Nebraska report finds DHHS misspent $4.1 million

The Nebraska Department of Health and Human Services will not face any consequences after being accused by the auditor’s office of misspending more than $4 million. The chain of events starts in May 2021. According to a letter from the Nebraska Auditor’s Office, DHHS was awarded $41,180,965 in Low Income Home Energy Assistance (LIHEAP) funds through the American Rescue Plan Act. Sen. Tom Brandt, who sponsored a bill in the legislature to change the State’s LIHEAP program, told KETV it’s an amount additional to and similar in size to what Nebraska gets for an entire year.”Ten percent of that, under the new law, was to go toward the weatherization program,” Brandt said. He’s referencing a bill (also passed in May of 2021) that requires 10% of LIHEAP funds be put toward making homes more energy efficient; things like adding insulation, improving windows or doors, and upgrading heating or cooling systems. The other 90% typically goes to help with heating and cooling bills.” If you’re in an older home and you’re using a lot of propane, or electricity, or natural gas and you can insulate that home and cut back on energy use by 25% — that’s a win-win for everybody involved,” he said. According to the auditor’s report, that never happened. In September 2021, DHHS said it entered into a contract with the Nebraska Department of Environment and Energy to allocate 10% of the ARPA funds, or about $4.1 million. Typically, NDEE partners with community action partnerships or Habitat for Humanity of Omaha to find uses for the money. From 2019 to 2021, NDEE awarded $8,017,315 for weatherization purposes. “Normally when funds are obligated you can say, ‘Hey we’re going to spend it on X’ and you have years or months after obligation to make those expenses,” said Craig Kubicek, a deputy auditor with the Nebraska Auditor’s Office. But there was a concern over the language regarding obligating funds. According to the federal award notice, the funding could be used for obligations between March 11, 2021, and Sept. 30, 2022. DHHS said it went back and forth with the federal government about whether obligation meant designating the funds or actually spending funds.” This is nothing new folks. We do this every year — year in and year out — there should’ve been no problems here,” Brandt said. DHHS said it never got a clear answer from the federal government and by April 2022, NDEE said its subgrantees could not spend the money with a perceived five-month deadline. NDEE returned all of the money to DHHS. “Disappointed,” Brandt said when he found out about the auditor’s report. “Not surprised, but disappointed that our state agencies can’t get this funding that was intended to help people in weatherization.” Asked if not awarding the $4.1 million for weatherization violated state statute, Kubicek said in the eyes of the auditor’s office, it i know He calls the obligation language a gray area. “I think they were doing what they intended to do, but should’ve pushed the feds a little harder to make that determination,” Kubicek said. Brandt said DHHS disputes the audit, but NDEE does not. There are two state agencies with two differing opinions. “When you have a state agency that just uses its power to move the monies where it wants to move the monies to, that’s not what should’ve happened here folks,” Brandt said. According to DHHS, the $4.1 million was spent, but it was used for other state and federally-allowable LIHEAP Services that could be obligated and expended by the Sept. 30, 2022 deadline. DHHS could not do an on-camera interview, but provided a statement to KETV: “Federal terms and conditions for ARPA required funds to be obligated and expended by September 30, 2022. When NDEE subgrantees were contacted to see if they could meet this deadline , they responded that they could not. As a result, it was mutually determined by DHHS and NDEE that the best course of action was to return the unobligated money to DHHS to fund other state and federally-allowable LIHEAP Services that could be obligated and expended by the September 30, 2022 deadline. This action ensured that eligible Nebraskans received assistance with funds that would otherwise have been unexpended. NDEE’s Weatherization Program continues to provide weatherization services across Nebraska using its annual allocation of federal and state funds. This program successfully reduces the energy burden for low-income Nebraskans by making their homes more energy efficient.” While Brandt re-emphasized his disappointment, he said he’s not sure if anything more can be done at the state level to ensure funds are properly spent “The intent of the new LIHEAP bill is very clear,” he said. “Ninety percent is to be used for LIHEAP, 10% for weatherization. I don’t know how you can get more clear than that.” Kubicek said more findings could come to light in spring 2023 when the Nebraska Auditor’s Office concludes its full audit of the LIHEAP program and how federal funds are used.

The Nebraska Department of Health and Human Services will not face any consequences after being accused by the auditor’s office of misspending more than $4 million.

The chain of events starts in May 2021.

According to a letter from the Nebraska Auditor’s Office, DHHS was awarded $41,180,965 in Low Income Home Energy Assistance (LIHEAP) funds through the American Rescue Plan Act.

Sen. Tom Brandt, who sponsored a bill in the legislature to change the State’s LIHEAP program, told KETV it’s an additional amount to and similar in size to what Nebraska gets for an entire year.

“Ten percent of that, under the new law, was to go towards the weatherization program,” Brandt said.

He’s referencing a bill (also passed in May of 2021) that requires 10% of LIHEAP funds to be put towards making homes more energy efficient; things like adding insulation, improving windows or doors, and upgrading heating or cooling systems.

The other 90% typically goes to help with heating and cooling bills.

“If you’re in an older home and you’re using a lot of propane, or electricity, or natural gas and you can insulate that home and cut back on energy use by 25% — that’s a win-win for everybody involved, ” he said.

According to the auditor’s report, that never happened.

In September 2021, DHHS said it entered into a contract with the Nebraska Department of Environment and Energy to allocate 10% of the ARPA funds, or about $4.1 million. Typically, NDEE partners with community action partnerships or Habitat for Humanity of Omaha to find uses for the money.

From 2019 to 2021, NDEE awarded $8,017,315 for weatherization purposes.

“Normally when funds are obligated you can say, ‘Hey we’re going to spend it on X’ and you have years or months after the obligation to make those expenses,” said Craig Kubicek, a deputy auditor with the Nebraska Auditor’s Office.

But there was a concern over the language regarding obligating funds.

According to the federal award notice, the funding could be used for obligations between March 11, 2021, and Sept. 30, 2022.

DHHS said it went back and forth with the federal government about whether the obligation meant designating the funds or actually spending funds.

“This is nothing new folks. We do this every year — year in and year out — there should’ve been no problems here,” Brandt said.

DHHS said it never got a clear answer from the federal government and by April 2022, NDEE said its subgrantees could not spend the money with a perceived five-month deadline.

NDEE returned all of the money to DHHS.

“Disappointed,” Brandt said when he found out about the auditor’s report. “Not surprised, but disappointed that our state agencies can’t get this funding that was intended to help people in weatherization.”

Asked if not awarding the $4.1 million for weatherization violated state statute, Kubicek said in the eyes of the auditor’s office, it did. He calls the obligation language a gray area.

“I think they were doing what they intended to do, but [DHHS] should’ve pushed the feds a little harder to make that determination,” Kubicek said.

Brandt said DHHS disputes the audit, but NDEE does not. There are two state agencies with two differing opinions.

“When you have a state agency that just uses its power to move the monies where it wants to move the monies to, that’s not what should’ve happened here folks,” Brandt said.

According to DHHS, the $4.1 million was spent, but it was used for other state and federally-allowable LIHEAP Services that could be obligated and expended by the Sept. 30, 2022 deadline.

DHHS could not do an on-camera interview, but provided a statement to KETV:

“Federal terms and conditions for ARPA required funds to be obligated and expended by September 30, 2022. When NDEE subgrantees were contacted to see if they could meet this deadline, they responded that they could not. As a result, it was mutually determined by DHHS and NDEE that the best course of action was to return the unobligated money to DHHS to fund other state and federally-allowable LIHEAP Services that could be obligated and expended by the September 30, 2022 deadline. This action ensured that eligible Nebraskans received assistance with funds that would otherwise have been unexpended.

NDEE’s Weatherization Program continues to provide weatherization services across Nebraska using its annual allocation of federal and state funds. This program successfully reduces the energy burden for low-income Nebraskans by making their homes more energy efficient.”

While Brandt re-emphasized his disappointment, he said he’s not sure if anything more can be done at the state level to ensure funds are properly spent.

“The intent of the new LIHEAP bill is very clear,” he said. “Ninety percent is to be used for LIHEAP, 10% for weatherization. I don’t know how you can get more clear than that.”

Kubicek said more findings could come to light in spring 2023 when the Nebraska Auditor’s Office concludes its full audit of the LIHEAP program and how federal funds are used.

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