCRRA) ranks Wisconsin #6 in the nation for rules and regulations and #41 for oversight. He disputed the ranking for oversight of rules and regulations saying NACCRRA miscalculated.

I also asked Secretary Bicha what he considers a serious number of violations. He replied it depends on the type of violation, the severity, remember, there is not a severity index as recommended by the LAB, the amount of violations over time, and the measures taken by the provider to fix the violations.

How could the department have missed so many problems and what was being done to address those issues? Secretary Bicha said those decisions are judgment calls on the part of licensers. The actions taken range from a written reprimand to an immediate suspension.

I suggested that weighting the citations would provide valuable information to parents seeking child care. Resources should be focused on pinpointing the severity of violations.

Clearly more problems are bubbling to the surface meaning Wisconsin Shares needs further scrutiny and possibly more remedies from the state Legislature.

DCF is scheduled to provide a report about the status of Wisconsin Shares this June.

Ongoing problems require audit of BadgerCare

Audits, Taxes

Despite limited resources and continuing serious problems with delivery of social service program benefits, the state is surging forward with plans to expand existing programs like BadgerCare. Before the state goes any further, I am formally asking the co-chairpersons of the Joint Committee on Audit that I serve on to request that the Legislative Audit Bureau conduct a full review of the BadgerCare program.

Where there’s smoke, there’s fire. We are still trying to figure out all the things that went wrong with Wisconsin Shares, and we still haven’t learned our lessons from the food stamp debacle a few years ago.  Writer George Santayana is most famous for his quote, “Those who cannot remember the past are condemned to repeat it.” Santayana’s historic words are especially true applied to recent controversies in Wisconsin health programs.

Warning signals that could and should have prevented scandals of today were apparent years ago. During 2003, the Audit Bureau reported that “Wisconsin’s food stamp benefit payment error rate…has been at an historical high of 4.4 percentage points above the national average.  Since FFY 1993-94, the federal government has imposed a total of $10.6 million in sanctions as a result of Wisconsin’s high error rates. Wisconsin had the third-worst error rate in the nation during these two years (FFY 2000-01 and 2001-02).  Only California and Michigan had higher error rates than Wisconsin.” 

Serious errors occurred in the food stamp program, followed by fraud in Wisconsin Shares. A Milwaukee Journal Sentinel investigation turned up astounding levels of fraud in Wisconsin Shares, identifying nearly $750,000 in suspicious child care disbursements. Since then, the Audit Bureau has estimated that fraud and errors cost Wisconsin taxpayers $16.7 million to $18.5 million last year alone. 

Problems continue. Earlier this year, the state created BadgerCare Plus Core, an extension of the BadgerCare Plus program to include adults that don't have children. The state Senate Health Committee that I serve on was informed the waiting list for BadgerCare Plus Core has ballooned to about 7,000 people. The earliest the waiting list applicants would be eligible for insurance would be March 2010 and by then the waiting list could grow to over 20,000.

The Milwaukee Journal Sentinel reports a flood of applicants to BadgerCare  Plus Core, about 600-700 has caused backlogs for the new food stamp program, FoodShare  resulting in thousands of people waiting months for benefits.  The newspaper reports the US Department of Agriculture views Wisconsin’s backlog of cases among the worst in the country. Failure to process applications and distribute or deny benefits in a timely manner could mean federal sanctions issued against the state.

Wisconsin Department of Health Services (DHS) Secretary Karen Timberlake has supplied data reported by the Journal Sentinel that the state received more than 46,000 applications for FoodShare from June 15 to October 19, 2009. Over 29,000 applicants waited more than 30 days to either obtain a debit card to purchase food or have their enrollment rejected. Wait times over the telephone to receive information about FoodShare applications are lasting over an hour.

There’s more. At a meeting last month of the state Senate Health Committee that I serve on, DHS announced three options being explored to expand BadgerCare Basic.

Option 1 covers emergency room (ER) visits and applies a Medicaid standard plan cost sharing. Generic drugs have a $3 copayment per script. Total cost: $100.05.

Option 2 limits inpatient hospital to two visits. ER visits are unlimited. There is a $15 copayment for outpatient non-ER services and professional services and $60 for ER visits. Inpatient hospital has a $100 co-payment per visit and generic drugs have a $5 copayment per script. Total cost: $131.66

Option 3 has a $7,500 deductible on all hospital services including ER visits. Once the deductible is reached, all hospital services are covered generic drugs carry a $5 copayment per script, and modest Medicaid standard plan cost sharing applies. Total cost: $106.89.

No matter the option (s) chosen by DHS, problems are sure to follow. Each option would result in another expansion of membership, pressuring an already strained system. Option 2 with its unlimited ER visits would attract applicants in droves. The high deductible provision arguably makes Option 3 the most cost-effective; however an unaffordable increase in members is likely.

The fiscally irresponsible pattern starts with the mantra that people need coverage followed by the argument that people are under-covered. Programs keep getting bloated, never getting smaller. Government falls further and further behind in its attempts to keep promises and then makes the injudicious decision to make more promises, create more programs, and spend more money it does
 not have.

The options considered by DHS are even more imprudent when the 2009-11 state budget is factored in. The governor and legislative Democrats cut about $600 million from Medical Assistance. DHS continues to struggle with making up for the cut. Their answer is to develop more programs the state can’t afford or administer appropriately. To draft and then seriously consider such options given our current fiscal and human service delivery problems is mind-boggling.

In a letter I sent to Joint Audit Committee co-chairs and the state Auditor requesting an audit of the BadgerCare program, I wrote, “My intent is not to cast blame, or to scapegoat, it is to have the Audit Bureau identify inefficiencies or problems that the Department of Health Services can utilize to assist more individuals properly and effectively. A BadgerCare audit by the Wisconsin Legislative Audit Bureau is preventative medicine to ensure the state does not repeat previous scandals. The outstanding Audit Bureau can make sure the state does not.”

e owe it to the taxpayers to ensure their money is being spent as wisely and efficiently as possible.

Audit: Child Care Regulation


During January 2009, as a member of the Joint Legislative Audit Committee, I requested an audit be conducted of Wisconsin Shares, the child care subsidy program for low-income working families and participants in the welfare-to-work program, W-2. The following month, the committee directed the Legislative Audit Bureau (LAB) to review Wisconsin Shares.  The findings by LAB are startling.

As I reported in previous blogs, during June 2009, the LAB discovered that $22.5 million in improper Wisconsin Shares subsidy payments were made during 2008. During September, the LAB pinpointed four registered sex offenders who reported the same addresses as child care providers.

The LAB has completed its final phase of its review of Wisconsin Shares and released its report today. As of June 2009, about two-thirds of all licensed child care facilities and one-half of all certified facilities participated in Wisconsin Shares.

The audit examined background checks, comparing names, dates of birth, and social security numbers of all operators of licensed and certified facilities regulated as of June 30, 2009, with criminal records of felony and misdemeanor convictions.

“We found eight instances in which convicted felons or individuals who had abused or neglected children were employed by or reported living in child care facilities. When we shared our findings with DCF, it investigated each case, and DCF believes that no children have been harmed,” the LAB writes. Details about the eight matches from the LAB report include the following:

1) A household member residing at a licensed family facility in Milwaukee County was convicted of felony battery in May 1995. 

2) A household member residing at a certified facility in Racine County was convicted of felony battery in January 2004. 

3) A household member residing at a certified facility in Kenosha County was convicted of felony battery in June 1995. 

4) A household member residing at a licensed family facility in Lincoln County had a substantiated finding of child neglect in January 2009. 

5) A household member residing at a licensed family facility in Green Lake County had two substantiated findings of child abuse in August and October 2006. 

6)  An employee of a licensed family facility in Racine County had a substantiated finding of child abuse in July 2004.

7) A household member residing in a certified facility in Waukesha County had a substantiated finding of child abuse in June 2008.  

8) A  household member residing at a certified facility in Dane County had a substantiated finding of child abuse in March 2009.

It is astounding to learn that children were placed in high risk situations. Thank goodness they were unharmed.

The audit also determined 317 individuals have prior criminal offenses that require further review. The LAB reports many facilities are having difficulty with stricter background checks signed into law during November 2009, writing, “Operators of 184 licensed facilities and 20 certified facilities were overdue for criminal background checks as of June 30, 2009. Operators of licensed facilities in Milwaukee County were 42.9 percent of those overdue.”

Also problematic is that DCF fails to keep a database of child care workers. When the LAB tried to match employee records with criminal records and with findings of child abuse or neglect, the LAB “could do so for less than 3.0 percent of the estimated 20,000 individuals employed in licensed or certified child care facilities statewide.”

Licensing and certification staff are required during site visits to child care facilities to issue written citations when child care violations are identified. The citations are then to be entered into statewide databases administered by the Department of Children and Families (DCF).

The LAB reports, “DCF staff conducted 28,549 regulatory visits to licensed facilities in the past three fiscal years. In 37.6 percent of these visits, no citations were issued. However, 29 facilities—including 27 in Milwaukee County—received more than 40 citations in a single visit……some county and tribal regulatory staff are not citing or recording all violations, despite contractual requirements to do so.”

As a result of these discrepancies, the LAB notes, “DCF cannot effectively use information maintained in statewide licensing and certification databases to target
higher-risk facilities for increased regulatory attention. Health and safety also may be compromised if regulatory staff cannot gain access to child care facilities.”

The LAB found problems with daily attendance records for Wisconsin Shares:

“Facilities cited for attendance record violations could reasonably be expected to receive notice of a payment error and to make repayments. However, in a random sample of 100 facilities with attendance record citations, we found that 42.0 percent of the licensed facilities and 82.0 percent of the certified facilities had not been assessed for payment errors.”

Significant changes were made this year to improve the detection of fraud in Wisconsin Shares and the LAB advises those methods be continued during 2010 and watched closely by the Legislature. The LAB also recommends DCF report to the Joint Legislative Audit Committee by June 30, 2010, on its work to:

  • Improve the timeliness of regulatory visits to higher-risk facilities
  • Establish a severity index for violations
  • Document unsuccessful attempted regulatory visits to licensed facilities
  • Ensure that county and tribal agencies document their regulatory sanctions as required by contract
  • Address the most serious or persistent violations of child care rules
  • Target facilities that have been sanctioned most frequently
  • Improve timeliness of background checks
  • Ensure that all necessary background checks are completed
  • Address the needs of facilities to gain information about findings of child abuse or neglect in order to complete employee background checks
  • Strengthen fraud prevention and detection efforts in Wisconsin Shares, especially in Milwaukee County.

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Audit: State Life Insurance Fund


For close to 100 years, the Wisconsin State Life Insurance Fund has been offering low-cost individual life insurance to Wisconsin residents. The Fund is operated by the Office of the Commissioner of Insurance (OCI).

The Legislative Audit Bureau (LAB) completed a review of the Fund and found internal control weaknesses of concern. The audit focused on the calendar years ending December 31, 2008, 2007, 2006, and 2005.

Financial statements for he Fund are prepared in compliance with provisions required by the National Association of Insurance Commissioners (NAIC). The guidelines, the LAB concedes are complex and the deadline for submitting reports is tight.

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Audit: Universal Service Fund


’s Legislative Audit Bureau (LAB) has uncovered fiscal mismanagement of the Universal Service Fund (USF), created to ensure delivery of essential telecommunications services to Wisconsin consumers. The LAB points a direct finger at the state Department of Administration (DOA) for problems it found.

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Audit: Charges for Cable TV service


Following the enactment of a new state law aimed at providing uniform regulation of cable video service, the Legislative Audit Bureau (LAB) conducted a small-scale analysis to determine the effect, if any the new law had on rates and level of service. The law, 2007 Wisconsin Act 42 took effect during January 2008.

Under the law, a state-level franchising process for cable television providers was established. The law includes both cable and certain telecommunications companies. Prior to the new law, cable television providers negotiated franchise agreements with municipalities and paid them franchise fees. Providers apply to the Department of
Financial Institutions (DFI) for a single state-level franchise under the new law. Similar laws are in place in 27 other states.

The LAB looked at the monthly charges for basic and expanded basic service for 10 providers in 17 Wisconsin during July 2007 and July 2009. Data was supplied to the LAB by the providers, including Milwaukee.

Over that two-year period, the LAB reports, “Charges for basic service increased an average of 21.2 percent, and charges for expanded basic service increased an average of 11.5 percent. The reported data do not suggest that competition has had a substantial effect in reducing either basic or expanded basic video service charges or in slowing their rates of growth during the period we reviewed.”

From the LAB report:

Charges for Basic Service


AT & T
Basic service was not offered during July 2007

During July 2009, AT & T had a monthly charge of $19.00 and 23 channels.

Time Warner Entertainment Company, LP

July 2007 data

Monthly Charge - $13.50

Number of Channels- 29

July 2009 data

Monthly Charge- $15.73

Number of Channels- 29

Charges for Expanded Basic Service


AT & T

July 2007 data

Monthly Charge - $44.00

Number of Channels- 50

July 2009 data

Monthly Charge- $ 49.00

Number of Channels- 70

Time Warner Entertainment Company, LP

July 2007 data

Monthly Charge - $48.15

Number of Channels- 78

July 2009 data

Monthly Charge- $55.99

Number of Channels- 78

The LAB warns that its findings must be regarded with caution due to the “variations in the number and types of channels that different providers offer as basic and expanded basic service, as well as variations in individual providers’ charges for the same services because of promotional rates and the increasingly common practice of ‘bundling’ video, Internet, and telephone services and charging less than their standard rate for each bundled component.”

Most importantly, little time has occurred since the new law took effect. The LAB says it is difficult to determine if the rate trends it discovered will continue.

You can read the LAB report here.

I want an audit of BadgerCare


I have released the following news release about BadgerCare:

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The Wisconsin Legislative Audit Bureau is priceless


Thank goodness for the
Wisconsin Legislative Audit Bureau.

The Legislative Audit Bureau (LAB) is a non-partisan agency that assists the state Legislature in keeping a thorough review and oversight of state operations through objective analyses of state programs and expenditures. Audit data is compiled and presented along with recommendations to the Legislature.

One of the latest find
s by the LAB shows the cost of the state’s plan to consolidate state computer services has far surpassed its original estimate.

During April 2004, the state Department of Administration (DOA) contracted with a South Bend, Indiana accounting and consulting firm, Crowe Chizek to facilitate a project to consolidate computer servers. Seven months later, Crowe Chizek informed the DOA the consolidation project would cost approximately $12.8 million and would reduce server maintenance costs by as much as 20 percent.

Crowe Chizek’s projections were far off-base as the LAB uncovered. The DOA spent $90.9 million on server consolidation through June 2009. As the LAB reports, that is “more than seven times the initial cost estimate of $12.8 million to implement the project. Although DOA originally anticipated that it would complete server consolidation by May 2006, consolidation has been hindered by planning that did not adequately account for the project’s complexity. DOA now estimates that server consolidation will be completed in June 2010, at a total cost of $110.0 million.”

Any savings and efficiencies that may have been attained through consolidation according to the LAB have been offset by payments of $15.2 million to four contractors that were brought on to advise the state about how to operate more efficiently. The LAB reports, “Continued legislative monitoring of ongoing consolidation efforts is warranted.”

The LAB’s latest audit also discovered that while the Legislature authorized DOA to sell $36.0 million in surplus property during the 2005-07 biennium and $40.0 million during the 2007-09 biennium, only $9.6 million was sold during that four-year period.

This review of the consolidation of administrative functions is the latest example of how invaluable the LAB that has been serving since 1965 is to policymakers and the taxpayers they represent. Other audits conducted during 2009 have found the following:

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Audit finds matching addresses of sex offenders and child care providers


As a member of the Joint legislative Audit Committee, I received a letter from State Auditor Janice Mueller about the ongoing review of Wisconsin Shares, the state child care program. Here is an excerpt from the letter:

“Our evaluation of the overall effectiveness of child care regulation is ongoing, but we are writing at this time to disclose a serious problem we discovered during the course of our work.

In July 2009, we began to compare the addresses of registered sex offenders to addresses for the sites at which all licensed and certified child care providers care for children. We subsequently found four matches. DCF (Department of Children and Families)  and the Department of Corrections (DOC), which maintains
Wisconsin’s Sex Offender Registry, were notified immediately and have confirmed the accuracy of the matches we found in electronic records. They are continuing to follow up and at this point believe that no child was harmed as a result of the situations we identified. However, we could not independently determine whether registered sex offenders had ever been present while care was being provided, and unless procedures are implemented to ensure similar situations do not occur in the future, such a potential will exist.”

The Legislative Audit Bureau (LAB) reports the following about the four matches it found:

  • The child care site address of a licensed family provider in Milwaukee County, which is her home address, matched the address of an adult convicted of third-degree sexual assault. DOC indicated to us that the provider and the offender had resided in the same building but in different units, and the offender’s whereabouts are now unknown. Milwaukee County currently authorizes the provider to care for 22 children in the Wisconsin Shares program, and she received $165,600 in program subsidy payments in 2008.

  • The child care site address of another licensed family provider in Milwaukee County, which is not her home address, matched the address of an offender adjudicated as a juvenile for second-degree sexual assault of a child. DOC has reported that the whereabouts of this offender are unknown. Milwaukee County currently authorizes the provider to care for 20 children in the Wisconsin Shares program, and she received $163,500 in program subsidy payments in 2008.

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State Audit: State Purchasing Cards


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Audit Bureau continues project on School Choice Program


State law requires that the Legislative Audit Bureau (LAB) review test scores of pupils enrolled in the Milwaukee Parental Choice Program. Privately funded researchers working on a five-year study of Choice and Milwaukee Public Schools supplied the data to the LAB.

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Audit Committee members request hearings on state travel


As a member of the Legislature’s Joint Audit Committee, I have joined colleagues asking the committee chairs to conduct hearings into the travel policies for elected officials and state employees. Our request follows a Milwaukee Journal Sentinel report  that Governor Doyle and his staff “failed to properly account for 145 travel expenses over two years.”

In a letter to the co-chairs, we write:

“We want to believe that 145 failures to abide by travel policies over the course of two years is neither a pattern nor a cause for concern.

It is our hope that we can gain a fuller understanding of the frequency of travel, the procurement of travel-related services, and the ultimate documentation and justification of said travel.”

You can read our letter here. 

Meanwhile, Governor Doyle, whose expenses according to the Journal Sentinel included “a $5,200 business-class flight to Ireland and a $654-a-night stay in a London hotel” told the Appleton Post-Crescent editorial board, “
You better pack a lunch when you travel with me.”

The Journal Sentinel defended its reporting about the governor’s travel deficiencies. Read more in the
Appleton Post-Crescent.

UPDATE: State Fair Park Audit


In my blog about the Legislative Audit Bureau (LAB) review of State Fair Park
I wrote:

“One of the key areas of financial concern is State Fair Park’s racetrack, the Milwaukee Mile.

During February 2009, State Fair Park ended its license agreement with Milwaukee Mile Holdings that it had since January 2006. A new agreement was entered into with Wisconsin Motorsports. The state Department of Justice intends to file a lawsuit on behalf of State Fair Park to recover at least $2.7 million in license fees, as required by the terms of the license agreement with Milwaukee Mile Holdings. 

State Fair Park entered into a new agreement with Wisconsin Motorsports in order to continue racing during 2009. The agreement stipulates a fixed license fee of $15,000 per month, or $180,000 per year. The fee is far less than the annual license fee of $1.0 million that was required under the most recent agreement with Milwaukee Mile Holdings.

The LAB writes, ‘State Fair Park will continue to incur significant costs. We estimate State Fair Park will be responsible for $1.8 million in Milwaukee Mile costs in 2009, less license fees it collects from the new promoter. Past promoters have had difficulty in operating the racetrack profitably. State Fair Park anticipates the new promoter will incur an operating loss in 2009, raising questions about the viability of racing at the Milwaukee Mile racetrack’

There are rumblings that one race is already in jeopardy for 2010. The Indianapolis Star is reporting the Indy Racing League (IRL) is still attempting to recoup money from its races held at State Fair Park May 30 and May 31, 2009. The promoter of the IRL races also owes money to NASCAR for races held June 20, 2009
at the Milwaukee Mile.

The newspaper reports there is a possibility Milwaukee will be taken off the IRL schedule next year.

Here is the story.

The Milwaukee Journal Sentinel has an update.

State Audit: Wisconsin State Fair Park


The required annual audit of the Wisconsin State Fair Park has been completed by the Legislative Audit Bureau (LAB) and it shows continued financial struggles at the Park.

As of June 30, 2008, the LAB found State Fair Park’s accumulated cash deficit was $8.6 million.

One of the key areas of financial concern is State Fair Park’s racetrack, the Milwaukee Mile.

During February 2009, State Fair Park ended its license agreement with Milwaukee Mile Holdings that it had since January 2006. A new agreement was entered into with Wisconsin Motorsports. The state Department of Justice intends to file a lawsuit on behalf of State Fair Park to recover at least $2.7 million in license fees, as required by the terms of the license agreement with Milwaukee Mile Holdings. 

State Fair Park entered into a new agreement with Wisconsin Motorsports in order to continue racing during 2009. The agreement stipulates a fixed license fee of $15,000 per month, or $180,000 per year. The fee is far less than the annual license fee of $1.0 million that was required
under the most recent agreement with Milwaukee Mile Holdings.

The LAB writes, “State Fair Park will continue to incur significant costs. We estimate State Fair Park will be responsible for $1.8 million in Milwaukee Mile costs in 2009, less license fees it collects from the new promoter. Past promoters have had difficulty in operating the racetrack profitably. State Fair Park anticipates the new promoter will incur an operating loss in 2009, raising questions about the viability of racing at the Milwaukee Mile racetrack.”

The LAB also uncovered that, “Interest earnings on proceeds from the sale of the Pettit Center have been less than the amounts expected, which may create an additional liability for State Fair Park starting in Fiscal Year 2012-13.”

The Wisconsin Exposition center continues to have problems. The LAB writes, “The future financial stability of the Wisconsin Exposition Center warrants close attention. The Exposition Center has accumulated a deficit of $3.0 million through calendar year 2007. Based on unaudited data, the deficit increased to $4.3 million as of December 31, 2008.”

The LAB also examined conflict of interest concerns that it wrote about in the 2008 audit of State Fair Park. New policies are in effect for agricultural competitions, rules, and selection of judges. The Agriculture Director of State Fair Park may not own any animal showing at the Wisconsin State Fair, may not reference the State Fair when selling any cattle or the embryos and progeny of cattle, and may not conduct outside consulting related to the fair. Anyone purchasing cattle
presentation and preparation services from the Agriculture Director’s business is prohibited from showing animals at the Fair.

The LAB recommends the State Fair Park continue to review its rules and policies for competitions and the criteria for selecting judges, develop a process to examine Wisconsin Motorsports’ financial data and report to the Joint Legislative Audit Committee by March 1, 2010, on how to address the revenue shortfall from changing racetrack promoters, and report to the Joint Legislative Audit Committee by March 1, 2010, on its financial relationship with the Pettit Center and the Wisconsin Exposition Center.

I commend the LAB for another outstanding review. You can see the full audit report

Audit finds major problems with state child care program


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Audit: Local Government Property Insurance Fund


The Legislative Audit Bureau (LAB) has completed a statutorily-required review of the Local Government Property Insurance Fund. The fund provides property insurance to counties, towns, villages, school districts, and other local units of government and is operated by the Office of the Commissioner of Insurance (OCI).

During June 2008, the Property Fund insured 1,124 local units of government with insured property valued at $45.5 billion. The total number of governmental units insured has dropped from 1160 during 2005 to 1124 during 2008. Even so, the value of insurance continues to increase due to inflationary increases in the property base and of new construction.

As of March 31, 2009, OCI reports a surplus balance of $40.0 million. There have been steady surplus increases since fiscal year 2003-04 due to premium rate increases. Factor in fewer claims than had been anticipated and the Property Fund started to reduce rates July 1, 2005. However, during the next three years, the fund had its highest claims because of numerous weather-related episodes. Total claims were $18.4 million in fiscal year 2005-06, $23.3 million in fiscal year 2006-07, and $24.0 million in fiscal year 2007-08.

The LAB asserts that monitoring the status of the surplus is critical:

“The larger the surplus, the greater the assurance that sufficient funds will be available to pay claims. The surplus may also help to keep premium rates stable and to ensure
that reinsurance is available and affordable. However, too large a surplus balance may indicate the premium rates are too high, and the Property Fund must balance its need for an adequate surplus with local governments’ needs for reasonable premium rates, especially as their financial resources are shrinking.”

The LAB recommends that OCI continue monitoring the surplus balance so that it remains proper, especially considering the tough economic times local units of government currently face.

The LAB also discovered during its review that OCI was charging appropriations based on the purchase and implementation of a new computer system to manage the Property Fund during 2004. OCI was not charging costs based on a consistent methodology. The LAB recommends the OCI establish and keep records of a methodology for charging costs to its administration and operations appropriations and obtain the proper authorization from the Legislature if large, one-time purchases are made, to ensure appropriate allocation of costs.

Once again, I commend the LAB for an outstanding review. You can see the full audit report here. 

State Budget Watch: The auditors

Audits, State budget

I have long admired and respected the outstanding work of the Legislative Audit Bureau (LAB) under the direction of Jan Mueller. 

The LAB, like auditors around the country in other states, faces budget cuts. Governor Doyle’s proposed 2009-11 state budget calls for a one percent cut in the LAB. However, as our state budget deficit gets bigger, so, too might cuts in state agencies like the LAB.

Some perspective along with a warning is in order. The state budget hole is huge, demanding that spending cuts be made. There are few, if any sacred cows. However, the quality and value of the LAB must not be overlooked.

The LAB meticulously, diligently, thoroughly, effectively carries out its task of finding waste and fraud. The bureau’s work is extremely helpful to lawmakers in deciding what programs deserve more or less funding. Serving on the Legislative Audit Committee, I know firsthand how invaluable the LAB is to state government and to state taxpayers.

Current budget woes in every state pose a dilemma for budget cutters when it comes to auditors. How far do you wield the budget axe on the very people utilized to help save money? It is the perfect example of cutting off your nose to spite your face.

The job of state auditors has never been more challenging. Not only must auditors perform their regular duties, they must also under a federal directive track the use of federal stimulus dollars.

The inherent risk of cutting auditing offices is that waste, fraud, and abuse won’t be discovered. In that event, the taxpayers lose.

For the sake of the people who pay the bills, the work of auditors during a tough economy may be more valuable than ever.

Stateline has more on this budget area that certainly requires cautious review.

State Audit: Construction Engineering in State Highway Projects



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State Audit: Agency overtime


Twenty-five employees of state agencies in Wisconsin, including 15 Department of Corrections (DOC) correctional officers and correctional sergeants and 10 Department of Health Services staff each earned more than $50,000 in premium overtime in addition to their regular wages during 2008. That information is contained in an audit of overtime in state agencies prepared by the Legislative Audit Bureau (LAB).

The review concentrated on premium overtime that is paid at 1.5 times an employee’s regular hourly rate.  The LAB found that the most premium overtime during 2008 was $97,800, paid to a nurse clinician at Mendota Mental Health Institute. The employee averaged about 80 hours of overtime for each two-week pay period.

A chart provided by the LAB shows another nurse clinician at the Central Wisconsin Center received $103,062 in premium overtime during 2007 and $85,818 in premium overtime during 2008.

The audit also discovered that the same 10 positions were paid the highest premium overtime payments during the last four years. About 4,000 DOC employees comprised almost half, 48.1 percent of all 2008 premium overtime payments.

Four state agencies account for the most premium overtime primarily because they operate 24-hours and respond to emergencies: the Department of Corrections (DOC), the Department of Health Services, the Department of Transportation (DOT), and the Department of Natural Resources (DNR).The LAB found that only the DOC’s premium overtime payments decreased during 2008.

Overall, Wisconsin spent $66.5 million on premium overtime during 2008, 2.2 percent more than 2007.

The LAB had asked DOC and DHS to submit options for reducing overtime to the Legislative Joint Audit Committee by January 5, 2009. Both agencies have requested more time to complete their reports.

As a member of the Joint Legislative Audit Committee, I once again commend the LAB for its consistent, excellent work on behalf of taxpayers. You can see the  LAB’s full report here. 

State Audit: Administering federal assistance


The highly-acclaimed Wisconsin Legislative Audit Bureau (LAB) has completed a review of the state’s administration of billions of dollars in federal financial assistance. The LAB found that, “Overall, state agencies have properly administered federal grant programs and complied with federal requirements.”

Even so, the LAB reports it uncovered, “several new and continuing internal control deficiencies and areas of federal noncompliance.”

During fiscal year 2007-08, state agencies administered $10 billion in federal financial assistance through more than 1,600 federal programs and grants, including 963 research and development grants awarded to the University of Wisconsin (UW) System. The LAB concentrated its review on
23 programs, chosen for their size and potential risk of noncompliance. The programs selected made 74.8 percent of the state’s federal financial assistance during 2007-08.

The LAB found that, “Three UW campuses were not timely in requesting federal reimbursement. For example, as a result of our audit work at UW-Madison, we identified $6.7 million in federal funds the State could claim as reimbursement for financial aid disbursed to students. We also
identified concerns with timeliness of  requests for federal reimbursement at UW-Milwaukee and UW -Oshkosh. We estimate the State lost $183,500 in interest earnings as a result of the untimely requests of the three campuses.”

A reimbursement problem was also discovered at DWD. The LAB writes, “We have renewed concerns with DWD’s process for claiming federal reimbursement for the cost of vocational rehabilitation services provided to individuals who also received federal disability benefits.
As a result of our audit, DWD either plans to claim or has already claimed an additional $227,167 from the federal government.”

DWD also had problems with idle facilities. Before the audit, the Division of Unemployment Insurance (UI) was given three additional rooms in a state office building to use two new computer systems for administering the UI program. After one of the computer systems was
developed, two of the three rooms became vacant during November 2005. However, DWD kept charging rental fees for the two idle rooms to the UI grant program from November 2005 through October 2006. During November 2006, DWD started charging rental fees for the two empty rooms to other sources. Then, for reasons unknown, during August 2008, DWD returned to charging the UI grant program for the second room that continues to be idle. A total of $11,612 for space rental costs for the second room was charged to the UI grant program from August 2008 through December 2008.

The LAB does not question any costs for the two rooms because the UI grant program was not charged any unallowable costs. However, The LAB notes the e second room is not currently being used by the UI grant program. So, DWD will need to transfer any unallowable idle space rental costs during fiscal year 2008-09 to cover appropriate funding sources.

The third room became empty during March 2007 after a second computer system project was ended. DWD continued to charge space rental costs to the UI grant program from March 2007 through July 2008. However, only space rental costs from March 2007 through February 2008 are allowable costs of the UI grant program. The LAB questions $26,483, representing idle space rental costs that DWD charged the UI grant program from March 2008 through June 2008. A total of $38,095 will be repaid by DWD.

The LAB had issues with the Foster Care-Title IV-E program. Two of ten licensed foster care providers chosen for scrutiny had not completed criminal background checks. After a review of all providers required to conduct background checks since July 1, 2007, two more providers were
found that had not completed the proper criminal background checks.

UW-Milwaukee uses the Foster Care-Title IV-E program to encourage students to seek child welfare careers. The LAB found that UWM charged the foster care program twice for tuition payments. There was a subsequent overbilling of $112,923. Documentation of the students
fulfilling the necessary requirements for post-graduate employment was, according to the LAB, “lacking.” UWM intends to return the money.

The LAB also cites continuing problems with the Department of Administration’s (DOA’s) billing rates that have resulted in the state compiling excess cash balances, stating, “During FY 2007-08, $2.2 million was lapsed from an internal fund to the General Fund. We question $449,645, representing the federal government’s share related to this lapse, which will have to be repaid to the federal government, possibly with interest.”

The LAB’s concern is that this has been going on for several years:

“Since FY 2002-03, DOA has returned a total of $39.3 million to the federal government related to excess balances and lapses from the internal service funds. The returned funds could otherwise have been spent for federal program purposes.”

In all, the LAB is making 35 recommendations to help improve the state’s administration of federal assistance.

Here is the breakdown on the federal assistance the state administered during fiscal year 2007-08:

$8.8 billion: cash assistance

$1.2 billion: outstanding federal loan balances

$66.4 million: noncash assistance, including food commodities.

The state has received an increase in federal financial assistance of almost $700 million since fiscal year 2003-04. The increases have been primarily in the areas of Medicaid, food stamps, and unemployment insurance. The bulk of the federal assistance, 95 percent, is expended
by five state agencies:

1) The Department of Health and Family Services (DHFS), now the Department of Health Services (DHS) and the Department of Children and Families (DCF): $4 billion (Medical Assistance, food stamps, health insurance for children).

2) Department of Workforce Development (DWD): $1.6 billion (unemployment insurance, vocational rehabilitation programs)

3) UW System: $1.3 billion (student financial aid, research and development grants)

4) Department of Transportation (DOT): $759.9 million (Highway Planning and Construction program)

5) Department of Public Instruction (DPI): $707.4 million (local schools, nutrition programs for children)

All other state agencies: $449.4 million

The LAB is aware that the state stands to receive a substantial amount of federal stimulus dollars and makes this pledge:

“We will be monitoring the State’s administration of these additional funds. In future audits, we will review compliance with federal requirements for their use.”

Here is the entire LAB audit report. 

As a member of the Legislative Joint Audit Committee, I once again commend the LAB for its outstanding work on behalf of Wisconsin taxpayers.

Audit: Inmate mental health care


As of June 2008, 6,957 of Wisconsin’s 22,451 prison inmates were categorized as mentally ill, almost 31 percent. That is according to an audit by the Wisconsin Legislative Audit Bureau (LAB) that was conducted following concerns about the cost and availability of treatment for inmates. The LAB just completed its review of mental health care of inmates by the Wisconsin Department of Corrections (DOC) and the Wisconsin Department of Health Services (DHS). Here is a summary of the audit findings.

During fiscal year 2007-08, expenditures for inmate mental health care totaled approximately $59.8 million.  DOC's expenditures included $20.6 million in staff costs and $6.1 million for psychotropic medications. Expenditures by DHS for housing and treating inmates at the Wisconsin Resource Center totaled $32.8 million. DOC used 127.35 full-time equivalent mental health care staff.

The number of mentally ill inmates is on the rise, from 6,084 during June 2006 to 6,957 during June 2008, a 14.3 percent increase. The LAB reports, “Mental illnesses were more than twice as common among female inmates.”

About two-thirds of inmates were screened for mental illness within two days of being taken into DOC custody. DOC staff reviewed files of inmates transferred between facilities in a timely fashion.

Inmates are monitored regularly by psychologists. However the LAB found group therapy was limited. DOC facilities fail to meet national standards for psychology and psychiatry staffing ratios.

Medications are delivered to inmates by correctional officers. The procedure in neighboring states has delivery made by health care staff.

The LAB also found that mentally ill inmates have had a disproportionate effect on safety and discipline, accounting for more than 90 percent of 1,231 special placements made as a result of selfharm from fiscal year 2005-06 to fiscal year 2007-08. These inmates must be monitored by DOC staff at least every 15 minutes. Mentally ill inmates were responsible for almost 80 percent of the 755 inmate assaults on staff during the same time period, costing $874,200 in worker’s compensation awards to DOC and DHS staff. Almost half (46.1 percent) of inmates segregated were mentally ill during January 2008.

The LAB noted the federal Department of Justice discovered during 2006 that inmate mental health care at Taycheedah Correctional Institution did not meet constitutional standards. Last September, DOC agreed to a conditional settlement with the federal Department of Justice that requires specific improvements by September 2012. A 45-bed addition to the Wisconsin Resource Center for female inmates will be completed during February 2011 for $11.1 million. Bonding totaling $7.6 million has been requested by DOC to construct additional treatment space at Taycheedah. Governor Doyle’s proposed state budget asks for 149 full-time positions and $6.6 million to operate the new space and provide services.

The LAB recommends DOC report back to the Joint Legislative Audit Committee that I serve on by January 4, 2010 about the following:

* Options 
for improving screening for developmental disabilities

* Plans for providing correctional officers with more specific information on inmates’ mental health needs and with enhanced training

* E
fforts to improve both release planning for mentally ill inmates and, after release, their supervision in the community

* Progress in implementing its settlement agreement with the federal Department of Justice

The LAB also recommends that DOC ensure all correctional officers have been trained in medication delivery and improve its collection and management of data related to inmate self-harm,
assaults on staff, and segregation placements.

Here is the full audit report.  I commend the LAB for its consistently excellent work.