TRENTON — Nine nonprofit agencies providing foster care services in New Jersey are facing intense scrutiny following an audit that found they spent $4.2 million on extravagances such as bonuses and a country club holiday party, and awarded a generous roofing job to a relative.
But most of the agency directors disagree sharply with the audit, insisting they did nothing wrong — and that in several cases, their practices were approved by the state.
The state auditor for the nonpartisan Office of Legislative Services last week released a report that criticized the department’s $40 million in contracts for private agencies to manage foster care services for fewer than 600 children, or 9 percent of the entire foster child population.
The audit did not identify the agencies, but at The Star-Ledger’s request, the state Department of Children and Families disclosed that nine were responsible for questionable billing from January 2010 to June 2011.
"The department has spoken with every agency and we’re working to address the issues in the report," said Kristine Brown, Commissioner Allison Blake’s spokeswoman. "Any undue funds will be recouped."
The audit criticized AtlantiCare Behavioral Health Foster Care Network in Atlantic County for spending $2,000 to throw a holiday party. But executive director Julie Drew said in an e-mail that this is a 15-year tradition the state has allowed.
The audit also cited the agency for using $5,900 in state funds to buy gift cards and "designer merchandise" for the guests.
"Children in foster care were given up to $250 in age appropriate merchandise as holiday gifts and foster siblings received $25 gift cards. Foster parents received $50 gift cards per family," Drew said. "We believe that the holiday party was reasonable and appropriate."
The audit also urged the state to cancel a contract with Youth Consultation Services, which billed $250,000 in administrative costs, then farmed out the foster care work to another agency already on the state’s payroll, according to the report.
YCS executive director Richard Mingoia said in an e-mail the auditors didn’t understand the contract, which included far more than foster care services. YCS also provided intense mental health treatment and housing to 150 "high-risk" youth, and also oversaw the administrative responsibilities for the foster care services, provided by a partner agency. "The state approved the contract and the budget … and never questioned it or disallowed any part of it," Mingoia said.
Family Intervention Services of East Orange paid a consultant $252,000 over three years to produce "no measurable product," according to the audit. It also spent $126,000 to pay the mortgage in violation of state policy that covers only rental costs.
"While we strongly support efforts to ensure non-profit agencies are reliable stewards of state money, we don’t agree with the auditor’s findings regarding our agency," agency spokesman Stephan Jackman said in an e-mail.
Babyland Family Services of Newark awarded a $17,000 roof repair contract to a relative of the finance director, who was ultimately paid $44,000. Babyland officials did not return a call for comment.
Children’s Aid and Family Services in Paramus spent $1,800 on gym memberships, according to the audit. Executive vice president Liz Mason didn’t deny the perk, but thinks the auditor over-estimated how much was spent. "It had been our belief that gym reimbursement, which is part of our health benefits, was an allowable expense," Mason said. The practice ended last year when the department informed the agency it would not cover those expenses, she added.
Independence: A Family of Services in Essex County paid a company $16,500 to produce fundraising workshops. "DCF policy disallows fundraising costs to be charged to state contracts," according to the audit. CEO Margaret Woods said the agency’s former CFO made the bookkeeping error, and no state money was used for fundraising.
The audit cited three agencies — Twin Oaks Community Services of Mount Holly, AtlantiCare, and Catholic Charities in Paterson — for paying a total of $20,000 in bonuses, ranging from $100 to $1,000 each, to foster families so they keep taking in kids. Foster families recruited and supervised by the state do not receive any money beyond monthly stipends, according to the audit.
AtlantiCare officials said the department knew and approved its policy to award bonuses, and Drew, the executive director, said it has been an "effective strategy" to retain foster families. Pamela Collins, Twin Oaks’ chief development officer, said the agency would "fully cooperate with the state to resolve the issue."
Children’s Home Society in Trenton was cited for not turning in a complete budget. President and CEO Donna Pressma disagreed. "We always supply the Department of Children and Families with a full written agency budget every year," she wrote in an e-mail. "However, the auditors wanted it in another format. While the auditors were here, we supplied them with full written documentation of all of our general and administrative expenses."
Children and Families officials were also criticized in the audit.
Through a combination of human error and the limitation of its computer system, the department overpaid its contractors $630,000 from July 2008 to April 2012. Blake, in a written response to the state auditor, said her staff is working to correct the problem