Audit of Kentucky's Title IV-E Administrative Costs

EXECUTIVE SUMMARY:

Our objective was to determine whether the State agency equitably allocated administrative costs to the Title IV-E program from April 1, 2001, through March 31, 2003.  The State agency undermined the statistical validity of the random moment study (RMS) by altering the random moment for employees with nontraditional work schedules and adding unapproved positions that may have skewed the results of the RMS, resulting in either an understated or overstated percentage of time charged to Title IV-E activities.  These conditions occurred because the State agency failed to design an RMS that complied with Federal guidelines and statistical sampling standards.  As a result, the State agency may not have equitably allocated $49.1 million ($24.5 million Federal share) in administrative costs to the Title IV-E program.

We recommended that the State agency continue to work with the Department of Health and Human Services, Division of Cost Allocation to ensure that the time study methodology equitably allocates costs to the benefiting programs.  The State agency agreed with our recommendations.