Montana Public Radio

Unpublished Report On Medicaid Costs Fuels Questions Over Infrastructure Funding

Jan 14, 2020

Montana’s Legislative Auditor is pushing back against the Governor’s Office’s public criticism of an unpublished report on the state health department. The administration says the details are holding up $80 million in infrastructure projects.

Lawmakers were briefed on the brewing controversy during the kickoff of Legislative Week.

A memo from Legislative Auditor Angus Maciver stresses that the study of Montana’s Medicaid system is not yet final, and might not be presented to lawmakers until April.

On Monday, he told lawmakers the Governor's Office has not seen the full report, and that public statements by the administration staff show an incomplete understanding of audit requirements. And, he says, the administration doesn’t need to agree with the audit division’s findings to sell bonds to fund the infrastructure projects.

"The Governor's Office have always been in a position to say that they don’t agree with how we’re doing it or what we’re finding."

Last week, the Governor's Office raised concerns about the auditor’s work, including questioning the methods used to determine that the state may owe the federal government up to $130 million because of a Medicaid system error. The Governor's Office says that analysis showing potential impacts to state finances is halting the sale of state bonds.

Maciver declined to expand on the issue last week, saying the Legislative Audit Division doesn’t comment on unpublished reports. In his memo to lawmakers, Maciver says the Governor's Office and the state health department may be threatening the Legislative Audit Division’s ethical standards of independence by their recent actions.

Governor's Office Budget Director Tom Livers says the administration is trying to trace the logic of the auditor’s upcoming report.

"I don’t see the logic," Livers says. "It’s not there. Give us some information that supports why you’re reaching these conclusions. I don’t think that questioning is undue influence."

Ahead of the lawmaker briefing Monday afternoon, the Governor's Office printed and placed a large map of Montana in their wing of the state Capitol. On it, like polka dots, are the $80 million worth of infrastructure projects scattered around the state, which the Governor's Office says are in jeopardy because of the ongoing audit dispute and its reported potential impact on state finances.

Budget Director Livers says the administration has talked with financial advisors about the impact of selling state bonds with a note indicating the potential risks raised by Legislative Auditors.

"The real test is gonna be, we’ll set up meetings with the rating agencies, the bond rating agencies, we’ll do that ahead of a bond issuance and we’ll see if this issue impacts Montana’s AA+ bond rating. And that’ll be the first barometer we get of how costly this might be."

Several Democratic lawmakers Monday questioned the auditor on how an unpublished report, which neither legislators nor the Governor's Office have read, could already be causing financial ripples in the state.

Legislative Auditor Maciver says the division needed to update other state financial analyses based on its initial state health department findings, even when that specific report was not yet complete.