Five years ago, state agencies were in an uproar over New Mexico’s new online accounting system, known as SHARE. They blamed it for financial misstatements, unaccounted-for federal funds and other mistakes. In one high-profile case, the Federal Highway Administration threatened to cut off crucial funding when the New Mexico Department of Transportation failed to properly reconcile its federal funds with SHARE data.
According to an audit released in February, those accounting errors and misstatements continue to plague state agencies—to the tune of millions of dollars.
“Here we are 2012,” Evan Blackstone, chief of staff for State Auditor Hector Balderas, tells SFR. “Agencies should be aware of what [the] problems are.”
Balderas’ office recently audited the Public Education Department, reavealing a $6 million discrepancy between federal and state accounts.
Part of the audit focuses on the Division of Vocational Rehabilitation, which seeks to give disabled people the proper amount of support and training to help them enter and succeed in the workplace.
Although DVR uses state money, the vast majority of its funding comes from the federal government. In 2006, for instance, the federal government provided $24 million for DVR in New Mexico—the bulk of its nearly $29 million budget. Because DVR is part of the Public Education Department, it’s scheduled to be audited every year.
But the state auditor’s office recently discovered that DVR wasn’t properly reconciling the federal money with its state accounting, prompting “errors in draw down amounts for federal funds.” Those errors add up to a total of $6 million, encompassing fiscal years 2007-2011.
Anthony Barela, who until recently worked in the DVR, says he’s concerned about the discrepancy’s unanswered effect on disabled New Mexicans expecting services.
“Every disabled citizen is going to potentially be affected in this state if those things aren’t corrected,” he tells SFR.
The audit also considers DVR’s financial misstatements a “material weakness,” the most severe type of finding, and one that signals a high likelihood that an agency has a significant mistake in its finances.
In the audit, DVR blames the $6 million misstatement on SHARE, which most state agencies began using in 2007. Deputy State Auditor Carla Martinez says the bulk of the problem comes from SHARE’s lack of a module, or component, for state agencies to truly track the federal grants they receive.
“What happens is agencies are having to track outside of the system,” Martinez tells SFR.
In DVR’s case, it’s not a case of missing money. It’s a case of writing down the budget incorrectly.
“They may have overbilled the federal government,” Martinez says. “They were anticipating receiving funds from federal government that they may not be entitled to.”
DVR isn’t the only state agency still blaming SHARE for sloppy accounting. Last summer, the US Department of Agriculture’s Food and Nutrition Service conducted a financial management review of the New Mexico Department of Health’s Women, Infants and Children program, which uses federal Medicaid money to provide food and nutrition services for the state’s neediest population.
The review, which was conducted amid accusations of fraud by DOH employees, found $500,000 in federal funding unaccounted for in the WIC program for fiscal year 2008. DOH officials attributed the variance to an error caused by SHARE.
“When you’re looking at a $45 million program and a new system, this is common,” Deanna Torres, the WIC program director, told SFR at the time [news, Sept. 21, 2011: “Cashed”].
But Blackstone says his office is concerned that agencies are still attributing errors to an accounting system that’s been in place for half a decade.
New Mexico mandated SHARE in 2006 as a means to streamline state government by unifying agencies’ various accounting systems. Estevan Lujan, a spokesman for the Department of Information Technology, says SHARE is still a work in progress. Many of the problems over the years resulted from agencies’ adjusting to changing policies, he says.
“It’s growing pains more than anything,” Lujan tells SFR. “[We’re] constantly having to adjust and change it.”
Some agencies foresaw those problems, pushing back against SHARE before its launch, but the state implemented the multimillion-dollar system anyway. In fiscal year 2012, according to the New Mexico Sunshine Portal, the state approved close to $1 million in purchasing orders from Oracle, the company that created SHARE.
The DVR audit isn’t available online; Antonio Corrales, director of operations and compliance at the state auditor’s office, says it’s simply too big.
“The [PED] report itself is seven volumes,” Corrales tells SFR. “We’ll have problems internally if we post it on the website for download.”
Barela obtained it through a public records request after he was “apprised that things were not correct” with the budgeting at his old workplace. He says it should be more accessible to the public. But Barela’s concern for how money allocated to disabled people is spent is also personal: In 2005, while carpooling home from work on Interstate 25, he was a passenger in a car that veered off the highway and flipped off the road.
Barela survived, but sustained significant injuries to his back and vision, causing him to take early retirement disability last year.
Per the report, DVR did make the necessary adjustment for FY 2012. But preventing future errors is another question.
“We have asked for a corrections plan from the division as well as solutions to fix the issue as soon as possible,” PED spokesman Larry Behrens writes in an email to SFR.
Blackstone says the state auditor’s office will stay concerned until it gets a clean audit from DVR.
“When you have those kind of control issues that have occurred in the past and keep occurring, it’s definitely a problem,” Blackstone says.