The Maryland Developmental Disabilities Administration is slated to get back $25.7 million in the coming fiscal year that it lost this year through specious accounting.

The state budget that Gov. Martin O’Malley proposed Wednesday would return the money to the administration, and include a boost to help people who are most in need of DDA’s services, said Department of Health and Mental Hygiene Secretary Joshua Sharfstein.

“I consider the budget a step forward,” Sharfstein said Thursday. “But we still have a lot of work to do.”

Earlier this year, Sharfstein faced criticism from lawmakers and advocates for Maryland’s disabled population after he revealed that the department had been forced to return $34.5 million in state and federal funding to Maryland’s general fund at the same time it had a long list of people awaiting its services.

DDA officials first became aware of the unspent money in July, as they closed out the department's fiscal 2011 books. The closeout revealed $25.7 million in unspent state funding and $8.8 million in unspent Medicaid reimbursement money from the federal government.

The state money reverted to the general fund, while officials were able to forward the unspent federal money to this year’s DDA budget.

State officials told legislators that an internal investigation revealed no evidence of criminal wrongdoing connected with the unspent money and that the problem seemed to stem from the department’s antiquated accounting system.

Sharfstein promised to modernize the system and hire a forensic auditor to discover exactly how and why the irregularity occurred.

Meanwhile, advocates pointed out that, as the unspent money accrued, the department’s waiting list for service grew to more than 6,000 names.

Also, legislators raised Maryland’s alcohol tax from 6 percent to 9 percent this fiscal year in part to help reduce DDA’s waiting list. The administration received $15 million from the tax this year.

O’Malley’s budget includes a proposed $6.5 million in the coming fiscal year to serve 300 people who are at “high risk” and most in need of DDA’s services, Sharfstein said.

That funding is part of a three-year, $28.5 million commitment O’Malley has made to fund a full complement of services for high-risk clients, Sharfstein said, adding that the funding is slated to continue beyond the three years.

In the meantime, DDA has this fiscal year decreased its waiting list by an additional 1,200 people who are less at risk, he added.

O’Malley’s budget also includes a proposed $27 million from the alcohol tax that would help pay for a variety of programs, including increasing the amount of money the administration pays to nonprofits that offer services to the disabled, the health secretary said.

In the meantime, the department continues to work to modernize its system so that it can maximize the amount of money it receives in federal matching dollars through Medicaid, a move that would take “thousands” off the waiting list in coming years, the health secretary added.

He said the department plans to hire the forensic auditor by the end of February and, by April 1, a consultant to help modernize its accounting system.

In addition, O’Malley’s budget proposes creating a trust fund into which the department’s unspent money would be deposited each year.

Advocates for the disabled appreciate that O’Malley restored the funding, said Brian Cox, executive director of the Maryland Developmental Disabilities Council.

But he added that it would have been “unconscionable” for the governor to have refused to restore the funding, given that DDA’s waiting list still has more than 6,000 people on it.

“We view it as progress,” Cox said of the budget proposal.

In November, 54 members of the House of Delegates, led by Montgomery County Del. Heather Mizeur, sent O’Malley a letter asking him to restore the $25.7 million to DDA.

On Thursday, Mizeur (D-Dist. 20) of Takoma Park said she was glad O’Malley heeded the request.

“I think the governor has shown a commitment to people with developmental disabilities,” she said.

skelly@gazette.net