Indiana veterans affairs employees not only dipped into state monies meant for struggling veterans — some also benefited from federal welfare dollars the agency administered.

Records obtained by IndyStar show one manager, Adryanne Bonner, and her boyfriend received at least $6,700 for child care, $1,200 for a couples retreat at the upscale French Lick casino resort and a voucher for an alternative horse riding therapy program for her son. Bonner, who is a veteran, also received a $2,500 grant from the state's military relief fund.

Other middle-income workers at the Indiana Department of Veterans’ Affairs also received federally funded benefits — more than $64,000 in all. In at least some cases, employees should not have been eligible for those benefits.

What’s more, the agency awarded benefits to dozens of people who were not state employees but did not meet the program’s requirements. Others who did qualify, meanwhile, were turned away

Problems with how IDVA handled the federal funds, known as Temporary Assistance for Needy Families, or TANF, were revealed to state officials — including Gov. Eric Holcomb's office — in a confidential 2017 audit, which IndyStar received through a records request and is making public for the first time.

Controls were put in place after the audit, but federal officials were not notified of the possible misspending and no one at IDVA was disciplined.

Instead, Bonner, who was then a contract employee, received a 10 percent raise and was later hired permanently with a salary of $50,000. Other employees who worked on the TANF program also received similar raises, records show.

Leaked records provided to IndyStar also indicate the state used TANF money to pay the salaries of employees who did little or no work on the federal program, which is not allowed under federal law.

That could put the state in jeopardy with the U.S. Department of Health and Human Services, which sends TANF grants to the states.

"We would not look favorably on that," said Thomas Schindler, regional program manager for the federal Office of Family Assistance. "It would be considered a misuse of funds. Normally that is not allowable."

When provided a copy of the state's internal audit by IndyStar, federal officials said they planned to contact the state for additional information.

If impropriety is found, Health and Human Services can demand repayment of misspent funds by reducing the amount of the state's annual $206 million TANF grant.

Previously:Special treatment? VA director grants state relief funds to employees

The revelations about the TANF program follow an IndyStar investigation in November that revealed similar abuses in the Military Family Relief Fund, prompting the resignation of IDVA Director James Brown. Between the two programs, employees received more than $104,000 in benefits intended for struggling veterans.

Neither Bonner, who is now IDVA's communications director, nor IDVA Acting Director Matthew Vincent responded to questions for this story.

Holcomb, who is ultimately responsible for the agency, and Indiana Family and Social Services Administration Secretary Jennifer Walthall, who administers the state’s TANF money, also declined to comment.

But in a written statement, Holcomb press secretary Rachel Hoffmeyer acknowledged that the governor's office knew about the problems. She said FSSA decided not to renew the grant in the summer of 2018 after IDVA's performance failed to improve.

"When a new IDVA director is hired," she said, "he or she will be charged with transforming the department from top to bottom."

Program manager benefited

The problems started soon after the IDVA entered into a contract with the FSSA in 2015 to provide counseling, marriage and family retreats, and job training to needy veterans with children. Veterans in job training programs or searching for employment could also receive child care benefits. The grant, funded with federal TANF dollars, eventually grew to $5.35 million.

IDVA hired several contract employees to help administer the grant. They included Bonner, a former human resources sergeant with the Indiana Army National Guard, who became the new program's manager.

Soon, Bonner and other employees were receiving many of the benefits they were administering.

Bonner's boyfriend, who is also a veteran, applied for the TANF program and received childcare benefits for Bonner's son, who appears in the paperwork as his dependent. Bonner and her boyfriend then spent at least $6,700 in TANF funds on day care costs for Bonner's son over the course of more than a year, according to invoices and vouchers obtained by IndyStar. An email and phone messages seeking comment from the boyfriend were not returned.

The child care benefit was meant for people in job training programs. ButIndyStar found no evidence that Bonner or her boyfriend were in an IDVA job training program or looking for employment during that period. In fact, pay stubs from 2016 and 2017 show they earned a combined income of $70,000 to $85,000.

And Bonner wasn't the only one. IDVA employees received nearly $40,000 in child care benefits, accounting for 11.5 percent of the program's child care budget.

Bonner and her boyfriend also received vouchers for marriage and family retreats and an alternative horse riding therapy program. One of those retreats was a "Warrior 2 Soul Mate" weekend at French Lick Resort. The resort features two historic hotels, a casino, golf courses, spas, a formal Japanese garden and its own trolley. Rooms go for about $270 a night.

In all, she and her boyfriend received more than $14,000 in grants and vouchers, records show, including the Military Family Relief Fund.

Questionable spending piles up

If any of this sounds familiar, that's because it is.

IndyStar previously reported that about a dozen IDVA employees received at least $40,000 in grants through the Military Family Relief Fund. Funded with revenue from specialty "Support Our Troops" and veteran license plates, that program is supposed to provide grants to financially struggling veterans.

While the employees who received the grants were veterans, many earned salaries of $40,000 to $50,000 at IDVA and provided little or no proof of financial hardship.

Those revelations stirred outrage among veterans, who accused the agency of giving its own employees an inside track on the money. In addition to the agency director's resignation a week after IndyStar published its investigation, the state launched an audit that confirmed the payments to employees and a widespread lack of controls.

State veterans officials have also approved new rules to govern the program, and legislation has been introduced to ban employees from receiving grants.

But the state knew it had problems two years earlier. Dozens of issues had been revealed in an April 2017 audit of IDVA's TANF spending conducted by FSSA. Among them:

Some applicants were approved even though their income exceeded the limit of 250 percent of the federal poverty line.

The program was reserved for those with dependent children, but some recipients had none.

Long-term child care vouchers were awarded even though recipients were not in a job training program.

Some individuals received benefits even though their applications were clearly marked as "ineligible."

Some applicants were denied even though they qualified and should have received benefits.

Similar retreats to the ones at French Lick were available at half the cost.

Auditors also found that employees were among the recipients.

"Program Managers and Case Manager were contract employees for IDVA and received child care benefits for extended periods of time," auditors wrote.

Specifically, they criticized the award of a roughly year-long child care voucher for the significant other of an IDVA program manager who was not in a job training program. The name was redacted. The job title matched Bonner's and the dates of the voucher cited in the audit match those for Bonner's son.

The audit attributed many of the problems — including the potential conflicts of interest — to a lack of oversight at the agency.

"We found limited evidence that IDVA state employees provide oversight of the contracted employees that operate the TANF program," auditors wrote.

The audit concludes that the problems exposed the state to risks including non-compliance with federal regulations, ineligible participants and over-payments.

The audit resulted in a corrective action plan that FSSA oversaw until the grant ended in the summer of 2018. And IDVA appears to have stopped paying Bonner's child care costs shortly after the audit.

FSSA's ongoing monitoring exposed another major problem. IDVA had paid the Indiana Parenting Institute about $200,000 in TANF funds for services provided prior to its agreement with IDVA to provide parenting classes. The Gary-based nonprofit refunded the money to IDVA.

Still, FSSA extended the grant agreement with IDVA for another nine months.

"FSSA allowed the program to continue in order to benefit recipients," FSSA spokeswoman Marni Lemons said. "However, a corrective action plan was developed and implemented to help address FSSA’s concerns."

As for Bonner, the state hired her permanently in March 2018. She now receives $50,000 a year as IDVA's communications director, an increase of more than $8,000 over what she made at the time of the audit.

No one was disciplined, according to state personnel records. Brown, the former director, remained in his position for another 20 months until IndyStar exposed similar problems with the military relief fund. And Matthew Vincent, the agency's deputy director, is now the one ushering in new rules for the relief program.

Lisa Wilken, an Air Force veteran and advocate who has expressed concerns about the program for months, said she was “appalled” that the Holcomb administration did not act sooner.

“Veteran's advocates have been ignored when raising concerns about these issues and to find out that there is a report from over a year ago highlighting this is very disappointing,” she said. “We need the leadership at IDVA and our Veterans Commission replaced to eventually gain back the trust of Hoosier veterans and the public.”

New questions

The concerns identified in the audit weren't the only potential misuse of federal welfare money.

An IndyStar review of payments to contract employees found several instances in which employees who did not work on the TANF program were paid with TANF money.

States are allowed to spend up to 15 percent of their TANF funds on administration, including employees, but those employees must work on TANF-related activities.

At IDVA, several contract employees were paid with TANF funds but worked primarily on other programs, according to their job descriptions and interviews with current and former employees. One of those employees was fully paid with TANF funds but worked for the military relief fund, which is a state program. IDVA used TANF funds to pay half the salaries of two other workers, even though they worked on the military relief fund or for the agency's employment services section.

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Vincent, the acting IDVA director, did not respond directly to questions about those arrangements. But the agency did provide documents that suggest those employees' duties included referring military relief fund and employment services participants to the welfare program.

Current and former employees told IndyStar those activities were minimal at best.

A spokeswoman for FSSA said it was unaware of any employees paid with TANF funds who were not working on case management, project management, TANF program accounting or client records.

Contact IndyStar reporter Tony Cook at 317-444-6081 or tony.cook@indystar.com. Follow him on Facebook or Twitter: @IndyStarTony.

Call Star reporter Chris Sikich at 317-444-6036. Follow him on Twitter: @ChrisSikich.