Auditor General report outlined shocking misuse of taxpayer dollars

House Oversight Committee Chair Jay DeBoyer this week led a hearing illuminating hundreds of millions of dollars squandered by the state instead of being used to deliver people better health outcomes.

The committee heard testimony from the nonpartisan Office of the Auditor General, which recapped its recent report identifying shortfalls in how the Michigan Department of Health and Human Services monitored Michigan Public Health Institute (MPHI) agreements. The audit findings outlined insufficient documentation, inadequate review procedures, reporting failures, and questions involving the approval of payments totaling hundreds of millions of dollars.

“What we saw in this report was hundreds of millions of dollars in taxpayer money being spent and there aren’t deliverables attributed to that spending,” said DeBoyer, of Clay Township. “Why is the state sending $20 million to a law firm in Los Angeles for the betterment of Michigan health? Why was there no record available of what specifically was being provided through that contract? That’s in this report and it’s a massive red flag.

“This is the problem in Lansing right now. Government departments are not doing their jobs. They are taking taxpayer-funded programs so far outside their intended purposes, and they aren’t accountable to the people of Michigan. What did the people get with this money – their money – that improved their quality of life and their health through public health research? Without documented deliverables, there’s no way to know.”

The audit findings included:

● Repeated instances where MDHHS could not document information it reviewed when approving project budgets, financial reports, and work plans. Nearly 70 percent of the financial status reports reviewed lacked supporting cost documentation and the department paid approximately $108 million before receiving or reviewing documentation validating project work.

● MPHI affiliate staff and MDHHS employees previously employed by MPHI approved nearly half of the financial status reports reviewed for payment, representing approximately $199 million in payments to the organization.

● MDHHS improperly approved certain indirect costs at a higher reimbursement rate than authorized.

● MDHHS repeatedly failed to provide the Legislature with information required under state reporting requirements. According to auditors, some semiannual reports omitted required project and funding information, and none of the projects reviewed included all reports, studies, and publications required to be reported to the Legislature.

“If you aren’t providing information that’s necessary, you’re either horribly unqualified or you’re covering for something,” DeBoyer said. “I happen to think in this instance it’s a lot of both, and that MPHI was acting as a shell company that wouldn’t be subject to oversight.”

DeBoyer also questioned how only a miniscule fraction of allocated research dollars – under 1 percent – went to public in-state universities, given the massive amount that is budgeted to MDHHS. In addition, OAG testimony disclosed out-of-state universities were found to have received grant dollars from Michigan taxpayer funds, which DeBoyer said was “unbelievable.”