Raleigh, NC -- Governor Pat McCrory said Thursday, there's an urgent need to fix what he calls a "broken government for the long term."
He made the comments during a presentation by State Auditor Beth Wood, who has uncovered egregious and illegal practices by leaders in the state's Department of Health and Human Services.
According to the audit, which covers the period between 2009-2012, the state's Medicaid program has been mismanaged to the tune of millions of dollars a year.
UPDATE: Read State Audit Report On DHHS
Governor McCrory says identifying the problems is just the beginning of accountability which will save taxpayers in North Carolina millions of dollars and give them a more efficient government.
The Department of Health and Human Services is the state's largest department.
The 70-page audit says leaders violated state and federal laws. For at least three years no one was held accountable.
Department heads didn't do an efficient job tracking spending, they didn't produce a budget for some areas of the division, they ignored several directives from the General Assembly, and exceeded their annual budget by nearly $1.4 billion every single year of the three years of this report.
READ: New State DHHS Head: Dept. Is 'Structurally Broken'
"Cost overruns will not be tolerated and will not be acceptable. There's a budget for a reason. And just as in your own homes, we must adhere to this budget," said Dr. Aldona Wos, the new DHHS secretary appointed by Governor McCrory. Dr. Wos noted, "Previously, we have not been very accountable for the money that we spent."
The state auditor also explained that there were several instances where lawmakers told the Department of Health to do something and leaders there refused to do it. This happened time and time again and at least two of those instances it cost taxpayers $190 million.
In another case, they broke state and federal law when they decided to hold on to $130 million owed to the federal government for drug rebates.
On another occasion, state lawmakers told DHHS leaders to eliminate inflationary increases to nursing homes, and again, heads of DHHS ignored the orders. That decision cost taxpayers $14 million of unplanned spending.
"In at least one case, program officials told us that they didn't really *know what the spending was going to be in that particular area, so they budgeted zero dollars," Beth Woods explained.
The governor says it's hard for his administration, especially Wos, to make any decision about health and human services with the glaring issues.
Furthermore, the management in the division means millions taxpayers never saw in services.
"That means less money is going to the people who need it and right, as we know across the state, people are hurting. And we want to make sure the money that's supposed to help people is going to them, not to administrative costs or an overview," said McCrory.
The state auditor has made 20 recommendations to the department in moving forward.
She says if they are all implemented, the state stands to save hundreds of millions of dollars.
"The issues we have heard about today that exist at the department of health and human services should concern every citizen of North Carolina. This is taxpayer money. Every dollar that is mismanaged for Medicaid is one dollar less that is available for the purposes of education, for things like road and bridge repair," the governor added.
McCrory says he has faith in his new appointee for the department.
In addition he point to a newly hired director for the Medicaid program as progress towards accountability and efficiency.
Carol Steckel, the new hire is nationally acclaimed, according to the governor.
Some North Carolina state legislators have already begun reacting to the state audit.
House speaker Thom Tillis said "the audit is further proof of inefficiencies and mismanagement at many levels of the Medicaid system that cannot be tolerated."
Senator Phil Berger also said that the report "confirms North Carolina does not have an administrative system in place that can capably handle an expansion of Medicaid or implementation of state based insurance exchange" -- referring to the federal health care law.
The governor did not mention is any of the former heads of DHHS will be held accountable, but Woods explained, there's another on-going audit. She says it includes an investigation that she cannot discuss at this time.