2025-009 LACK OF SUPPORTING DOCUMENTATION FOR FOSTER CARE TITLE IV-E– REPEATED & MODIFIED Funding agency: U.S. Department of Health and Human Services Title and ALN Number: 93.658 Foster Care Title IV-E Type of Finding: Material Weakness, Material Non-compliance Compliance Area: Allowable Cost and Cost Principles, Eligibility Award Year: 7/1/2024 to 6/30/2025 Question Costs: Unknown Condition We selected 50 foster care cases to test the Department’s compliance with laws and regulations governing the Foster Care program and the operating effectiveness of controls over compliance. The Department lacks controls over compliance and document retention and could not provide supporting documentation as follows: • 9 instances: no documentation of the Level of Care was provided, and the details were not entered in FACTS as required by the Department's internal controls. • 5 instances: no documentation was provided for agreements with congregate care facilities (e.g., crisis shelters, residential • treatment centers, group homes). These agreements outline placement periods, recurring payment amounts, and other terms and conditions related to the child's arrangement in the facility, therefore, we cannot verify the validity of the payments made to these organizations. • 4 instances: no foster family agreement provided to the auditors. We cannot verify whether the disbursed amounts align with the terms agreed upon with the foster family. • 9 instances: no provided evidence that the individual(s) and/or organization hold a valid foster care license at the time of payment. We cannot ascertain validity of the foster care arrangement. • 3 instances: CYFD was unable to provide a copy of the criminal records check, preventing us from verifying whether these checks were conducted prior to issuance/renewal of the foster care license. • 7 instances: criminal records check for certain foster care applicants revealed histories that would potentially disqualify them from obtaining a foster care license, as listed in 42 USC 671(a)(20)(A)(i) and (ii). However, CYFD was unable to provide documentation of any actions taken to mitigate these criminal histories. • 1 instance: management was unable to provide any documentation of judicial or voluntary removal from home. We cannot ascertain the validity of CYFD's custody of the child. • 8 instances: CYFD was unable to provide a copy of the abuse and neglect checks, preventing us from verifying whether these checks were conducted prior to issuance/renewal of the foster care license. • 1 instance: for placements with specially arranged rates, the Department is unable to provide specific Memorandum for Decisions (MFDs) for these arrangements. As a result, we cannot verify the reasonableness of the payments made. • 2 instances: no VSSAs were provided for extended foster care. We are unable to verify the validity of payments made on behalf of children aged 18 and older. In addition, we noted one (1) instance where a Foster Care license was issued to an individual despite a criminal records check indicating they were not recommended for licensing due to their criminal history. Update for FY25: The Department has not made progress in this area. Criteria The Department must retain all records necessary to comply with the data requirements in Sections 1355.41 through 1355.45. The Title IV-E agency’s retention of such records is not limited to the requirements of 45 CFR 92.42(b) and (c). 45 CFR 74.53 (b) which, in pertinent part, states that "Financial records . . . shall be retained for a period of three years from the date of submission of the final expenditure report . . .". NMAC 2.20.5.8 requires agencies to ensure that all reporting of financial information to be timely, complete, and accurate. 42 USC 671(a)(20)(A). The State shall provide procedures for criminal records checks, including fingerprint-based checks of national crime information databases (as defined in section 534(f)(3)(A) of title 28), for any prospective foster or adoptive parent before the foster or adoptive parent may be finally approved for placement of a child regardless of whether foster care maintenance payments or adoption assistance payments are to be made on behalf of the child under the State plan under this part, including procedures requiring that— Subsection (i) in any case involving a child on whose behalf such payments are to be so made in which a record check reveals a felony conviction for child abuse or neglect, for spousal abuse, for a crime against children (including child pornography), or for a crime involving violence, including rape, sexual assault, or homicide, but not including other physical assault or battery, if a State finds that a court of competent jurisdiction has determined that the felony was committed at any time, such final approval shall not be granted; and Subsection (ii)in any case involving a child on whose behalf such payments are to be so made in which a record check reveals a felony conviction for physical assault, battery, or a drug-related offense, if a State finds that a court of competent jurisdiction has determined that the felony was committed within the past 5 years, such final approval shall not be granted. Effect The Department's deficiency to provide required documentation and ensure compliance with foster care regulations exposes it to significant risks, including non-compliance with federal and state laws. This can lead to potential issues with Title IV-E funding, jeopardizing the Department's ability to receive federal support. Additionally, the lack of documentation—such as Level of Care details, foster family agreements, criminal records checks, and abuse/neglect checks—impairs the Department's ability to verify the legitimacy and appropriateness of foster care placements and payments. This increases the risk of improper or unauthorized disbursements, potential safety risks for children, and a lack of transparency in foster care operations. These issues may also undermine public confidence in the integrity of the foster care system. Cause The files pertaining to the foster care cases are located all over the State. During the audit, Management had encountered difficulties in getting the employees in certain locations to cooperate to get the requested documents timely for audit purposes
2025-010 LACK OF SUPPORTING DOCUMENTATION FOR ADOPTIONS– REPEATED & MODIFIED Funding agency: U.S. Department of Health and Human Services Title and ALN Number: 93.659 Title IV-E Adoptions Type of Finding: Significant Deficiency, Other Non-compliance Compliance Area: Eligibility Award Year: Title IV-E Adoptions 23 Assistance (7/1/2023 – 12/31/2024) Title IV-E Adoptions 24 Assistance (1/1/2025 – 9/30/2025) Question Costs: Unknown Condition The Department lacks controls over compliance and document retention and could not provide supporting documentation as follows: Adoptions Eligibility Testing (10 sample items) • 1 instance where the Department could not provide documentation addressing the parent's criminal record and evidence of mitigation, which would determine the parent's eligibility for adoption. We cannot determine whether the Department has mitigated this history. • 1 instance where we were not provided with negotiation files showing that CYFD attempted to proceed with the adoption without a subsidy. • 1 instance where we were not provided with the executed subsidy agreement i.e., signed by an authorized CYFD personnel. • 1 instance where CYFD was unable to provide documentation of either the birth parent's relinquishment or a death certificate. Additionally, for the adopted child from a tribal nation, the Department did not provide evidence of obtaining the required approval from the tribal nation. Update for FY25: The Adoptions unit has continued to move adoption files from county offices to the central filing location in Santa Fe. Training is provided in the 3rd casing process to help case workers in the field understand exactly what needs to be done before an adoption finalizes. Criteria Pursuant to Social Security Act – sections 476; 8.2D.1 Title IV-E, Adoption Assistance Program, Payments, Allowable Costs, subsidies are not allowed until there is an adoption assistance agreement in effect. Also, per 8.2D.4, the amount of the adoption assistance payment cannot exceed the amount the child would have received if s/he had been in a foster family home, but otherwise must be determined through agreement between the adoptive parents and the IV-E agency. The Department must retain all records necessary to comply with the data requirements in Sections 1355.41 through 1355.45. The Title IV-E agency’s retention of such records is not limited to the requirements of 45 CFR 92.42(b) and (c). 45 CFR 74.53 (b) which, in pertinent part, states that "Financial records . . . shall be retained for a period of three years from the date of submission of the final expenditure report . . .". NMAC 2.20.5.8 requires agencies to ensure that all reporting of financial information to be timely, complete, and accurate. Effect Unallowable purchases could be made with program monies if the Department is not able to review and retain adequate documentation. There is a higher risk of improper payments and misreporting, which is backed by Finding 2024-003. The Department is at higher risk of non-compliance with laws, contracts, and regulations without accountability in place to ensure proper controls are followed. Allegations and complaints decrease public trust in government. Cause Certain paper files may be missing due to the program moving office spaces and files; however, there would still be electronic files. The Department lacks controls over compliance, monitoring, and document retention. NM CYFD has been making continuous efforts to organize the adoption case files in their New Mexico Children, Youth, and Families Department Reporting 32 custody. However, personnel turnover in County placement offices has made recovering some of the pertinent files challenging.
2025-011 IMPROPER PAYMENTS TO ADOPTIVE PARENTS– REPEATED & MODIFIED Funding agency: U.S. Department of Health and Human Services Title and ALN Number: 93.659 Title IV-E Adoptions Type of Finding: Significant Deficiency, Other Non-compliance Compliance Area: Allowable Cost and Cost Principles, Eligibility Award Year: Title IV-E Adoptions 23 Assistance (7/1/2022 – 12/31/2023) Title IV-E Adoptions 24 Assistance (1/1/2024 – 9/30/2024) Question Costs: $205 (less than 5% of federal expenditures) Condition The Department made improper payments to adoptive parents as follows: Adoptions Subsidy Payments Testing • One (1) where payments were made on behalf of a child over 18 years old without extended subsidy agreements in place, resulting in total of $205 in payments that were improper. Update for FY25: The Department has made significant progress in this area, by reducing the instances of non-compliance in this area. Criteria 2 CFR § 200.1. An improper payment is a payment that should not have been made or that was made in an incorrect amount under statutory, contractual, administrative, or other legally applicable requirements. The term improper payment includes: any payment to an ineligible recipient; any payment for an ineligible good or service; any duplicate payment; any payment for a good or service not received, except for those payments where authorized by law; any payment that is not authorized by law; and any payment that does not account for credit for applicable discounts. 42 U.S. Code § 673 (a)(3) and (a)(4). The amount of the payments to be made shall be determined through agreement between the adoptive parents and the State or local agency administering the program. In no case may the amount of the adoption assistance payment made exceed the foster care maintenance payment which would have been paid during the period if the child with respect to whom the adoption assistance payment is made had been in a foster family home. A payment may not be made pursuant to this section to parents or relative guardians with respect to a child (i)who has attained— (I) 18 years of age, or such greater age as the State may elect under section 675(8)(B)(iii) of this title; or (II) 21 years of age, if the State determines that the child has a mental or physical handicap which warrants the continuation of assistance; (ii) who has not attained 18 years of age, if the State determines that the parents or relative guardians, as the case may be, are no longer legally responsible for the support of the child; (iii) if the State determines that the child is no longer receiving any support from the parents or relative guardians, as the case may be. Effect This oversight in handling subsidy payments increases the risk of non-compliance with federal grant requirements and may expose the Department to potential financial liability or the need to recover funds. It also highlights a weakness in the internal controls surrounding the administration of adoption subsidies. Cause The adoption cases were scheduled for consideration by Fostering Connections for eligibility for extended subsidies. However, a disconnect in cooperation between the adoptive parents and the Title IV-E team resulted in delays in finalizing the extended subsidy agreements.