Wisconsin Department of Workforce Development

DEPARTMENT ORDERS MAXIMUS TO PAY
Half a million dollars will go toward supportive services for W-2 participants

MADISON – Department of Workforce Development Secretary Jennifer Reinert announced today MAXIMUS Inc., has agreed to donate $500,000 toward community supportive services for incorrectly billing the W-2 contract for a total of $485,208 in unallowable expenses. The funding will go to community-based organizations in Milwaukee that provide services to W-2 participants. MAXIMUS will also reimburse the state for the total amount of unallowable costs.

A total of $780,013 in unallowable or questioned costs were identified through an independent audit ($230,902), the LAB audit ($415,247) and annual single audits required by the department ($133,864). Upon further review by the department and additional documentation provided by MAXIMUS, it was determined $294,805 of that was allowable. Of the $485,208 determined unallowable, a balance of $309,862 is due to the department. MAXIMUS has agreed to repay that amount in full, immediately.

"MAXIMUS made some serious bookkeeping mistakes, for which they must be held accountable. The department, and MAXIMUS agreed, that the best way to correct these mistakes was by providing additional direct services to clients," said Reinert. "But it is important to recognize that MAXIMUS did not commit fraud or do anything illegal. The mistakes were the result of sloppy bookkeeping and measures are being put into place to make sure it doesn’t happen again."

The independent audit also uncovered $1.6 million in costs that MAXIMUS should have charged to the W-2 contract, but mistakenly did not. MAXIMUS will not be allowed to recover any of those costs because the deadline for filing the expenses has passed.

"This certainly reinforces the truth behind the mistakes MAXIMUS has made. These mistakes are the result of sloppy bookkeeping, not an intent to defraud the W-2 program. It will be rectified by recovering all amounts that have been incorrectly charged to the contract, and in the form of $500,000 in community services," said Reinert.

"MAXIMUS has provided services to its clients since the inception of W-2, which have enabled thousands of clients to make the transition from welfare to work. They have met all performance standards set by the department and have done so keeping the mission in mind, helping people gain the skills they need to become self-sufficient. We do not want to see those services unnecessarily disrupted by mistakes that can and will be corrected," added Reinert.

The department’s biennial budget request includes the creation of a financial oversight unit to provide closer monitoring of W-2 contracts and TANF-related contracts. Four of the staff would be devoted to monitoring contracts in Milwaukee.

"The department still reserves the right to cancel any W-2 contract with 120 days written notice, and will not hesitate to exercise this provision if there are serious questions about taxpayer dollars being spent inappropriately in the future," said Reinert. "We will also be keeping a close watch over all expenses being billed to the W-2 contract by all local agencies."

Reinert said five objectives guided the department in its decision:

• Any expenditure of taxpayer dollar that was unallowable had to be fully recovered.
• Disruption of needed services to W-2 participants was not acceptable.
• Community restitution would be requested if the W-2 contract was incorrectly billed.
• All W-2 agencies must recognize the state has zero tolerance for sloppy bookkeeping or improper expenditures.
• A finding of fraud or illegal activity would result in immediate cancellation of the contract.

"It is now time to take what we have learned through this process and move forward with the shared goal of helping people find jobs, and excel in those jobs to self-sufficiency. We must never lose sight of that goal," said Reinert.

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