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Commentaryby Mark Reutter7:11 amDec 5, 20120

Inside City Hall: What a federal audit tells us about city spending

Baltimore ranks at the bottom of cities audited by HUD’s Inspector General. Where, exactly, did the $9.5 million in homeless funds go?

Above: Homeless men and women sit near the city’s Harry and Jeanette Weinberg homeless shelter at 620 Fallsway.

Calling for audits has become a popular pastime at City Hall.

Mayor Stephanie Rawlings-Blake wants one to look at Comptroller Joan Pratt’s Municipal Telephone Exchange office, while Pratt is calling for numbers crunchers to sift through the contracts of the Mayor’s Office of Information Technology.

Councilman Carl Stokes has called for audits of all city agencies, something the mayor and majority of the City Council don’t want to do. But the mayor and Council did agree over the summer to audit selective agencies beginning in year 2014.

Given all the fuss, wouldn’t it seem that when an audit does appear, elected officials would rush to find out what it says about how the city spends money?

Such a report arrived last month. The Inspector General of the U.S. Department of Housing and Urban Development (HUD) released an audit of Baltimore’s use of $9.5 million for homeless programs awarded under President Obama’s 2009 Recovery and Reinvestment Act.

A Crash Nobody Heard

City Hall seems to be pretending that this audit does not exist, like the proverbial tree that fell in the woods with a crash nobody heard.

There’s been no comment about the report by top officials, not least by Mayor Rawlings-Blake, whose Office of Human Services and Homeless Services Program stand accused of ineptitude and mismanagement by HUD’s auditors.

The report says that the city did not properly monitor the homeless funds, paid sub-providers based on a preset formula rather than on actual expenditures, lost track of money in several instances, and paid city staffers according to estimates, not on the actual time they spent on grant activities.

Calling 100% of Baltimore’s homeless expenditures “unsupported” by required documentation, HUD’s Inspector General is recommending that the city either provide proof that its homeless payments were legit or return the dough – all $9,472,118 – to the federal government.

The Inspector General faulted the financial accounting of Baltimore's homeless program.

The Inspector General faulted Baltimore’s homeless program.

“Baltimore Was Delinquent”

While Rawlings-Blake and her staff haven’t publicly responded to the audit, the Homeless Services’ rebuttal to HUD was published in the report.

It’s revealing. The city admits that it violated federal regulations because it did not have the staff to ensure compliance and because it found the program’s regulations too complicated.

“The City of Baltimore was delinquent in monitoring the program’s sub-providers as required because we lacked resources to conduct an appropriate level of monitoring, both fiscally and programmatically,” Kate Briddell, director of Homeless Services, wrote.

She acknowledged a number of management infractions. Among them: “the fiscal director improperly directed the fiscal staff to draft funds . . . to reimburse itself,” the Board of Estimates approved a homeless contract “in error,” the language of another contract “was not amended in title or terms to accommodate” the federal program, and funds “that appear to be drawn” improperly from one account were in fact used without documentation for a related program.

After making these admissions, Briddell went on to deny that they had any real consequences. “[W]hile some of the paperwork was not completed or kept in a standard we would like, no waste, fraud or abuse was conducted during the course of administering this project,” she wrote.

Briddell’s statement was flatly contradicted by her own acknowledgment that the Prisoner’s Aid Association of Maryland did not properly handle $270,550 in homeless funds – HUD claims the group was double billing the government for clients they had placed in emergency housing.

Perhaps that’s why HUD’s reply to Briddell begins so bluntly: “We disagree with the city’s statements.”

At the Bottom of Cities Audited

To check whether other cities shared Baltimore’s managerial shortcomings, The Brew reviewed a dozen HUD audits of city and county governments that also received funds under the Homelessness Prevention and Rapid Re-Housing Program.

Compared to Baltimore’s 100% “unsupported” expenditures, HUD’s Inspector General found that less than 1% of the funds spent by New York City, Houston and San Francisco to be “unsupported” or “ineligible.” The exact percentages were: New York (0.6%), Houston  (0.48%) and San Francisco (0.7%).

The Los Angeles Housing Department was also audited. HUD found $29,004 of the $29.4 million awarded was not properly documented, or less than 0.001%.

Even the worst offenders – Buffalo with 6.6% unsupported documentation and Newark with 8.5% unsupported, according to HUD – look like like fiscal angels compared to Charm City.

The HUD audit provided this summary of following generally accepted government auditing standards.

HUD certified in its audit of Baltimore that it followed generally accepted government auditing standards.

Coming Back for More

The lack of sufficient internal controls has been a longstanding criticism of Baltimore government.

City departments, including the Mayor’s various offices handling criminal justice, CitiStat operations, information technology, health and human services, are budgeted a certain amount of funds for the fiscal year beginning July 1.

But the practice of letting departments come back for more funds during the year, through supplemental appropriations approved by the Board of Estimates, undercuts fiscal discipline, critics say.

This coupled with the lack of oversight by the City Council – the Budget and Appropriations Committee chaired by Councilman Helen Holton has yet to reconvene a hearing concerning agency spending last year – and the necessary checks and balances are absent.

Farming Out Responsibility

A larger issue brought out by the HUD audit was the lack of programmatic oversight by the city. The Mayor’s Office of Human Services did not even hand out the homeless grants. The task was farmed out to its fiscal agent, the United Way of Maryland.

That process split up management functions, which effectively meant that nobody was minding the store and determining whether the sub-providers were actually fulfilling the needs of the homeless as well as meeting the requirements of HUD.

Until effective accountability is instilled at the top, the future audits promised for city agencies are likely to suffer the same fate as the HUD homeless audit – official silence from those in charge, leading to more public cynicism about the workings of local government.

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