Posted on: Wednesday, September 11, 2002

Child support fund 'slipshod,' court told

By Mike Gordon and David Waite
Advertiser Staff Writers

The Hawai'i Child Support Enforcement Agency has millions of dollars in undistributed child-support payments in its accounts that should have been mailed to parents, including nearly $5 million that it cannot account for, attorney Francis O'Brien said yesterday during opening statements of a class-action lawsuit against the state.

One of the key issues in the jury-waived trial before Circuit Court Judge Sabrina McKenna is whether the state agency is substantially meeting requirements under state and federal law that it mail child-support checks to intended recipients within 48 hours of receiving them.

O'Brien, whose clients are suing the state, said the agency is using the $7.2 million in its accounts as "a slush fund to cover up the incredible slipshod manner in which it manages the fund."

He said that audits by the legislative auditor showed that the agency had continuing problems and opportunities for theft and fraud of the money. He told the judge that the money "was not safe as long as it is in the hands of the agency."

O'Brien said the state agency ignored warnings about its automated distribution system, the "Keiki" computer system, before it began and even punished a Big Island investigator who works for the agency after he raised his concerns about the system.

The agency, with almost 200 employees and an annual appropriation of $18 million, sends checks to about 35,000 child-support recipients per month, logging an estimated $90 million to $95 million in child-support payments each year.

State Deputy Attorney General Charles Fell, who is defending the agency, told the court about the magnitude of the job. As of the end of June, the agency had 100,000 active cases, which amounts to about 450 cases per full-time employee.

Fell said the reliability of the Keiki computer system used to distribute checks, which began in July 1998, has been checked by the federal government.

He said the Keiki system is not, and was never intended to be, a traditional business accounting system.

"We know from the federal government audits and certification that the Keiki system is indeed reliable," Fell said, noting also that it sends out checks in most cases within 48 hours.

He urged McKenna to focus only on whether the agency sends out checks to people entitled to child support within 48 hours of receiving payments from people who are obligated to pay child support.

But according to a July 30 internal e-mail message that was introduced in the trial late yesterday afternoon, the agency still has trouble meeting the two-day check turnaround deadline. Another internal e-mail message, one dated July 17, informed agency workers that customer service operations were being suspended in an all out effort to process as many of the checks within the two-business-day limit as possible because of the upcoming trial.

The first witness called to testify in the trial, Michael Meany, who headed the agency from February 1996 until November 2000, said he had no formal accounting training even though he headed an agency that collected and dispersed about $70 million per year in child support payments.

Meany said he never examined the back balances in any of the three checking accounts the agency used while he was the administrator and had no "large computer system development expertise" although the state was spending millions to develop a new computer system to keep better track of payments.

Asked if there were overwhelming problems when the new computer system was put into operation in July 1998, Meany said, "Absolutely."

But he said the problems were expected.

"Everyone knew there would be roll-out difficulties, every other state (that put a new computer into operation) had experienced a tremendous amount of difficulties," Meany said.

The trial is expected to last a little more than a week.