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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?

homeless outside Weinberg shelter

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

Photo by: Mark Reutter

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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  • Nick Sheridan

    Excellent article, though upsetting for us city residents.  I think I’m through with this mayor, in spite of some good things she’s done.  Any realistic alternatives on the horizon?

  • http://twitter.com/bosconet p johnson

    What consequences are there from this poor accounting? Can city officials (not rank and file workers) be held criminally/civilly responsible for these actions? 

  • Justin Matoska

    Democratic party run city for too long, maybe its time to let some Republicans into the city government.  Oh yeah wait Baltimore’s black population would never let that happen.

    • Barnadine_the_Pirate

      It is not purely a function of “Baltimore’s black population,” although to be sure, it’s been 40 years since the GOP gave any black person a reason to vote for a Republican.  Can you say “Southern strategy”?

      But that could be overcome, I suspect, if the party had not made the decision on the national level to position itself as the anti-urban party.  Republicans hate cities, and so cities hate Republicans.  Combine that with decades of anti-minority posturing, and yes, it’s easy to see why there is no chance at all of Republicans making Baltimore a two-party city.

      But I also agree that Baltimore really, really, really needs a multiparty democracy. There needs to be a regular, credible threat to incumbents. (The same can be said of our gerrymandered Congress).  It’s not going to be the Republicans, however.  Let’s all agree to put the Justice Party on the ballot and vote against the incumbent in every contested election until given a reason not to.

      • cwals99

         That’s the spirit!!!!

  • Citizenpane

    You need to do more careful research, before you accuse people of contradicting themselves.    The Prisoner’s Aid issue was unrelated to the Recovery and Reinvestment grant.  Accordingly, Ms. Bridell did not contradict herself 

    • baltimorebrew

      From Brew: Here is an excerpt from the Inspector General’s audit:

      “The City did not monitor its fiduciary agent and subgrantees as required. It monitored only 5 of 15 subgrantees during the grant period. The City acknowledged that it did not monitor its grant as required because it claimed that it lacked resources to conduct the monitoring and the grant expenditure timeframes were too restrictive.

      “It monitored Prisoner’s Aid in May 2011 because it noted a discrepancy on a billing record, indicating that participants received benefits under both the Homelessness Prevention and Rapid Re-Housing Program grant* and Shelter Plus Care program. Based upon that monitoring review, the United Way terminated its agreement with Prisoner’s Aid for cause, effective July 1, 2011.”

      * This was the Recovery and Reinvestment grant you cite, and it appears closely related to the Prisoner’s Aid billing issue. -MR

  • MarylandEsquire

    What’s concerning is that no one cares about the audit report from the Feds.  There used to be a time when the media, elected officials, appointed officials, and voters all cared about a negative audit report because there would be consequences.  There are no longer any consequences.  Government corruption, complacency, and incompetence is out of control.

  • discer

    Brutal report. The response from the mayor should prove interesting.

  • cwals99

    Thank you for this article.

    We all remember when Governor O’Malley famously said of the Center for Public Integrity Report on State fraud and corruption that placed Maryland at the bottom nationally something like ‘there must have been a flaw in the paperwork’.  That means that this problem is statewide with Baltimore being ground zero for crime and corruption.  It is telling in the interview with the employee from the Homeless Services agency that the Federal guidelines seemed onerous because that is simply the point.  When you have no oversight procedures in place anything becomes onerous.  To give this one agency a break, there are problems throughout all agencies, she just got caught.

    The problem I have with this is that as Baltimore is a city with a high poverty rate all of the money that is stolen and misappropriated has deeply affected the most vulnerable in the city even as the money ends up with they richest and their projects.  Maryland is one of the richest states in the nation  so there is plenty of money for oversight….it isn’t a funding issue.

    There is an arrogance of deliberate neglect of Rule of Law in Maryland like I have not seen anywhere.  I call it the 3 monkey syndrome…..see no evil, speak no evil, hear no evil.  It comes from centuries past when the 1% of the city or state ruled absolutely and they haven’t stopped that culture.  Johns Hopkins is a striking example.  They think the institution can do anything it wants regardless the legal, moral, or ethical boundaries.  So why have a system that checks up on things when the powers expect to do it their way or the highway.  Not many other states do that and as the article says it isn’t institutionalized as it is in Maryland.  Even the lawyers who should be holding all accountable are part of the problem.  We have no States Attorney office action on anything white collar.

    The answer is not democrat or republican because these are institutions behaving badly as well.  The answer is electing people from our communities who are not a part of the system.  We must be aware that these executive positions matter: Mayor, Governor, Attorney General, and Comptroller.  If you do not have a Rule of Law person in these positions they will appoint people to commissions and agencies with an equal distaste for accountability.  Do not allow the State or National Democratic Party pick your candidates…..do it yourselves!

     

  • Barnadine_the_Pirate

    Because there will be zero, zip, nada, no electoral consequences from this whatsoever, why should the mayor or the comptroller care?

    At this point, I’m not foolish enough to hope that (a) we would get honest, competent outsider candidates to run for office or that (b) the electorate would actually vote out an incumbent for simple incompetence.  We don’t even vote them out for criminal conduct.

    All I’m wishing for is financial transparency.  We’ll deal with accountability later.  Let’s just start with the baby step of actual, meaningful, rigorous audits, and transparency about the results.  We can deal with blame and punishment later.  It took the feds to bring this to light; if the city had its way, nobody would ever know how anymoney was spent.

  • Aleta Coffey

    The Dept. of Human Services is a joke they would have had it all screwed up too!! This is terrible Baltimore is a sad city and any city or state agency within it is full of ignorant people who don’t want to do their jobs or know so little about their job they grossly misinform the people who come to them for help. The people who desperately need help are punished because someone in the office screwed up. Yes speaking from experience here…maybe someone will start to pay a littl more attention to what the heck is going on in these offices now!!!

  • Gerald Neily

    The fundamental problem is that the overwhelming majority of Baltimore’s economy is based on spending other people’s money.

    • Barnadine_the_Pirate

      “The fundamental problem is that the overwhelming majority of Baltimore’s economy is based on spending other people’s money.”

      The same is true of Washington, D.C., and New York City. But they are just a lot more efficient at it than we are.

      • Gerald Neily

        Unlike Bmore, DC and NY are world capitals, so even though they are not exactly models of efficiency, their money flows are at least innately apparent. And they’re the closest the US has to being city-states. The notion that Bmore is Maryland’s “economic engine” is increasingly ridiculous. It’s more like it’s economic noose. Money comes in and disappears.

        I think what Baltimore really needs to do in the grand scheme of things is tone down its pretentions and “normalize” things – no more mega-convention arena superblock kinds of deals. The rhetoric for social causes like ending homelessness, a swimmable harbor and doubling the tree canopy just rises to match the hubris.

        But a recent positive note in all this is the growing idea of making downtown into a neighborhood. Just a neighborhood, not the all-consuming center of the universe. More of a DC suburb or Amtrak whistle stop. It sure would be great if the powers-that-be really meant it. Neighborhoods don’t have Grand Prixs or mega-convention arenas. They’re just neighborhoods, where nice peaceful civilized streets are more important than constant hoopla. The “crown jewel” in this is certainly the art-deco masterpiece at 10 Light Street. Is its recently announced apartment conversion a positive bellweather or simply the neighborhood version of the Exelon deal? Will its subsequent operation be based on deferred maintenance and gradual deterioration as with most of Bmore’s residential base? I haven’t heard a word but The Brew will know – Mark, we love you !!!!!

  • baltimorebrew

     

    CHRIS DELAPORTE SENT THIS VIA EMAIL AND ASKED US TO POST SO HERE IT IS:

    As the saga of no
    accountability continues, one episode after another, it becomes more painfully
    apparent that no one in a position of authority in the state or city even wants
    to touch misadventures like this.

     

    ….in an a city
    trying to attract families and businesses (there is no documented plan to do so.)
    We find the MIAs spanning the State’s Attorney, and each and every member of
    our city delegation. 

     

    ….it is a fact that
    all of these people, some of whom I have known for years, fall silent when
    developments like this happen; I can see their faces daily in the paper and on
    Facebook attending a feel-good event of one type or another, or reading to
    third graders, or celebrating one little event after another, but not a one of
    them, save Jack Young, Carl Stokes and a couple of others even come close to
    crossing the threshold. 

    This Has to Stop—our city is
    being fleeced.

     

    ….rather, these
    people, including the leadership of the GBC, and the non-profits, legal firms,
    accounting firms—all of the interests who have something to gain or lose with
    the city—remain stuck, sidelined by FEAR, yes fear, that they might not get
    the next invitation in the mail.  

     

    ….here is what will
    happen with this matter: the city will have to repay the money or most of it to
    the feds; Gansler and his group will do nothing, claiming it is a federal
    matter; the money needed to make restitution to the feds will be added to the
    money that is needed to handle the water bill situation, and the costs likely
    to emerge from the speed camera development—among other broken or
    dysfunctional parts of the government that have created one disputed financial
    mess up after another—which will compel Mr Black, the new Finance Director, to
    sadly inform the Mayor that the city has another Long Fall situation that can
    only be overcome by putting advertising on our fire trucks, selling naming
    rights for our fire plugs, and shortening the amount of parking time from 7 to
    5 minutes for 25 cents. Plus—for the 4th year in a row—trying to make
    people think there is no money for swimming pools and send out an RFP to lease
    the War Memorial building as a “big box” on Gay Street.

     

    ….plus thinking up
    some bogus reasons to tax some group like the poor bottlers; some sort of
    general tax on some group will have to emerge, likely.

     

    ….if this scenario
    does not play out, or if the Mayor says good management has prevailed and the
    revenues coming in equal the spending needs of the city, then that raises the
    question: just where did the money come from to make restitution for speeders
    and folks who have been drinking water at home, 24-7?

     

    ….but we know what
    will be the case: Not Enough Money. And here is where the “audits
    issue” begins to rear its head as a new wedge issue, having been revealed
    that the city leadership has not audited its agencies since the price of gas
    was 63 cents a gallon at the pump, and Israel and Egypt made peace.

     

    ….this go-around
    when the Mayor claims the city is broke, the P E O P L E will begin to say “Prove
    it: where are the audits to support such a claim.?”

     

    …..it shows the
    abject disrespect for the citizens that they would be asked to change the city
    charter so our largest agencies would be audited at least once every four
    years. Let me put that silly, useless provision in perspective by asking the
    question, “why don’t we hold elections at least once four years?…but
    just count the votes in our largest precincts?

     

    We are destined to
    become a city run by people who can’t shoot straight.

     

    And don’t care to..
     

     

    Chris T. Delaporte

  • MarylandEsquire

    Corruption, incompetence, and mismanagement isn’t limited to Baltimore City.  You should read some of the recent audit reports issued by the Office of Legislative Audits on the problems with State agencies.

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