LINCOLN, Nebraska (KOLN) – A new audit report on the Nebraska Department of Correctional Services highlights a number of challenges the agency continues to face.
State Auditor Mike Foley on Monday released the findings of his audit team on NDCS for 2023, including unnecessarily high medical costs for inmates, excessive staff overtime and alleged improper handling of inmate trust funds, among other things.
Medical costs for prisoners in Nebraska
According to Foley, the NDCS spends about $70 million annually to provide health care to the 5,800 inmates in Nebraska’s correctional system, but the audit team found that more than $3.5 million could have been saved if inmates had been encouraged to enroll in the Medicaid program immediately after they were incarcerated.
The team also found that NDCS needs to improve its procedures to ensure that Medicaid-eligible claims are forwarded directly to Medicaid rather than submitting expenditures to the third-party claims processing administrator.
Foley acknowledged the NDCS’s push to incorporate automatic Medicaid enrollment into the inmate intake process in 2024.
Pharmacy operations of the department
The audit report documents over $9 million worth of drugs and pharmaceuticals purchased by the department in 2023.
According to the auditors, the department has a serious control weakness in its pharmacy operations that could allow agency employees to steal certain medications by manually adjusting drug inventory levels without supervisor approval.
Foley’s audit team examined 30 manual drug inventory adjustments involving tens of thousands of dollars’ worth of departmental drugs and found no evidence of a second review or approval in 23 of those adjustments.
In total, the audit report states, the NDCS disposed of over $84,000 worth of drugs in 2023 for a variety of reasonable and other reasons.
Trust funds and inmate maintenance fees
The audit report highlighted an ongoing problem with the NDCS’s procedures for properly crediting inmate trust accounts, finding that more than $500,000 – largely earned by inmates while on work release – was deposited into a government bank account but not credited in a timely manner.
Foley said the auditor’s office has informed NDCS in writing about the matter at least twice over the past decade, but the problem remains unresolved.
In response to the re-audit results, NDCS claimed it was not possible to properly credit inmates’ funds because the earnings submitted by employers did not accurately identify the recipients, Foley wrote.
The audit team disagreed, stating that $460,972 of inmate earnings since February 14, 2020, had been earmarked for certain workers.
The audit report shows that more than $307,000 of the inmates’ earnings have still not been credited to their accounts.
Another audit issue related to inmates’ wages is that NDCS allegedly failed to deduct the full maintenance fee from those wages, as required by law and set out in administrative guidelines. According to the audit report, NDCS undercharged inmates by approximately $310,000 by failing to apply the correct, updated daily rate.
According to the press release, the NDCS has failed to increase the maintenance fees deducted from prisoners’ earnings, despite a doubling of the minimum wage and a staggering increase not only in the cost of medical care for prisoners but also in the cost of incarceration overall during this period.
Use of debit card by inmates
Certain NDCS inmates are permitted to carry a debit card to make small purchases while on work release or 48-hour mandatory leave. Inmates are prohibited from carrying more than $100 in cash at any time.
The audit team found that NDCS staff loaded approximately $3.4 million onto inmates’ debit cards during calendar year 2023, but no audit of the transactions on the cards was conducted.
Funds for the debit cards come from the inmate’s work release earnings or from cash transfers from approved family members.
In one case, an inmate was found to have made $9,860 in cash transactions and ATM withdrawals during a three-month period in late 2023. The inmate’s debit card activity also included $3,216 in purchases at multiple stores.
“While some of the purchases made by inmates using their debit cards may be legitimate, it is imperative that they are monitored. All cash withdrawals and ATM withdrawals must be closely monitored – if only to ensure that the funds are not being used for criminal purposes or to maintain relationships with criminal associates,” Foley said.
Overtime of department employees
According to the auditors, the costs of recruiting and retaining qualified staff for correctional facilities continue to burden the agency’s budget. These costs are exacerbated by extraordinarily high overtime pay.
The audit report looked at the NDCS’s payroll for 2023, which totaled $179,545,650 without benefits – nearly $58 million more than two years earlier, the audit team found.
Foley said the increase in payroll costs was due in part to changes in the collective bargaining agreement negotiated with the Fraternal Order of Police. As a result, the report found that NDCS paid $22 million for its employees’ overtime and compensatory time in 2023, which is about $3 million more than the amount spent two years earlier.
According to Foley, more than 250 employees in the department worked 500 or more hours of overtime in 2023.
The fact that guards consistently receive enormous amounts of overtime or time off, sometimes as much as two full-time positions, is extremely costly to the NDCS and potentially detrimental to the safety of both facility staff and the inmates being monitored, Foley wrote.
Paid vacation
Foley’s team had already identified another problem in an earlier audit of the department for the 2013-2014 fiscal year, which had already been identified a decade earlier.
At the time, auditors found that the department’s time tracking application granted employees paid vacation regardless of the number of hours worked per week.
Foley said the department appears to have taken no corrective action since the issue was first raised.
The auditors’ review of employees who were paid for more than 40 hours during the period under review shows that the department appears to have overpaid those workers by a total of 3,403 hours, wasting more than $105,000 in the process.
“No one can deny that leading the Department of Corrections is anything but an enormously demanding and, at times, largely thankless job,” Foley said. “I take my hat off to every man and woman, from the warden to the guards and other staff, whose hard work contributes to this incredible responsibility. However, there is always room for improvement, and the department could save approximately $3.9 million annually by implementing the recommendations contained in the audit report. I hope that those in charge take these suggestions seriously, knowing that my office is always available to help in any way I can.”
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