AUGUSTA – The red ink in the new state Department of Health and Human Services is growing.

Audit problems alone now total about $19 million that must be funded by the end of the current budget year. Other budget issues likely will add millions more to the total.

“These [audit] issues go back several years, in some cases a decade,” said state Health and Human Services Commissioner Jack Nicholas. “These audits began in September [2003], and we knew there would be some problems, but just found out the estimate of what they will cost.”

He said the audits, in the state Bureau of Child and Family Services, will cost the state $5 million to $6 million in repayments to the federal government. A number of individual programs in the bureau are being audited by the U.S. Department of Health and Human Services’ inspector general’s office.

“One regards adoption services and how cost reports are being prepared,” he said. Another area being checked involves eligibility questions in a program that provides services to foster care teens who are over 18, but still covered by the program as they finish their education. The program is known as Title IV E.

These federal audits are in addition to the one that found $13 million that was reported in June and caused by an error in Medicaid bookkeeping.

Nicholas, who has served as budget officer in the administrations of three governors, has been plagued by bookkeeping problems, many created by his determination to get the books in proper order.

“Some of these problems go back three and four commissioners,” he said. “They have to be fixed.”

Sen. Mary Cathcart, D-Orono, co-chairman of the Appropriations Committee, said the newly elected Legislature will face at least a $25 million problem.

“It is going to be very, very difficult to make the cuts,” she said. “We made some $160 million in Medicaid cuts this year, and they will help. But I think there will have to be further cuts to balance this budget.”

Rep. Richard Rosen, R-Bucksport, also serves on the Appropriations Committee. He said increased use of programs such as Medicaid could cause the budget deficit to grow, and the new Legislature will need to deal with it immediately. “We will already be halfway through the budget year,” he said. “So any cuts we have to make will be magnified because they will have to be done over just one or two quarters.”

Finance Commissioner Becky Wyke pointed out there is always a supplemental budget early each year to make budget adjustments. She said it is clear that DHHS is facing several budget problems that will need to be addressed.

Maine had a $71 million surplus in the fiscal year that ended June 30. Most of that was used to fund reserve accounts, but $8.4 million was not allocated. “And I am sure we will need that for the supplemental,” Wyke said.

Nicholas said his goal is to fund the agency budget problems by cuts and reordering spending priorities. He acknowledged that will be very difficult and will need legislative approval.

In addition to the big-ticket audit problems, DHHS is facing other financial problems.

For example, the state’s general assistance program, which local municipalities pay for the welfare program administered by the towns, was projected to be short $1 million this budget year. It was not funded by lawmakers, who knew they would have to deal with supplemental budget needs in January.

Another $1 million problem is the result of the error rate in the food stamp program. Maine’s error rate was 13.29 percent in 2003, second highest in the nation and the highest in New England.

The error rate measures mistakes made by state staffers in figuring eligibility, in clerical errors that may occur in data entry, and other mistakes. The measurement also includes errors made by food stamp recipients in applying for food stamps. It is not a measure of fraud.

Maine may have to pay the entire cost of administering the program – losing the federal grant that usually pays half of those costs – because of the high error rate.

The agency, which now includes mental health institutions and programs, could face additional costs to meet the terms of a 1990 consent decree that governs mental health programs in Maine. That so-called AMHI consent decree, named for the closed Augusta Mental Health Institute, could require additional money this budget year, said Brenda Harvey, deputy health and human services commissioner.

“The question is whether we will be required to implement those changes immediately,” she said.

Harvey said that, until the court acts on the department’s plan, she would not know what the additional costs might total. She said additional Medicaid funding is likely to be needed, as well as funding for a new peer support system for community-based patients.