Human Service Center was mired in controversy for years

News analysis

A sharp outcry from law enforcement and social services agencies these past few years in Oneida, Forest, and Vilas counties has finally led to the demise of the Human Service Center as a vendor for various mental and behavioral health services to those counties, but serious troubles have long plagued the agency dating back more than 20 years.

In fact, in 2008 the county spent $100,000 to study the agency’s management shortcomings, as well as allegations of misconduct. Though much of the behavior was confirmed and the consultants urged the county to consider leaving the multi-county arrangement, the county at the time opted for the status quo — with a little tweaking — a decision that has reverberated across the mental health landscape in the three counties like an excessive wake hurtling toward the shores.

Beginning in the late 1990s and continuing through the early 2000s, an insular group controlled the agency through the Human Service Center (HSC) board, with the powerful Forest County board chairman, Erhardt Huettl, also serving as HSC board chairman.

Huettl was so powerful in those years that many thought of him as the de facto chairman of Oneida and Vilas counties as well, with Huettl allies controlling committees ranging from human services to mining.

Within the HSC, murmurs of mismanagement and employee abuse began to percolate in professional circles and to bounce around newspaper reports as long ago as 2003 — many of the troubles reported by this newspaper — and continued for years. In recounting those past troubles, it’s important to say that none of these problems from the early to mid-2000s are attributed to current management or staff or to the current board.

They are recounted because they led to a report in 2008 that cautioned that, as the consultant wrote, “the times they are a-changin’,”  meaning that even then time had passed by the multi-county model and that the model itself was flawed when it came to accountability — the lack of any real ability to control policy in an insular agency even though Oneida County paid the majority of the agency’s bills.

The county ignored the warnings.

In 2004, for example, current and former employees of the HSC called for an independent audit of the agency, citing dozens of errors in official budgets, flaws found by compliance auditors and what they said was ongoing departmental mismanagement. Routine budget items presented to HSC board members during budget discussions contained addition errors totaling hundreds of thousands of dollars, prompting whistleblowers to come forward and seek an audit.

Then, too, calls for an audit were raised in the early 2000s after the agency significantly cut developmental disability programs, even though the three member counties had provided the money for the mental health programs when they approved their budgets.

The pressure became so great at one point that Huettl acceded and hired an audit firm. The HSC passed with flying colors, with the HSC director at the time repeatedly referring to those who had called for the audit as “disgruntled” former or current employees and circulating an audit report letter that found no “misappropriation of funds.”

But that was not the whole story, and it did not ameliorate the concerns of HSC critics, who pointed out that Huettl had hired the same firm that conducted Forest County audits. A compliance audit by a hired-gun was far different from an independent audit ordered by the board and conducted by a firm with no ties to agency officials, critics and whistleblowers charged.

Indeed, at the time, The Times was conducting its own investigation into the agency and corroborating many of the claims being made by whistleblowers. Over several years, a team of various newspaper reporters reviewed hundreds of documents and interviewed many current and former employees, as well as other interested parties.

New math

The official documents, some of which The Times obtained through an open records request in late 2004 and which had been submitted to HSC board members during their consideration of the HSC 2005 budget, did indeed contain addition errors ranging from a few dollars to hundreds of thousands of dollars.

For example, the systems management budget request understated actual mid-year revenues for 2004 by $50,000, causing the agency to project to board members a budget deficit. The agency reported revenues of $422,947.19 against expenditures of $472,949.57.

In fact, when added properly, the revenues matched actual expenditures of $472,949.57.

The Times discovered an even larger discrepancy in the agency’s mental health 2005 requested budget. That document projected a year-end 2004 mental health deficit of more than $481,000, based on expected revenues of $2,383,052 against expenditures of $2.864 million. 

However, the budget contained an incorrect calculation of various state funds. The agency’s addition of listed revenue projections totaled $1,089,653.71, though the correct amount was actually $1,323,223.71, a mistake of $233,570.

Based on individual line items, the actual projected revenues should have totaled $2.616 million, with a projected deficit closer to $250,000.

Mathematical inaccuracy continued to plague the agency during consideration of the 2006 budget, with budget errors ranging from a few cents to several hundred dollars.

Even the agency’s official audits raised serious concerns about management at the HSC.

The agency’s 2002, 2003, and 2004 audit letters found problems with employee expenses, purchase of service contracts, and automatic payroll tax payments, among other things.

The audit also found in 2004 that most purchase of service contracts were not being issued until the contract year was well under way or over. The purchase of service contract problems had not been corrected a year later when auditors again performed an annual test.

In addition, the auditors also raised concerns about the agency’s unearned revenue account, noting an “unusually large balance” at the end of the year, and that problem, too, still existed a year later.

Perhaps most serious, the auditors found an error in the agency’s payment to the Internal Revenue Service. The HSC had apparently paid the IRS twice and had not made any attempt to recover the money.

“A payment of $22,839 was made twice for the same payroll in December, 2002,” the report stated. “This error wasn’t addressed with the IRS for months after that fact and hasn’t been received or resolved as of August, 2003. Immediate action is necessary to ensure collection of the $22,839 from the IRS.”

Nearly a year later it still had not been resolved, though HSC did receive a check from the U.S. Treasury Dec. 21, 2004, for the $22,839, two years after the mistake was made and 1-1/2 years after the audit report noted the error. 

The 2003 audit report also noted lingering problems with balance sheets accounts, which had to be adjusted during the audit period, and observed that some state aid revenues were being recorded in one revenue account only to be allocated to other revenue accounts later.

Neither could the auditors verify accounts payable figures in the general ledger account. 

The Lakeland Times also obtained documents showing discrepancies between what the agency reported in wages paid to the IRS and that it reported to the Social Security Administration. One discrepancy totaled $16,047.49; a second totaled $84,064.82.

Employees allege mistreatment

As The Times reported in 2006, between June 2005 and June 2006, the HSC in Rhinelander suffered a 21-percent turnover in employees, though agency officials at the time called the staff attrition rate “perfectly normal.”

According to union officials at the time, it was anything but normal. The Times discovered the high turnover rate after current and former HSC staff members spoke confidentially with the newspaper, alleging mistreatment.

“Examples of the allegations made by the employees include managers swearing at employees, staff members being interrogated by managers about what they discussed at union meetings and employees being terminated without just cause,” the newspaper reported.

The union representative for HSC employees at the times said the turnover rate was very high and that something was going on at the agency that wasn’t normal.

“For county agency positions in this area of the state, you could have places that are closer to two or three percent each year,” the HSC’s union representative told the newspaper.

The Oneida County labor relations department compared yearly turnover of the county’s 300-plus employees with the HSC’s 60 employees. Those documents showed that, over the previous decade, the county’s turnover had remained steady at 10 percent, about half of that of the HSC.

What’s more, documentation provided by both the HSC and the anonymous sources indicated that 41 percent of those leaving were fired, not laid off.

“There was a small group that was terminated,” the HSC director told the newspaper. “But it must have been for just cause, because if not, I’d have a lawsuit on my hands. And I don’t, so I must have been right.”

One former employee told The Times that she was told to keep quiet about inconsistencies the employee discovered in bookkeeping. Following the former staff member’s revelations, she said she became the victim of both physical and mental intimidation, directed at her by a cadre of agency managers.

Between 2003 and 2006, another 35 percent of employees who left the HSC did so of their own volition.

“They apparently are leaving dissatisfied with the experience of working there,” the union representative said. “It is my job to represent the interests of the employees, but if they don’t come to me to file a grievance, there is nothing I can do. My guess is they won’t call me, because they are afraid of any retaliation they may receive back at work. And that’s frustrating.”

Hidden funds

Another discovery showed that the existence of unspent program funding dating from between 1999 and 2001 and totaling $126,584 had gone unreported for at least six years. The state ordered  the HSC to repay all of the hidden funds, plus interest.

In that case, the state Department of Health and Family Services (DHFS) did not authorize the HSC to carry over the unspent funding after the contracted project period had expired. Instead, the HSC retained the funding, transferring it to Community Mental Health Services, Inc. (CMHS) for future expenditures.

In that matter, the DHFS concluded “that the HSC took steps to mask the transfer of funds to CMHS, including reporting to our Department that all grant funds in question had been spent.”

At the time, the HSC was ordered to determine how much interest was accrued by “holding the inappropriately diverted funds” and to then remit that interest to the DHFS.

In addition to that diversion, the HSC diverted nearly $100,000 in unspent grant funds to the same community organization between 1999 and 2002 without proper authorization, in addition to the $126,584 in diverted funds already reported, a subsequent state audit found.

To cover the diversion of money from the state Department of Health and Family Services (DHFS), the audit reported that the agency created internal expense vouchers that were not supported by any actual expenses.

The state did not demand a return of the money, which totaled $97,516, because it said the money was ultimately spent to provide services to the community and because the HSC had discontinued the practice of diverting funds.

Specifically, state auditors found additional funds diverted beyond what the agency had already reported for three different grants to Community Mental Health Services (CMH). All the diverted funds were for mental health and substance abuse activities, but the audit described deceptive practices within the HSC in carrying out the diversions. According to the audit, the HSC would claim expenses throughout the year without reconciling their claims to actual expenses.

“When reconciliations were done at the end of the year, the agency realized it had claimed funds that were not supported by expenses,” the audit stated. “Not wanting to return the funds to the state, HSC amended the contract they had with CMH for these additional amounts.”

Those contract revisions identified the additional funding amounts but did not specify the services the funds would provide or the time frame during which the money had to be spent, the audit continued.

“Next, HSC created an internal expense voucher that was not supported by any actual expenses,” the audit stated. “This voucher was included with other vouchers and per the normal process was submitted to and approved by their audit committee.”

The audit reports that the agency retained control over the money and “believed the funds could be used for legitimate expenses that were incurred over any time frame they wanted.”

However, the audit stated, the HSC did not inform the state that excess funds had been moved to CMHS. In addition, CMHS kept the excess funds in an interest-bearing account, the audit observed. CMHS retained all the interest earned as an administrative fee for holding the funds. The amount of interest earned over the years was more than $16,000.

Cut and stay

Over time, the mounting problems at the HSC gave pause to some Oneida County officials, and, in 2008, the county spent $100,000 to conduct a study of its operations and to make recommendations about its future.

The study subsequently substantiated what many critics of the agency had been saying for several years: namely, the entity was hobbled by managerial shortcomings, budgets that didn’t reflect reality, and an organizational structure that didn’t provide the most proficient delivery of services to clients.

There was resistance, especially in Huettl’s Forest County, and neither Vilas nor Forest counties helped pay for the study. 

From a global perspective, the county’s consultants—The Management Group (TMG), Virchow Krause & Company, and independent human services expert Gerry Born—said Oneida County should consider opting out of the three-county arrangement and establishing its own Human Services Department.

That department could possibly provide “mental health, AODA and selected children’s long-term support programs with staff of the new Oneida County Human Services Department or contract for these services from a newly configured HSC and other providers,” the report stated.

“Our recommendation is that you look at the Human Services model and that you establish a human services coordinating work group that would bring various agencies together to look at the feasibility of such a model,” the report stated. “The theme here is, the times they are a-changing.”

Then, too, regardless of the county’s future direction, the consultants said, the county needed to grapple with current HSC shortcomings. That’s because many of the problems might otherwise exist in a new county human services department; furthermore, it would be at least 18 months before the county could withdraw from the HSC, if it chose that path.

Communication and lack of leadership were cited as major existing deficiencies.

On the one hand, the report continued, it appeared that HSC had a strong group of managers with solid experience in their respective areas, through they were not properly utilized. In addition, the HSC board of directors itself came in for some organizational scrutiny.

Despite the withering report, the county ultimately remain in the tri-county model, contingent on the HSC board agreeing to a host of reforms, including the installation of a new management team, the development of new HSC board leadership and the replacement of the executive director.

Ultimately — in what might be cautionary tale for current county supervisors — the county panel overseeing the recommendation, led by supervisor Ted Cushing, said the more the group listened and learned, the more they felt the real solution was simply to tweak the current system to make it perform as it should. 

The county then chose its path to the future, paying the outgoing executive director $34,000 as part of an agreement for her voluntary resignation.

The director also received a glowing letter of reference for future employment, stating that she “comes highly recommended by the Human Services Board of Forest, Oneida and Vilas counties.”