Wake up call for the department of human services and child care comes at a crucial time as the state gets ready to vote for the state’s next governor.

Mississippi Department of Human Services isn’t properly monitoring the spending of some federal public assistance dollars reserved for the state’s most vulnerable citizens, the state auditor’s office found in an annual report released Monday.

The department doesn’t “compile basic, required documents, like a comprehensive list of grant recipients,” said a release from the office. The department passes roughly $150 million of the more than $1 billion it receives in federal funds to these private nonprofits and organizations.

“If you don’t have a comprehensive list of your subgrantees, you can’t monitor who you don’t know you gave money to,” said Stephanie Palmertree, financial and compliance audit director for the state auditor’s office. “In that case, you don’t know if they’re using the program funds correctly, if the subgrantee might have fraud in their system … you don’t know if those costs are even allowable.”

“There’s not really a culture of keeping documentation at DHS,” she added.

Human services, which delivers Mississippi’s primary safety net programs, was among the most cited agencies in the audit, responsible for 10 of the 63 total findings identified across state agencies in fiscal year 2018. From minor reporting issues to serious monitoring errors, the auditor’s office found management errors associated with $30 million in human services spending.

The auditors also cited the agency for making improper payments to child care centers and welfare recipients, failing to monitor child care centers for health and safety standards and failing to submit financial reports to the federal government on time. These are all repeated violations from previous audits.

The more times the department of human services violates federal spending rules, Palmertree explained, the more scrutiny it will receive from the federal government, which can impact the amount of money it receives in the future.

The audit comes at a time of transition for the agency and the $62.8 million Child Care Development Fund program, which provides child care vouchers to low-income families, typically so parents can go to work. The state is implementing new standards for child care centers, which involves sending coaches from the local community colleges to train child care workers in early childhood education.

John Davis, outgoing director of the Mississippi Department of Human Services

Meanwhile, executive director John Davis, whom Gov. Phil Bryant appointed to head the agency in 2016, announced in early July that he would retire from his post July 31.

State Auditor Shad White said he hopes the audit will grab the attention of agency and state officials and serve as a road map for whomever assumes Davis’ role.

“I don’t know what amount of political strife this is going to cause or has already caused but I can say … there is a certain amount of waking people up that we just have to do as a natural byproduct of our jobs in this office,” White said.

Carol Burnett, director of the Mississippi Low-Income Child Care Initiative, said DHS  has often employed government workers to run programs they know little about, but she also praised the agency’s recent approach to child care delivery.

“Under John Davis’ leadership, we have found DHS to be very responsive to families’ need for child care,” Burnett said.

Some federal anti-poverty programs, such as Temporary Assistance for Needy Families, through which the state receives $114.2 million, give states broad discretion on how to spend the funds.

In Mississippi, just $7.8 million of that pot goes to direct cash payments to poor families, formerly known as the “welfare check.” The rest is transferred to other programs, such as child care, or given to organizations, such as Mississippi Community Education Center and Family Resource Center of Northeast Mississippi, to deliver workforce training and supportive services.

The TANF program itself serves fewer than 4,500 families and touches less than 4 percent of children living in poverty in the state. This is despite Palmertree’s characterization of Mississippi’s “generous” eligibility requirements for the program.

“Very few people receive this and so there is this bigger question about where do these funds go and how are they being used that this (audit) report really doesn’t address,” said LaDonna Pavetti, vice president for Family Income Support Policy for the Center on Budget and Policy Priorities.

Burnett, former administrator of the Child Care Development Fund for human services, said the next chapter for department of human services and child care will be determined by the November governor’s race.

“They (the new governor) are going to set the tone for the program. If they like it, it will fare will, and if they don’t like it, it won’t fare well. And if they don’t care about it and it’s off the radar screen, it will just get marginalized and kicked to the curb,” Burnett said.

In a statement, Attorney General Jim Hood, democratic candidate for governor, acknowledged the lack of affordable child care as a barrier to work for low-income parents and a reason for the state’s low workforce participation rate. Specifically, Hood said he would support transferring the maximum amount of TANF dollars, 30 percent, to the child care fund; create a task force to identify all child care funding and advocate for increased state and federal child care dollars. “I will work to link child care programs to living wage career paths for the parents and families they serve,” he said.

A statement from Republican candidate Bill Waller Jr. said he would “do a thorough review of this program and the agency” and look for agency leaders “who mirror his style of bringing people together to implement the most efficient and effective policies and services.”

Democratic candidate Velesha P. Williams said she disagrees with the state’s public assistance eligibility process, which she believes limits services for low-income Mississippians. She said she’d look for an agency leader with experience serving families “with love and compassion.”

“We don’t need to continue … creating barriers to people receiving the resources that we say they’re entitled to receiving,” Williams said. “The people who are making policies are out of touch with the reality of the everyday Mississippian.”

Democratic candidate Hinds County District Attorney Robert Shuler Smith cited the $10.6 million grant Mississippi received for early childhood development, which involves improving quality at child care centers. Smith said in a statement his grandfather was one of the state’s first Head Start founders, “therefore, I’m certainly passionate about continuing to implement his vision for all children in Mississippi.”

Republican gubernatorial candidates Lt. Gov. Tate Reeves and Rep. Robert Foster, R-Hernando, did not respond to Mississippi Today’s request for comment on the state’s child care program.

Burnett said while state leaders have tried to give the impression that the department of human services operates independently of the governor’s office, “that is not the case.”

“(The department of human services) works as an arm of the governor’s office,” Burnett said. “That’s part of the political context that makes the governor’s opinion (of the program) so critical.”

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Anna Wolfe is a Pulitzer Prize-winning investigative reporter who covers inequity and corruption in government safety net programs, nonprofit service providers and institutions affecting the marginalized. She began reporting for Mississippi Today in 2018, after she approached the editor with the idea of starting a poverty beat, the first of its kind in the state. Wolfe has received national recognition for her years-long coverage of Mississippi’s welfare program, in which she exposed new details about how officials funneled tens of millions of federal public assistance funds away from needy families and instead to their friends, families and the pet projects of famous athletes. Since joining Mississippi Today, she has received several national honors including the Pulitzer Prize for Local Reporting, the Livingston Award, two Goldsmith Prizes for Investigative Reporting, the Collier Prize for State Government Accountability, the Sacred Cat Award, the Nellie Bly Award, the John Jay/Harry Frank Guggenheim Excellence in Criminal Justice Reporting Award, the Al Neuharth Innovation in Investigative Journalism Award, the Sidney Award, the National Press Foundation’s Poverty and Inequality Award and others. Previously, Wolfe worked for three years at Clarion Ledger, Mississippi’s statewide newspaper, where she covered city hall, health care, and wrote stories about hunger and medical billing, earning the Bill Minor Prize for Investigative Journalism two years in a row. Born and raised on the Puget Sound in Washington State, Wolfe moved to Mississippi in 2012 to attend Mississippi State University, where she currently serves on the Digital Journalism Advisory Board. She has lived in Jackson, Mississippi since graduating in 2014.