State police investigating finances of Rhode Island's child welfare agency

State authorities are investigating possible financial mismanagement at Rhode Island's troubled child welfare agency, officials said Wednesday, weeks after an audit cited problems in department management and financial controls.

The Department of Children, Youth and Families referred "suspicious activity" to state police and an investigation is underway, said Mike Raia, a spokesman for the Executive Office of Health and Human Services. He declined to comment further. The Providence Journal first reported the investigation.

The department has had a deficit in five of the past six years and was about $16 million over budget when Gov. Gina Raimondo took office in January. Raimondo ordered an audit and brought in Jamia McDonald, who previously conducted an analysis of DCYF's contracts, to lead an overhaul of the agency. That same month, DCYF announced that director Janice DeFrances was resigning.

According to the audit, which focused on the previous fiscal year and was released in July, the agency rarely complies with state laws when procuring contracts, fails to monitor contracts afterward and fails to collect and review audits of contracted providers.

McDonald attributed the department's problems to "management chaos." She said in July her team hadn't yet looked into whether any of the agency's service providers had taken advantage financially of the chaotic environment.

"We haven't gotten to that next layer of analysis," McDonald said.

McDonald told The Associated Press last month that it was unclear whether money was being accounted for before her arrival.

In conjunction with the audit's release, Raimondo and McDonald announced that the agency would undergo a complete overhaul. Last month, McDonald told the AP that the agency would be restructured in a way that may not include the two networks the state currently uses to provide services. She said a plan could be done by the fall.