AUGUSTA – The program that provides adoption assistance payments in the Department of Health and Human Services failed to follow federal law and rules in 403 out of 1,369 cases audited by the inspector general of the federal Department of Health and Human Services. It will cost Maine taxpayers at least $2.5 million.

“We have gone over this very thoroughly,” Maine DHHS Commissioner Jack Nicholas said Monday. “My financial division and the accounts and control have gone over this and we are now following what we should be doing.”

He said the audit covered July 2000 to June 2003 and uncovered problems with the way the state was handling paperwork in the program that provides assistance to adoptive families. He said accounting and computer issues cited in the federal report have been addressed.

The inspector general’s report indicated the largest problem dealt with eligibility of 139 children under the AFDC program at the time they were removed from their families.

Another major concern was lack of a judicial determination on the need to remove a child from a family in 134 cases.

The report did not elaborate on another 102 children that were ineligible for the assistance at the finding of the state, even though the state was drawing down the federal funds for the payments. Another 28 children were over 18 and no longer eligible for assistance payments.

Nicholas said the state agrees it should pay back $2.5 million resulting from the improper finding of AFDC eligibility. Another $1.7 million is claimed by the federal government for those children who had not received a judicial determination, and that is “still under discussion” and may take months to resolve.

“The $2.5 million will be in the 2006 supplemental,” Nicholas said, “and we will wait and see if we have an additional need.”

Members of the Legislature’s Health and Human Services Committee said they were not informed of the audit, even though it was started two years ago and state officials were given the preliminary findings earlier this year and agreed with the findings in a letter dated Feb. 28, 2005.

“I found out about this audit because you told me about it this morning,” Rep. Hannah Pingree, D-North Haven said. “And I don’t remember hearing about this one on Appropriations, either.”

Pingree is co-chairwoman of the Health and Human Services Committee and served on the Appropriations Committee over the last two years.

She said there were several briefings on various audits at DHHS, but she did not recall any discussion of this audit.

Sen. Richard Rosen, R-Bucksport, also serves on the HHS committee this session and previously served on the Appropriations Committee. He could not recall this audit being mentioned in any of the briefings, public or private, by the department.

“How long is it going to be before the committee of oversight is going to be presented information about this audit?” Rosen asked. “I have a lot of questions about how this has been addressed, and the department needs to be accountable.”

He said that DHHS has told lawmakers several problems had been “fixed,” only for lawmakers to find out from constituents that there were still problems to be resolved.

“If we had known about this, I think we would have tried harder to hold their feet to the fire and be accountable,” Pingree said. “One of the problems I have found as co-chair of this committee is there is a lack of benchmarks in this department to measure what we are doing, and this is an example.”

The inspector general found that about 31 percent of all adoption assistance cases in the audit had some sort of error serious enough to disqualify the child for assistance. Nicholas said he did not know what level of errors is considered acceptable.

“I do know the inspector general did a review of state fiscal year 2004 and found what we were doing was acceptable,” he said.

Pingree expects her committee will ask Nicholas to appear before them and answer questions about the audit and ways to improve communication with the committee on future audits.