LINCOLN — State Auditor Mike Foley said Monday that mismanagement by the state caused it to lose out on about $5.8 million in federal energy-assistance funds intended for low-income Nebraskans.
Foley said the Nebraska Department of Health and Human Services also overspent its allowed allocation for administration by some $656,000 over two years.
“There's an extraordinary level of confusion about the management of this program,” the auditor said in an interview.
The program in question, the federal Low Income Home Energy Assistance Program, was the subject of a critical audit by Foley's office this spring.
That audit said HHS had misspent nearly $8 million from the energy assistance program, sending checks to some people who were dead and allowing funds to be used at retail stores instead of for heating and cooling bills.
On Monday, Foley said that HHS could have avoided losing the entire $5.8 million by amending its rules to give more money to low-income families to pay utility bills. That, he said, would have maximized the federal aid and prevented costs from falling on Nebraska's public utilities.
“When people don't pay their energy bills, you and I pay them because we're a public power state,” Foley said. “So we're losing twice, and I think the (State) Legislature should know that.”
An HHS spokesman said the agency had identified $432,000 in excess administration costs and was reimbursing the federal government. Federal rules prohibit using more than 10 percent of an energy assistance grant for administration.
But when it came to the $5.8 million, HHS spokesman Russ Reno said, the state just didn't get enough qualified applicants to use all of the federal grant.
The “funds were provided to those who applied for and qualified for assistance in accordance with our state plan,” Reno said in a prepared statement. “Therefore, excess funds will be retained by the federal government for use where there is a greater need.”
Foley, in a letter to HHS officials, said the state could have amended its energy assistance plan or asked for a federal waiver to utilize more of the federal money for weatherization projects or assistance in paying utility bills.
Nebraska, he said, sends about $20 billion a year in taxes to Washington and should consider fully utilizing grants that come back to the state.
“It's not my call as auditor,” Foley said, “but the Legislature should know.”
The audit letter was the latest by Foley to criticize the management of HHS. He is a Republican candidate for governor and has said the agency needs to be overhauled “brick by brick.”
The auditor said that after he notified HHS of the most recent problems, the agency transferred about $3 million in energy assistance expenditures from the 2013 grant year to the previous year in an attempt to “mitigate” the audit's findings.
However, Foley said, that would have increased the questionable expenditures.
Reno said HHS plans to reverse that fund transfer.
He also said HHS attempted to utilize some of the unspent grant funds by transferring $1.4 million to the Nebraska Energy Office for use in weatherization programs.
But Foley said the transfer was made so late — in the last few days of the fiscal year — that it was “difficult if not impossible” for the Energy Office to find low-income households to utilize the money.