Despite Maryland’s complex system for assessing 9-1-1 fees, collection of the funds is infrequently audited ― an issue that drew concern from a legislative commission this summer after years of incorrect billing by a major mobile carrier and has now drawn scrutiny from legislative auditors.
An Office of Legislative Audits review released publicly this week included recommendations for ways to review whether payments to the state’s 9-1-1 Trust Fund are made properly to support emergency call centers throughout the state.
State Sen. Cheryl C. Kagan (D-Montgomery), who chairs the Commission to Advance Next-Generation 911 Across Maryland, will introduce an emergency bill in the 2020 legislative session to empower the state comptroller’s office to conduct more routine audits of mobile carriers’ payments.
In 2018, the Emergency Number Systems Board ― a small part of the Department of Public Safety and Correctional Services ― collected $55.5 million in 9-1-1 Trust Fund deposits, according to the audit.
However, the department did not always verify that 9-1-1 Trust Fund fees are properly collected by wireless providers or properly remitted to the state.
T-Mobile, one of the larger mobile carriers in the state, for example, overbilled Maryland customers for about 15 years by charging a 9-1-1 fee for every cell phone line, though state law only required the fee per account under an old fee structure.
Lawmakers came to see the old structure as a “loophole” as mobile phones proliferated and contributed to growing numbers of emergency calls and the General Assembly passed a bill this year that changes state law to impose an increased fee per line.
It was the debate and passage of the legislation that brought the billing issue to light, as well as deficiencies in the state’s auditing process.
Legislative Auditor Gregory A. Hook concluded that T-Mobile overbilled customers by about $490,000 in January 2019 alone; the amount of the overbilling over time could not be established due to a lack of records at the department, Hook wrote.
In response to concerns about billing issues earlier this year, T-Mobile representatives said the company “follows all applicable tax laws and has always fully remitted all 9-1-1 fees collected from our customers back to the State of Maryland,” and had been assured in 2015 that they were applying fees properly.
The Emergency Number Systems Board, which manages the state’s 9-1-1 trust fund, said it will work with carriers found to be out of compliance with state law and will try to determine the full extent of any improper fees collected by next February.
The board has also started a process to hire a private company to conduct an audit on fee collection, but will cancel that procurement if Kagan’s emergency legislation shifting that duty to the comptroller’s office is passed.
The board established procedures for audits of the fee collection in 2007, but had not conducted an audit since 2009 because they were deemed not to be cost-effective, according to Hook’s report.
The 2009 audit found $179,000 in fees that were not remitted to the state.
The legislation passed earlier this year to update the state’s 9-1-1 fees is expected raise funds to add new technology such as video and texting capabilities at state emergency call centers, based on recommendations from the Commission to Advance Next-Generation 911 Across Maryland. A second report from the commission is expected to be released in coming weeks.
The audit report included several other findings relating to financial transactions within the Department of Public Safety and Correctional Services.
The department continues to buy pharmaceuticals under a June 2005 contract, which has been extended 14 times since the contract’s third renewal expired in 2010.
The original two-year contract was valued at about $32 million; as of June 2018, more than $425.3 million has been expended through the contract.
The state attempted to update the contract in 2011, but contract protests and litigation ultimately canceled the procurement. More recently, the state started a new procurement in August 2017, with the goal of awarding a new contract in spring 2019.
The department also miscalculated consumer price index adjustments for inmate medical and mental health contracts, resulting in overpayments of $1 million. New contracts for the services do not include regular adjustments for CPI; about $120,000 was recovered for overpayment of the mental health contract, according to an audit response from Department of Public Safety and Correctional Services Secretary Robert L. Green.
The agency also could consolidate contracts for fresh produce and maintenance services to save money, according to the audit. Other produce purchases ― including one for $27,990 ― did not appear to be competitively bid, according to auditors.
On maintenance services, the department made 240 payments to one vendor for $677,000 during the course of four years. Because the payments were valued at $5,000 or less, competitive bidding was not required, but could have saved the state money, the auditors concluded.
In a written response, Green said the issues with procurement are being addressed.