As the auditor went through his notes, the room had quieted and the committee members were solemnly listening to the litany of management and compliance failures at the New Hampshire State Hospital.
The audit results were presented on Friday to the Joint Legislative Fiscal Committee, a 10 member body which meets monthly to approve financial transfers within departments and to hear the results of performance and financial audits of state agencies. I am one of the five Senators on the committee. Representatives Randy Foose (New London) and Beverly Rodeschin are two of the five House members on the committee.
The findings of the State Hospital audit were so bad that the Legislative Budget Assistantís office which conducted the audit "disclaimed an opinion due to the lack of supporting revenue and agency fund records." If you look up Disclaimer of Opinion in Wikipedia, you will see that only an "adverse opinion report" when it is determined that financial statements are materially misstated is a worse audit report.
The New Hampshire Hospital was established in 1842 as the Stateís hospital for the care and treatment of the mentally ill. Children, adolescents, adults and elders with severe mental illness are treated at hospital facilities including eight community transitional housing units.
During the nine month period covered by the audit ending on March 31, 2011, the hospital employed 490 permanent full-time employees and 143 part-time employees. Expenditures for the audited period were $49 million while revenue was $27 million. The average number of patients being treated was just under 200.
The auditors raised 33 issues or in the parlance of accountants, observations. They covered 29 internal financial control issues and two each dealing with federal and state compliance concerns.
What were some of the observations? They run from having signature authority on bank accounts for people who had left the hospital years ago to lack of controls over the hospitalís preparation of its Medicare Cost Report which is used to collect money from the federal government for patients served.
In most cases, the hospital management agreed with the LBAís observations completely or in large part. There was one item, with a potential estimated impact of $9.8 million, where the LBA determined that the hospital was collecting federal money for patients "with some level of health insurance" during the period covered. The hospital does not agree with the auditors saying the LBA used "an interpretation that is more harsh than federal law and process supports."
Whether hospital management is in agreement or not with each audit observation, it is clear that serious financial issues have been unveiled and the department will need to respond quickly. The Commissioner of the Department of Health and Human Services, Nick Toumpas, was at the witness table for the audit presentation. A committee member suggested that the Fiscal Committee get an annual update on how the hospital is responding. Commissioner Toumpas said, given the seriousness of the audit, that he would report quarterly. That is a good idea.
Two points come to mind upon reflection of the audit. One, patient care was not addressed in the audit and I have no complaints about the services of the hospital. Two, we should be thankful that my predecessors in the legislature put in place the Legislative Budget Assistant audit function as it regularly highlights inadequate and failed financial and performance situations. That information is critical to put appropriate policies and budgets in place for the best management of state government.
Debate over constitutional amendments dominated the Senateís session last week. Constitutional amendment concurrent resolution (CACR) 12 is the latest proposal that would provide the legislature with more authority and responsibility to set public education standards and distribute state funding for schools. This amendment has the support of a majority of the Republicans in the Senate as well as Governor John Lynch and one of the five Democrat Senators, Lou DíAllesandro (Manchester).
Constitutional amendments must pass both the House and Senate with a 60 percent vote of the members voting. And if passed by the legislature, a proposed amendment requires a 66 percent favorable vote at the next general election.
The vote in the Senate was 17 to 7 achieving the 60 percent benchmark. The problem it faces is that the House passed CACR 12 with slightly different language and the Senateís changes may not be acceptable to House leadership.
The other constitutional amendment, CACR 6, as passed by the House would require a 60 percent majority of the House and Senate to increase taxes or fees. Senate President Peter Bragdon (Milford) offered an amendment that would cap spending instead of taxes and fees. That approach goes to the premise of the late Governor Meldrin Thomson that "low taxes are a result of low spending."
Senator Bragdonís amendment passed by the necessary majority but a press release came out immediately from the House leadership that a cap on spending instead of taxes was unacceptable. There will be much more to report on the constitutional amendment front in the weeks ahead.
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