National Partnership for Women & Families

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Pa. audit presents questions about publicly funded CPC org's activities

A Pennsylvania Department of Human Services (DHS) audit of an antiabortion-rights crisis pregnancy center (CPC) organization has prompted questions about how the organization is using money that it has set aside, the Pittsburgh Post-Gazette reports (Born, Pittsburgh Post-Gazette, 4/27).

Organization details

The organization, called Real Alternatives, is a not-for-profit that operates in Indiana, Pennsylvania and Michigan (Women's Health Policy Report, 10/14/15). In Pennsylvania, Real Alternatives has secured a $30 million, five-year state contract that expires in 2017. The grant is funded by about $5 million annually from the state's general fund and $1 million in federal assistance program money.

The funding is used at 93 sites monitored by Real Alternatives. Employees at the sites are required to "maintain a pro-life mission," according to the contract. Roughly $604,000 is allocated annually to cover administrative costs, including five full-time and five part-time workers.

Audit details

For the audit, DHS reviewed Real Alternatives between July 2012 and June 2015.

According to the Post-Gazette, the audit was launched in response to self-reported billing irregularities. Real Alternatives had flagged inappropriate billings, most of which came from a Braddock-based organization called Pittsburgh Family Development.

Key findings, recommendations

The department found that Real Alternatives collects a 3 percent fee from claim reimbursements filed by service providers. The organization then invoices the original claim amount to DHS as "direct services." For example, Real Alternatives would collect $3 from a $100 claim, meaning that the service provider receives only $97.

The audit found that Real Alternatives has collected $497,468 from the fee since July 2012. However, "only a portion of the amount collected has been expended," the audit found.

According the audit, Real Alternatives would not permit DHS to review how the organization used those funds. However, the Post-Gazette reports that at least part of the money appears to have been earmarked for out-of-state programs. Real Alternatives says on its website that it has assisted 14 states in creating antiabortion-rights counseling programs.

The audit stated, "RA management stated that the fee is used to fund expenses that are not permitted under the grant agreement, such as travel and other expenses to support advancement of the program in other states."

DHS called on the state's Office of Social Programs (OSP) to evaluate whether Real Alternative's 3 percent fee is appropriate. DHS said if OSP finds the fee inappropriate, it should recover the funds or ensure Real Alternatives returns the money to the service providers. If deemed appropriate, DHS said OSP should detail potential ways to allocate the money.

In addition, the audit cited several "internal control weaknesses" at Real Alternatives. DHS advised the organization to improve documentation and on-site supervision of service providers. Further, the audit confirmed $485,000 in inappropriate billing, most of which was linked to Pittsburgh Family Development. The auditors advised OSP to recover that funding.

Real Alternatives' response

Real Alternatives said its service providers have independently agreed to the 3 percent fee so that Real Alternatives can further "its programs and mission." In addition, the organization contended that DHS, after allocating reimbursement funds to service providers, does not have the authority to review how those funds are used.

According to the Post-Gazette, Real Alternatives refused to answer a reporter's inquiries into where the organization sent its employees and for what purpose. In response to emailed inquiries, the organization denied using public funds to subsidize out-of-state programs.

Real Alternatives also acknowledged the billing irregularities, but the organization disputed the overall amount.

State response

DHS Secretary Ted Dallas said his department was assessing the findings and "determining the most appropriate next steps."

Separately, Pennsylvania Auditor General Eugene DePasquale said his office in June or July would launch an investigation into DHS' supervision of Real Alternatives. He noted that the 3 percent fee "is one of the items we'll be reviewing in very close detail" (Pittsburgh Post-Gazette, 4/27).