State is cleared over
anti-drug ads

The federal audit into welfare fund
spending finds no impropriety

The U.S. Department of Health and Human Services has ended its audit into the state's use of federal welfare funds after a three-month investigation found nothing improper in the way the Lingle administration has been spending the money.

Lillian Koller: The state Human Services director feels "vindicated" after the audit

"We knew what we were doing was not just legal, but it was the right thing to do," said state Human Services Director Lillian Koller. "We've been vindicated."

The state receives about $98 million in federal anti-poverty funds each year.

Koller's agency faced heavy criticism after it was learned that some of the money coming to the state under the federal Temporary Assistance for Needy Families program was being used for an anti-drug media campaign run out of Lt. Gov. James "Duke" Aiona's office and as a replacement for funding that was cut from state spending on arts programs.

"We really hope we can finally put to rest a very unfounded and unfair, persistent allegation that what we were doing was illegal and was bad policy as well," Koller said. "If it was contrary to TANF policy, if it was contrary to the intent of this federal law, it would've come out in the federal audit. ... This is federal money. They set the policy."

Officials from the U.S. Health and Human Services Department's Office of the Inspector General informed Koller of their decision to halt the audit earlier this month.

An e-mail message from Anthony Rocha, one of two agents who conducted the federal audit in Hawaii, informed Koller that the OIG has made a "no go" decision and planned no additional work at this time.

"This is their federal program and they said it's fine," Koller said.

A state audit of the agency's TANF spending is pending.

Majority Democrats called for the audit after learning that about $513,000 in TANF money was spent on anti-drug ads featuring Hawaii celebrities such as singer Jasmine Trias, surfer Bethany Hamilton and Olympic decathlete Brian Clay.

"The critical issue here is why the Lieutenant Governor's Office and the director of human services thought that the best anti-poverty strategy was television commercials," said Rep. Brian Schatz, who introduced the resolution calling for the state audit.

"We have families who are in need of assistance, working two and three jobs trying to make ends meet, and what they need is help," said Schatz (D, Tantalus-Makiki). "That help is not in the form of an encouraging advertisement from Duke Aiona -- they need real help."

Koller has defended the expenditures, noting that federal spending guidelines for TANF funds are based on extensive research.

Those guidelines say the money must go to help poor families, promote self-sufficiency through job training and marriage, prevent unwanted pregnancies and encourage the formation of two-parent families.

Funding for programs that aim to keep kids off drugs and in school all fall under the guidelines, the Lingle administration has said.

"The shift in welfare occurred to encourage the spending on prevention -- to prevent children and teens from high-risk behaviors that would cause them to end up in a life of poverty," Koller said.

In addition to the resolution calling for a state audit, lawmakers also approved budget restrictions on how the Human Services Department spends the TANF money.

Lawmakers also passed legislation requiring the state to provide information to the Legislature on how it is spending TANF money.