The state Department of Human Services' spending of federal welfare money lacks strategy and predictability and may not be the best use of taxpayer dollars, a state audit has concluded.

The audit also found that state lawmakers, who have oversight responsibility over how the money is spent, have had difficulty since the Cayetano administration in obtaining information from the department. Last year, after several public clashes with the department's director, Lillian Koller, lawmakers put a cap on spending to gain more leverage in setting priorities.

The audit claims the department falls short of Gov. Linda Lingle's promise in 2002 to inform the public of how tax dollars are spent and whether the money produces results.

Koller has defended her department and asked why an audit was necessary. "We are proud of the work we've done so far to provide new and expanded programs that are helping children and families make healthy choices and break the cycle of poverty," she said.

A federal welfare reform law that places a five-year limit on cash aid has moved thousands of Island-ers off welfare in recent years. But federal welfare money to the state has not declined, leaving the state with a reserve that last year reached $150 million.

Koller and Democrats in the Legislature want more of the money to get to people in need but they have not agreed on the best strategy.

"This is an eye-opener," state Rep. Alex Sonson, D-35th (Waipahu, Crestview), said of the audit. "This has given us an inside view of how the department conducts business."

Sonson, chairman of the House Human Services Committee, said the audit undermines Koller's defense. Lawmakers have questioned whether the Lingle administration should have used welfare money for an anti-drug media campaign and to replace money cut from art programs, but Koller has said the administration was being innovative.

The federal money is given to states to help needy families; promote job preparation, work and marriage; reduce out-of-wedlock pregnancies and encourage two-parent families. States have flexibility in spending the money when it comes in each year to meet any of these goals, but once it falls into the reserve fund, its use is restricted to cash assistance to needy families.

Last year, federal auditors examined how the department was spending the money and decided not to pursue an investigation, which Koller has said confirms the department has not done anything improper. Last week, Wade Horn, assistant secretary at the U.S. Department of Health and Human Services, praised Koller's creativity and an initiative to use welfare money to promote fatherhood.

But the state audit, which was requested by lawmakers last session, seems to validate some of the lawmakers' concerns.

"Departmental efforts to shift blame for its own failings to the Legislature underscore the need for added vigilance by lawmakers," the audit reports.

The audit found the department has not adequately explained its priorities. For instance, it questioned why the department has substantially increased spending to prevent teen pregnancy when the problem has already been declining. The audit also claims that the Reward Work program was launched without community involvement because "the department lacked the time to do so."

The audit found no substantial rationale for a $1.4 million contract to a nonprofit education group that provides after-school pregnancy prevention at charter schools. The audit said the students were already doing better than those at traditional public schools and suggested the welfare money was used to offset a loss of federal education funds.

Koller said the audit appears to be an attempt by the Legislature to "find every possible fault" with the department's use of welfare money and to justify its decision last session to cap spending.

Reach Derrick DePledge at ddepledge@honoluluadvertiser.com.