Audit describes
disarray in isle
benefit paymentsThe state counters it has made
great strides curbing unjustified
and costly disbursements
The state lacks adequate controls over its electronic welfare payment and food stamp disbursement systems, resulting in a higher risk of unauthorized payments and the loss of millions of dollars in federal incentive funding, according to the state auditor.
But the state said it has taken corrective actions and has made dramatic improvements during the past year.
In a follow-up report on the state electronic benefit transfer system, Auditor Marion Higa said that Hawaii went from being one of the most efficient states in the nation during the early 1990s when it came to administering food stamps to 16th best in 2000 and 2001.
That decline resulted in the loss of about $4.5 million between 1999 and 2001 in incentive money that the state received from the federal government, according to Higa's report.
"Our current audit found that the department continues to struggle with implementing proper controls, resulting in decreased payment accuracy ratings, loss of enhanced federal funding, increased risk of unauthorized benefits and limits to the effectiveness of the EBT program," Higa said.
The electronic benefit transfer system uses debit cards, similar to credit cards, to distribute welfare benefits to recipients who can use them in grocery stores or at automated teller machines.
The food stamp program provides an average 100,000 people each month with a total $12.5 million in benefits paid by the federal government.
The latest audit follows reports by Higa's office in 1994 and 1998, which found serious flaws in the Department of Human Services' internal controls. According to the 1994 report, the state's computerized welfare payment system and food stamp distribution system were plagued by inaccuracies which resulted in significant overpayments to welfare and food stamp recipients.
The 1998 report found faulty internal controls resulting in material misstatements of financial records.
In the latest audit, Higa also said her office found a lack of control over the transfer card inventory, "leaving the system vulnerable to potential fraud, waste and abuse."
She added that the department allows clerks to have access to the cards and case files, "allowing them to use participants' benefits with minimal detection."
In a letter to Higa, department Director Lillian Koller said the department has been taking corrective actions since 1999 on some of the problems cited by the report.
She noted that the department earned a $1.5 million bonus last year from the U.S. Department of Agriculture, which funds the state's food stamp program. The bonus -- the first in three years -- was a reward for improvements in the department's delivery of benefits.
"We developed a plan that gave our workers greater focus, leading to improved case management skills and more supervisory reviews," Koller said.
