The Maryland Department of Health says it has recouped a majority of the $1.4 billion that the agency may have missed out of from the federal government during the pandemic.
Health Secretary Laura Herrera Scott told state lawmakers Tuesday that MDH accounted for all but about $244 million of the funds and expects to get almost all of the money back by the end of 2024.
“The Moore-Miller administration is committed to service transparency, accountable stewardship of taxpayer dollars in compliance with the law addressing the impact of these audit findings will require both immediate and consequential actual action to create stability in these systems and will rebuild trust in the long term,” Herrera Scott told the Joint Audit and Evaluation Committee.
However, Joint Audit and Evaluation Committee Sen. Clarence Lam (Baltimore and Howard Counties), says he’s skeptical of the agency’s ability to fully account for the money.
“I think that's probably premature and potentially overly optimistic,” Lam said. He noted that MDH’s estimate is based on a sampling of 16 accounts, when the agency still needs to sort through hundreds of others.
The missing funds came to light after a report from the Maryland Office of Legislative Audits (OLA).
The report found the state’s health department did not properly track funds reimbursed by the federal government during the COVID-19 pandemic.
By the end of 20-22 about $3.5 billion dollars were unaccounted for. The department later recovered about $2.1 billion of those funds.
The missing cash came under the stewardship of former Republican Governor Larry Hogan, who left office in January.
During the pandemic, states typically spent money upfront on COVID-related programs and then were later reimbursed by the federal government.
Despite finding a large chunk of the funds, legislators, auditors and agency officials said that there are glaring fiscal issues within MDH that need to be addressed.
“When we started looking and delving into some of the numbers, we saw some very scary things and that's the best way I could describe it,” said Brian Tanen, the director of compliance and performance at OLA. “The details in this are very, very important when you're dealing with 1,200 accounts, dealing with multiple federal grants, multiple federal grant years.”
Tanen said MDH relied on a constant stream of funds from the federal government, but was not paying close attention to the bottom line numbers.
At the very least, Tanen said there will be a loss of $8.8 million that will need to be bailed out by the state’s general fund.
“What I can tell you is based on the lack of documentation that they were able to provide us during and subsequent to our audit, they cannot come to this table and tell you definitively that there is not a deficit,” Tanen said. “They're making some meaningful strides to establish procedures to identify it, but it's going to take time and it's going to take a long time until they're able to unravel some of these things going forward to identify whether or not there is a deficit.”
Herrera Scott said MDH is updating its policies to better keep track of receipts and provide better manuals so there will be less of a knowledge gap when one accountant leaves and another takes that person’s place.
