Reps grill auditor general over Health Department oversight lapses

Members of the House Oversight Committee at a recent hearing questioned whether the Michigan Department of Health and Human Services is using a state-created nonprofit for purposes that go beyond what lawmakers intended when they created it in 1990.

House members heard testimony from three employees of the Office of the Auditor General during a Sept. 22 committee hearing on deficiencies in the department’s oversight of contracts with the Michigan Public Health Institute, an organization created, according to the public health code, “to plan, promote, and coordinate health services research with a public university or a consortium of public universities within the state.”

Yvonne Benn, Chad Monger, and Ivy Jaroche testified on oversight failures including inadequate documentation, payments approved before required work plans were reviewed, and incomplete reporting to the Legislature.

An audit found that less than 1% of $435 million routed through the institute went to public university projects over the course of two years.

Only eight of the nonprofit’s 857 project-level agreements included subcontracts or subgrants with universities, for a total of $1.5 million. The audit covered fiscal years 2024 and 2025, when the total number of grants the department awarded through the institute came to about $435 million.

The auditor general’s office reviewed 20 of those agreements, representing about $90 million, or roughly 20% of the total.

Benn, audit division administrator for the Auditor General’s office, told lawmakers all 20 agreements reviewed had deficiencies falling within the audit’s four findings.

Rep. Jay DeBoyer, R-Clay Township, chairman of the Oversight Committee, asked the auditors how the Department of Health and Human Services could interpret the law in a way that resulted in such a small portion of funding going toward university projects.

Benn said the Health Department would be better positioned to explain why it believes the arrangement complies with legislative intent.

She noted during the hearing that the department appears to rely on the portion of the statute that says the purpose “shall” be to plan with universities, but the next sentence says the corporation “may” research, evaluate, and demonstrate various activities prescribed by law.

That means 1% goes toward the “shall” and 99% goes toward the “may” portion of the law, DeBoyer said.

Monger, the office’s principal audit supervisor, specified that “a handful” of the recipients were not even Michigan universities.

Rep. William Bruck, R-Erie, asked whether the less-than-1% figure represented the amount of all money from the Michigan Public Health Institute that reached universities for research and health improvement.

Monger clarified that the 1% figure represented money paid to universities listed as subcontractors.

“We're paying all this money to all these contracts to all these employees to get 1% to actually where it's supposed to go,” Monger said.

Rep. Luke Meerman, R-Coopersville, said that the institute’s use of subcontractors can add another layer of administrative costs that might not exist if the Health Department performed some of the work itself.

Rep. Dylan Wegela, D-Garden City, agreed.

Wegela said it appears the agency could save money by doing more of the work in house. He asked if the Michigan Public Health Institute is subject to audit through the Freedom of Information Act. Benn said the institute is subject to audit, but Monger gave a slightly different view.

“I believe it is: They told us they don’t believe that they are when we initially discussed it with them,” Monger said.

The auditors testified that about 80% of the contracts reviewed had no deliverables reported to the Legislature.

The prevalence of subcontracting was also a factor in the auditors’ decision to report a “material condition” finding, the most significant deficiency concluded by an auditor.

DeBoyer also questioned approximately $20 million paid through the institute to Manatt, Phelps & Phillips, a Los Angeles-based law and consulting firm.

Monger said the auditors found no deliverables reported to the Legislature for the law firm’s agreement.

DeBoyer asked what deliverables Michigan taxpayers received from the roughly $200 million in Michigan Public Health Institute contracts awarded during the most recent fiscal year.

Monger said a large portion of the money went toward salaries and wages, fringe benefits, professional services, indirect costs and other expenses.

The audit’s exhibit 2 shows $353.6 million in reported expenditures for fiscal years 2024 and 2025.

Of that amount, $139.9 million was reported as salary and wage expenditures, $81.2 million as contractual professional services and $48.9 million as fringe benefits — 76% of expenditures.

One of the audit’s central criticisms involved the Health Department’s monitoring of agreements with the Michigan Public Health Institute.

Monger testified that institute-affiliated employees and Health Department employees who had previously worked for the Michigan Public Health Institute approved nearly half of the financial status reports for payments to the institute, totaling $199 million during fiscal years 2024 and 2025.

The auditors found that in some cases, Michigan Public Health Institute affiliate staff were simultaneously working on agreements while approving financial status reports or work-plan progress for those agreements. Monger said the instances involved $12.2 million in approved costs and 89 work plans.

The audit report also concluded there were no improper payments identified.

Rep. Josh Schriver, R-Oxford, asked whether the auditors’ inability to identify improper payments was partly attributable to insufficient documentation.

“We can’t substantiate either way whether they were improper payments,” Monger told him.

The Michigan Department of Health and Human Services did not respond to a request for comment.