Were it not for the United Way of Central Maryland, Baltimore taxpayers could well be on the hook for much more than the $3.7 million that the city agreed to return to the federal government this week.

The full 12-page report by the U.S. Department of Housing and Urban Development (HUD) depicts the Mayor’s Office of Human Services as so inept that it could not properly account for any of the $9.5 million in homeless funds awarded under President Obama’s stimulus act.

The lack of documentation led HUD’s Inspector General to conclude in 2012 that all $9.5 million in grant funds were “unsupported” and needed to be reimbursed by the city. However, a year-long review by HUD’s Baltimore field office found enough documentation in the files of United Way, which served the program’s fiscal agent, to help reduce the level of unsupported spending to $3,756,025.35.

On Wednesday, the Board of Estimates approved this reimbursement, with City Comptroller Joan Pratt saying homeless providers should be asked to repay the taxpayers for not properly keeping records. Mayor Stephanie Rawlings-Blake took up the same theme, saying that while the providers had done excellent work, “when they can’t provide the documentation that we need to support those grants, we all are made vulnerable to that.”

HUD’s complete and so far unreleased report – a copy of which The Brew has obtained – provides a more nuanced account of what went wrong with the Homelessness Prevention and Rapid Re-Housing grant.

It also squarely places blame on the mayor’s homeless office for not following basic rules of grant administration, citing failures in five areas that allowed non-profits to spend funds on activities, such as a legal hotline and leafleting, that were not permitted under the grant.

United Way played a limited role in the debacle because the mayor’s office assumed responsibility for monitoring the expenditures of the sub-grantees. The audit, however, found that United Way incorrectly billed the city for $16,391 in indirect costs.

Wild Rumors

The lack of public information about the grant investigation has led to widely divergent views.

They range from City Hall’s assertion that the program was essentially tripped up by picayune federal rules to conspiracy theories that United Way, the city and unnamed non-profits had pocketed millions of dollars intended for the homeless.

The facts occupy a middle ground of mostly well-intended homeless providers kept in the dark about the rules and regulations of the grant money until HUD forced the issue with an audit of the program.

The full report says it found “no cases of fraud or abuse” in grant spending, but at the same time decries the lack of accounting that made it difficult, and at times impossible, to determine how sub-grantee money was spent.

What Happened at Prisoner’s Aid?

What’s more, the HUD report skirts around the matter of how the Prisoner’s Aid Association spent $270,550 in grant money.

The HUD Inspector General’s report, issued in November 2012, said that the city stopped paying Prisoner’s Aid in June 2011 following claims of fraud. The group’s director reported that “the former executive director transferred participants from the Shelter Plus Care program” into the homeless program “and billed both HUD programs for the same participants.”

Homeless Services also told The Brew in 2011 that the Baltimore Inspector General’s Office was looking into allegations of fraud by Prisoner’s Aid. The IG’s investigations are secret – and no findings by the IG were ever publicly disclosed.

A year later, Prisoner’s Aid was out of business amid a “death spiral” of heated accusations, as City Paper reported.

In the meantime, HUD auditors found that Homeless Services had drawn down $392,981 in federal funds, reportedly for Prisoner’s Aid. This left more than $100,000 in unaccounted-for funds.

Eventually, United Way was able to show that the missing funds had been reallocated to other service providers. In its final report, HUD demands that the city repay the original $270,500 given to Prisoner’s Aid.

In several other cases, the city simply allowed non-profits to use the homeless grants for their existing programs rather than spend the funds directly on homeless or near-homeless clients.

For example, AIRS (AIDS Interfaith Residential Services) used much of its $600,000 in federal funds to develop outreach efforts for youths at risk of homelessness. This included paying employees to distribute thousands of cards to residents in poor neighborhoods in Baltimore.

Ignore the Rules

Only 10% of the AIRS award was spent on providing direct financial assistance to needy clients. Because AIRS was a novice recipient of HUD funds, the city should have monitored its program and made sure the organization understood and complied with the grant’s rules. But it didn’t, the report said.

Several homeless providers (who asked not to be named because of the sensitivity of the investigation) said Homeless Services staffers told them essentially to ignore the restrictions on the grant funds and use the money to continue their existing programs to serve the chronically homeless.

Adding to the confusion was the existence, at least on paper, of the city’s 10-year-plan to end homelessness called The Journey Home.

The Journey Home was “more of an idea than a program” during the period of the HUD homeless grant, said one provider.

It was envisioned as a quasi-public city agency that would coordinate federal, state and private homeless grants. But without staff or an executive director at the time, the program existed mostly to raise funds through an annual charitable event – and did not exercise any oversight on how the $9.5 million HUD grant was being spent.
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BREW COVERAGE OF THE FUNDS DISPUTE

• What a federal audit tells us about city spending (12/5/12)
• City reserves $7 million to repay mismanaged federal homeless grant (12/3/13)
• Questions but no answers on mismanaged homeless services grant (1/8/14)
• HUD tells city to repay nearly $4 million in misspent homeless funds (2/25/14)
• Documents show: HUD last year ordered review of 64 homeless grants (2/26/14)
• Mayor and homeless providers praise grants faulted by HUD (2/26/14)
• Baltimore set to repay $4 million in misspent homeless funds (3/17/14)
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