The Wisconsin Veterans Home in King transferred more than $21 million over a five-year period to the struggling home in Union Grove.
The Legislative Audit Bureau (LAB) released its findings in a 93-page report Feb. 10.
The report found that the combined expenses of the two veterans homes rose from $54.6 million in the 2004-05 fiscal year to $89.7 million in 2008-09.
“Combined expenditures have exceeded revenues in four of the past five years,” the report stated. “The homes remain solvent largely because of a one-time payment of $20.1 million in Medical Assistance funds that King received in 2005-06 as a reimbursement rate for adjustment of care it provided from 2001 to 2005.”
LAB found that King maintained yearly surpluses during the five years it reviewed, but Union Grove had a deficit every year from 2004-05 to 2008-09.
Union Grove’s five-year running deficit was covered by the $21.2 million it received from King, according to the report.
Fiscal policies at the state’s veterans homes are unsustainable, according to LAB.
“The homes had a $9.5 million operating account balance at the end of FY 2008-09; however, that balance will be fully depleted by FY 2013-14 if deficit spending continues at current levels,” the report said.
stipends at King
To facilitate the recruitment and retention of qualified nurses, King developed two programs: the Registered Nurse Education Stipend in 2004, and the Licensed Practical Nurse Stipend in 2002.
The program for RNs provides a training stipend of $3,750 per semester for up to four semesters.
The program for LPNs requires each participant work at least a half-time position as a nursing assistant at King while enrolled in training and to work full time during school breaks. Each participant is paid full-time wages even if hours worked are less than a typical full-time schedule. And King pays the participant’s tuition at Fox Valley Technical College.
“The effectiveness of these programs cannot readily be determined because of the small number of participants,” the auditors reported. “Only 57 nursing students participated during the five-year period we reviewed, including 10 who did not complete their training or employment requirements.”
The auditors also reviewed 79 purchases made by the homes in 2008-09 and 2009-10. It found that the homes violated state purchasing requirements in 26 of the 79 transactions.
Only four of the 26 violations occurred at King. Three of those violations involved failure to rebid a contract.
LAB provided an example of how the failure to rebid a dairy products contract resulted in overspending at the vets home in King.
For the first four months of fiscal 2008-09, King purchased approximately $94,400 in dairy products from a vendor whose contract had expired in June 2008. In state government, the fiscal year begins on July 1.
“We estimate the home was charged $18,000 more than had been permitted under the expired contract,” the report said. “If a formal bidding process had been conducted in a timely manner, these overpayments would not have been incurred and King would have likely reduced its expenditures by at lest $17,200, because the vendor that was eventually awarded the new contract in October 2008 underbid the former vendor by 24.1 percent, or $51,600 annually.”
While only 13 percent of the audited purchases at King violated state rules, nearly half of those audited at Union Grove were in violation.
Among the home’s violations, LAB found that Union Grove split 10 large purchases into smaller ones to avoid state requirements for soliciting bids on purchases over $5,000.
LAB recommended more oversight of purchasing by the veterans homes.
DVA Secretary Kenneth Black responded to the auditors’ report with a letter on Feb. 2.
The letter detailed some of the steps DVA has taken to address the operational and financial issues raised in the report. It noted that DVA prepared a strategic plan for 2010-15 and adopted risk-assessment policies that include monitoring and performance evaluations in July of last year.
Black’s letter said the DVA had developed a reorganization plan to help standardize financial procedures and “establish cost-savings through operating efficiencies.”
Black also reported that the Centers for Medicare & Medicaid Services had rated the residential halls at the Wisconsin Veterans homes as above average in terms of residents’ health, nurse staffing and quality measures.
CMS gave Boland and Stordock halls a rating of five out of five stars, and Olson, MacArthur and Ainsworth halls four out of five stars.
“The findings of your review confirm issues we are aware of and are working proactively to address,” Black wrote. “Your recommendations reinforce the importance of several restructuring recommendations presented to the Wisconsin Board of Veterans Affairs on February 1, 2011, as part of our proposed Reorganization Plan.”
LAB examined the costs associated with the homes relying on overtime to meet their required staffing levels.
Between 2004 and 2009, the two homes combined increased their staffing levels by 19 percent. Much of the growth in new employees occurred at Union Grove when it opened a skilled nursing facility in September 2006.
King employed a total of 691 full-time equivalent positions in 2004-05 and 740 FTE positions in 2008-09. Nurses accounted for 344 FTE positions in 2004-05 and 391.5 in 2008-09.
Increasing the number of nurses helped King to reduce the amount of overtime they worked by 16 percent between 2004-05 and 2008-09. Nurses and nursing assistants worked a total of 57,300 hours of overtime in 2004-05 and 48,100 hours of overtime in 2008-09.
King paid $1.36 million in overtime in 2008-09. LAB estimated that had the veterans home hired additional staff to avoid the overtime hours, King would have saved $112,800.
LAB recommended that the Department of Veterans Affairs (DVA) analyze overtime costs and the cost of hiring additional staff to meet state and federal nurse staffing requirements for 2009-10 and report back to the Joint Legislative Audit Committee by July 1.