AUGUSTA – Gov. John Baldacci on Tuesday disclosed $37 million in accounting errors that have accumulated over several years in Maine’s Medicaid accounts, and said his administration is taking action to correct the problem.

Tuesday’s disclosure came about a month after Baldacci revealed problems in the state’s welfare books. An accounting firm found that drawdowns of federal money in the Temporary Assistance for Needy Families program exceeded reported expenditures by about $31 million between fiscal 1999 and 2002.

The independent firm PricewaterhouseCoopers was called in to look at Human Services Department books after the state auditor found deficient internal accounting of millions of dollars in federal welfare funding last spring.

Baldacci, who took office in January, emphasized that none of the problems involve wrongdoing.

“It’s my responsibility,” Baldacci said at a news briefing in the State House Cabinet Room. “The buck stops at my desk.”

The latest $37 million mixup involves a combination of errors and oversights, which involve missed payments to Medicaid providers, incorrect payments to psychiatric hospitals and other problems. The errors resulted in the denial of at least $3.2 million in federal matching funds, state Finance Commissioner Rebecca Wyke said.

Wyke noted that the problems remained hidden for years while state finances were robust, and came to light only after revenues dried up and state programs became strapped for cash.

Baldacci said he plans to ask the Legislature for money in a supplemental budget next session to reconcile the problems, but said he does not know how much of an appropriation will be needed.

House Minority Leader Joe Bruno, R-Raymond, gave the Democratic governor credit for being upfront and doing something about the problem, but said Baldacci will have to explain where the money to fix it is going to come from.

Bruno also said that the accounting problems raise questions about the wisdom of Baldacci’s planned merger of two state agencies that rely heavily on federal funding: Human Services and Behavioral and Developmental Services.

“It’s going to be an issue down the road,” said Bruno.

House Speaker Patrick Colwell, D-Gardiner, promised to work with the administration to make any needed budget changes and said he was gratified by the administration’s quick action to address problems dating back to 1996.

Baldacci said his senior health policy adviser, Trish Riley, will work with acting DHS Commissioner Peter Walsh to engage the governor’s office directly in improving accounting practices. A chief financial officer for the Medicaid account is also being hired.

Colwell said that the previous administration, “while undertaking an ambitious and much-needed expansion of state health programs in the 1990s, did not have the proper financial controls in place to monitor these programs effectively.”

Angus King, who was Maine’s independent governor from 1995 until Baldacci took office in January, said he was not familiar with the specifics of Tuesday’s report.

But King said his administration “worked to improve the state’s financial controls in all areas. As I recall, one of the places where we added people was in the accounting department” at DHS.

The former governor said the $37 million highlighted in the latest report represents 4/10 of 1 percent of Maine’s overall Medicaid expenditure over the last eight years, about $8 billion. The federal government pays two-thirds of Medicaid.

The $37 million “is not an insignificant amount of money … but given the magnitude of overall Medicaid spending, the number has to be put in some kind of perspective,” the former governor said.

AP-ES-09-16-03 1907EDT

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