SCR200 SD1

WHEREAS, Title VII of the Rehabilitation Act of 1973, as amended, provides enabling legislation for the establishment of a network of independent living centers for persons with disabilities in the United States; and

WHEREAS, independent living centers are required to be consumer-controlled, community-based, cross-disability, nonresidential, private nonprofit agencies that aim to maximize the independence of individuals with disabilities and promote their integration into the mainstream of American society; and

WHEREAS, the core required minimum services of an independent living center are information and referral, independent living skills training, peer counseling, and advocacy services; and

WHEREAS, the Hawaii Centers for Independent Living receives nearly $1,200,000 in federal Rehabilitation Act funds and state general funds; and

WHEREAS, the Hawaii Centers for Independent Living has had a high staff turnover and an exodus of board members within the past five years resulting in a lack of continuity of services; and

WHEREAS, under the federal Education Department General Administrative Regulations, the State is responsible for managing the day-to-day operations of grant and subgrant supported activities, and must monitor grant and subgrant supported activities to assure compliance with applicable federal requirements and that performance goals are being achieved; and

WHEREAS, the Legislature is concerned as to whether the Hawaii Centers for Independent Living is meeting its core function and delivering the services as contracted; and

WHEREAS, the Legislature is concerned as to whether independent living services are available to the full spectrum of persons with disabilities; and

WHEREAS, state contracts require the Hawaii Centers for Independent Living to submit annual and quarterly reports for all its contracts, including final comprehensive, expenditure and activity reports, and the Center has reportedly failed to submit eight annual reports and sixty-six quarterly reports, including expenditure and activity reports, for state contracts dating from 2002 through the present; and

WHEREAS, the Legislature has received testimony from a number of former Center employees who held such positions as finance director, human resources director, deputy operations director, independent living specialist, and neighbor island program coordinator; and these persons have reported instances of alleged fiscal improprieties, misappropriation of funds, and fraud between 2003 and 2006, including the following:

(1) Hawaii Centers for Independent Living Board of Directors approved contract moneys for staff bonuses which were not allowable expenses;

(2) In 2005, the Executive Director instructed the Center's Finance Director to issue false invoices, reports, and improper checks indicating contracted services;

(3) Between July 2005 and April 2006, the Executive Director transferred funds from federal grant moneys in amounts exceeding actual expenditures;

(4) The Executive Director received payment for airline tickets, hotel accommodations, and per diem moneys for agency travel, and cancelled the trips without providing reimbursement for funds received;

(5) The Executive Director used a Center vehicle for her regular personal use but which was purchased with Department of Transportation funds solely for use as client transportation, and instructed the Center's Finance Director to charge the fuel, insurance, and vehicle repair expenses to three state contracts that did not allow for vehicle expenditures; and

(6) The Executive Director hired a security specialist and paid this individual approximately $2,000 per month out of grant moneys when the services were not budgeted and did not relate to the grants; and

WHEREAS, more than twenty-five Center employees have left their positions either because they were fired for complaining about the Executive Director or were forced to resign due to threats by the Executive Director; and

WHEREAS, the Legislature has also received complaints from numerous persons in Hawaii county with hearing and sight impairments stating that the Center is not presently providing services, and that the Center closed the cases of clients who had offered testimony in support of Senate Concurrent Resolution No. 81 in 2007 which called for an audit of the Center; now, therefore,

BE IT RESOLVED by the Senate of the Twenty-fourth Legislature of the State of Hawaii, Regular Session of 2008, the House of Representatives concurring, that the Auditor is requested to conduct a financial and management audit of the Hawaii Centers for Independent Living in the State of Hawaii; and

BE IT FURTHER RESOLVED that the audit determine whether:

(1) The Hawaii Centers for Independent Living is fulfilling the mission of providing core services;

(2) The Board of Directors of the Hawaii Centers for Independent Living is meeting its oversight and fiduciary responsibilities;

(3) State or federal agencies providing funding are adequately monitoring program outcomes, financial management practices, and consumer satisfaction; and

(4) Program effectiveness and consumer satisfaction are adequately measured and, if not, the Auditor is requested to seek out at least some consumer input; and

BE IT FURTHER RESOLVED that the Auditor report its findings and recommendations to the Legislature no later than twenty days prior to the convening of the Regular Session of 2009; and

BE IT FURTHER RESOLVED that certified copies of this Concurrent Resolution be transmitted to the Board Chair and Executive Director of the Hawaii Centers for Independent Living, the Director of Human Services, the Administrator of the Vocational Rehabilitation and Services to the Blind Division, the Federal Rehabilitation Services Administration, the Council President and the Executive Director of the Statewide Independent Living Council of Hawaii, and the Auditor.

Report Title:

Financial Audit of Hawaii Centers for Independent Living

THE SENATE	S.C.R. NO.	200
TWENTY-FOURTH LEGISLATURE, 2008		S.D. 1
STATE OF HAWAII