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Friday, July 28, 2000
Governor
Tommy G. Thompson
Secretary
Linda Stewart

News Media Contact
Christopher Marschman
608/261-6705
e-mail: news@dwd.state.wi.us
fax: 608/266-1784

Contact: Orlando Canto, (608) 266-7553

DWD RESPONDS TO MAXIMUS REVIEW

MADISON – Department of Workforce Development Secretary Linda Stewart said today that it was the department’s vigilant efforts at monitoring and oversight that identified concerns about MAXIMUS’ employment practices, cost controls and organizational make-up, resulting in DWD withholding or recouping $7.6 million in payments to the company.

DWD already has received a check to the State of Wisconsin covering the amount of unallowable costs identified in the audit. Department officials said they welcomed the audit.

"The Department of Workforce Development has been aggressively looking into its contract with MAXIMUS since January," Stewart said. "The Audit Bureau’s report provides independent confirmation of our findings and conclusions to date and supports our decision to continue our own intensive review."

"We have also been working with MAXIMUS to ensure continuous improvement in its financial practices," Secretary Stewart stated. "It is unfortunate that these improvements, as well as our strong efforts over the past seven months to address identified concerns, were not adequately reflected in the Audit Bureau report. As a result, the report includes recommendations that have already been implemented by DWD and MAXIMUS."

DWD will incorporate the findings of the Audit Bureau’s report into its ongoing efforts to ensure questions about MAXIMUS’ business practices and expenditures are fully addressed. "As was the case prior to the report’s release, we intend to take any and all appropriate actions against MAXIMUS in order to ensure all identified concerns are resolved," stated Secretary Stewart.

DWD has contracted with an independent audit firm to conduct a comprehensive audit of MAXIMUS in order to identify any inappropriate conduct during the life of the company’s contracts with DWD for the delivery of W-2 services. The comprehensive audit, which DWD decided to pursue in May as part of its oversight process, is to be completed by October 2000.

"Although the report contains some minor errors and omits details regarding DWD’s oversight activities to date, it will nevertheless be of great help to have this independent review in hand as we continue to work with our auditors to complete our comprehensive review of MAXIMUS," Secretary Stewart concluded.

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NOTE: A chronology of actions taken since January 2000 to identify and address concerns related to MAXIMUS’ finances and operations is attached.

Chronology of Actions Taken Since January 2000

The following summarizes the actions taken since January 2000 to identify and address concerns related to MAXIMUS’ finances and operations:

	January	DWD requests a written description from MAXIMUS of the relationship between MAXIMUS and MAXSTAFF in response to allegations of inappropriate conflicts of interest. The Department of Administration’s Performance Evaluation Office undertakes an independent review of MAXIMUS.
	February	DWD requests MAXIMUS submit its annual financial report and audit for review.
	March	DWD requests MAXIMUS address the direct and indirect financial relationship of MAXIMUS and MAXSTAFF and the allocation of costs and profits from national MAXIMUS to the Wisconsin MAXIMUS W-2 contract.
	April	DWD conducts an extensive review of financial audit reports given to DWD under the terms of the 1997-99 W-2 contract. DWD finds more than $1 million in questionable costs.
	May	DWD requests MAXIMUS detail in writing that it has not inappropriately charged staff time not related to W-2 to the W-2 contract. DWD informs the co-chairpersons of the Joint Committee on Finance of its decision to hire an independent outside auditing firm to conduct a review of the operations and administrative practices of MAXIMUS. DWD notifies MAXIMUS that it will delay both the final calculation and any issuance to MAXIMUS of performance bonuses or funds available under Community Reinvestment until audit issues are resolved.
	June	DWD notifies MAXIMUS of concerns regarding calculation of its indirect cost rate. MAXIMUS subsequently agrees to reconcile indirect costs under the current contract on a quarterly basis. DWD notifies MAXIMUS that it owes DWD $3,166,861, payable immediately. Payment is received June 22. DWD notifies MAXIMUS that DWD will cease issuance of all payments to MAXIMUS under the current contract pending resolution of audit issues. DWD makes arrangements to hire an independent audit firm to conduct an extensive review of costs charged to the W-2 contract. DWD hires Williams Young, LLC., to provide assistance in evaluating the specifications of the independent audit.
	July	DWD hires Hoppe & Orrendorf, S.C., to conduct an extensive audit of MAXIMUS. In anticipation of further allegations coming to light, the contract includes a provision to expand the scope of the audit to address all new concerns as they arise.

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Content Contact: Orlando Canto


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Wisconsin Department of Workforce Development

DWD RESPONDS TO MAXIMUS REVIEW