Chicago Only Distributed 15% of $52M for Homeless

September 11, 2023

Two years after the City of Chicago received $52 million in federal funding to combat homelessness, it has only distributed under $8 million, about 15% of it, according to an investigation by the Illinois Answers Project.

The funding came from the American Rescue Plan Act, which gave states and municipalities broad discretion on how they spent the funds. Chicago planned to use the $52 million to combat homelessness, an area where the city has already budgeted $200 million. Unfortunately, many programs are off to a slow start.

The Illinois Answers Project found that the funding was intended to support five programs. The first, called the Rapid Rehousing Program, was meant to quickly get homeless people into housing. Only $7.4 million of the $27.3 million budgeted, or about 27%, has been distributed.

Additionally, the Stabilization Housing Pilot Program, meant to help those with substance abuse and mental health issues, was budgeted at $12 million, though the city hasn’t released any funding yet for this program. Meanwhile, the Re-entry Workforce Development Program, meant to help the homeless find jobs, has only paid out $157,626, about 2% of its $8.2 million goal.

Next, the Rapid Rehousing Services of Gender-Based Violence Survivors program for victims of domestic abuse has distributed $440,691 of its expected $4.6 million. A program for formerly incarcerated people and a shelter initiative have also been created, but no funds have been paid out.

Chicago blames delays in staffing up for its slow rollout. Whatever the reason, Chicago must act quickly, as ARPA requires cities to have a plan for how to use the funds by the end of 2024. Cities must spend the funds by the end of 2026.

It’s a disgrace that Chicago is sitting on millions of dollars that could help alleviate its rampant homelessness.

 

Up to $40M in HUD Funds Vulnerable to Fraud

September 12, 2023

From 2017 to 2019, Congress gave the U.S. Department of Housing and Urban Development $40 million for disaster relief assistance, but a recent U.S. Government Accountability Office report found these grants were vulnerable to fraud and double dipping, and lacked basic accounting controls and oversight.

The block grants under this program were meant to be paid out to homeowners that rebuilt or repaired their homes due to damage from natural disasters between 2017 and 2019. While that may be a worthy goal, the report found glaring issues with how HUD distributed these grants.

GAO reviewed 8,260 grants made as a part of this program and found that 500 grantees were also approved for Federal Emergency Management Agency grants, meaning these households may have double dipped on federal aid. Other households also double dipped from other agencies’ relief programs, with one household receiving aid from three agencies.

Additionally, 197 approved households were above the income cutoffs, making them ineligible to receive the grants. Estimated income for two of these were above $330,000, far above the income cutoff.

The report found that all of this confusion was a result of HUD’s lack of data collection from the 16 contractors it works with. While HUD monitors individual contracts, it does not share and receive information across the contracting environment, making it liable to waste and duplication.

There is no reason why important programs like these must be riddled with waste. By implementing simple fixes like improved data collection, better oversight procedures and guidelines, and fraud-related training, waste could be prevented.

 

Maui’s Emergency Budget Ballooned to $10M Before Wildfires

September 13, 2023

From 2021 to 2022, Maui’s Emergency Management Agency’s budget spiked from $942,860 to $10,237,431, according to the county’s budget records.

After the devastating wildfires that ravaged Maui and left over 100 residents dead, questions have emerged over how prepared Maui’s government was to respond to a common natural disaster like wildfires.

Maui’s Emergency Management Agency is tasked with providing “emergency management services, including training; emergency planning and preparedness; and effective communication.”

Maui wasn’t prepared, however, for even basic communications. Herman Andaya, the administrator of Maui’s Emergency Management Agency, didn’t sound the sirens as the wildfires raged. In fact, in July 2020, Andaya admitted only 58 of the 70 sirens on the island even worked, according to NBC News.

It’s difficult to trace exactly where all the money went, as line item expenditures are not reported. The budget does note, however, that Maui spent $250,000 in 2022 on consultants to “update emergency management plans.” The agency also grew its headcount from seven to nine employees in 2021.

The spike in spending was driven primarily by an increase in spending on special projects. These projects are not defined in the budget, but they presumably had to do with either COVID-19, or severe flooding the island faced in December 2021. The latter is more likely the case, as Maui reportedly received $8 million in grants from FEMA for “the response and recovery of the December 2021 Severe Weather Event.”

While natural disasters are unavoidable, the lax response from the agency tasked with protecting citizens from disasters leaves many questions unanswered. What is clear, however, is that a lack of adequate funding and personnel was not the issue in the botched response.

 

 

Throwback Thursday: Commerce Wasted $1.3M on Mismanaged Loan Program

September 14, 2023

Throwback Thursday! 

In 1987, the U.S. Department of Commerce wasted $1.3 million – worth $3.5 million in 2023 dollars – on a revolving loan program that did more harm than good thanks to rampant mismanagement.

Sen. William Proxmire, a Democrat from Wisconsin, awarded the department his Golden Fleece Award for this entirely preventable waste.

According to Proxmire, Commerce’s Economic Development Administration was responsible for managing grants to localities to establish revolving loan programs. The loans were meant to spur local economic development, increase incomes, and decrease unemployment.

Unfortunately, despite strict oversight requirements, officials from the administration often neglected to monitor these loans. Auditors found several issues that resulted in rampant fraud and abuse within the program.

Auditors described the loan portfolio as in “poor condition at best” and found that four loans had been awarded despite receiving no loan application and having insufficient funds to make the loans with. Two of those loans did not receive funding for over two years.

Of the loans that were made, one was in default and had never been monitored or serviced in seven years. This loan’s default cost $700,000, and auditors noted none of the other loans were monitored, raising the possibility of default.

The board that made the grants knowingly violated a key provision and principle of the bill, Proxmire alleged. These funds could not be used to relocate employees, but they were, costing 45 jobs in a town. In fact, many of the basic terms of these loans were ignored, with four loans made in amounts over $100,000, which was the maximum amount allowed.

This waste could have been prevented with appropriate oversight. Instead, taxpayers ended up losing $1.3 million.

 

 

Railroad Retirement Board Has $359M of Questioned Costs

September 15, 2023

An investigation into the U.S. Railroad Retirement Board found its lien process didn’t have sufficient controls to identify, monitor, and collect liens, leading to $359 million in questioned costs, according to an Inspector General report.

According to federal law, railroad employees must reimburse the board for sickness benefits, what the board refers to as a 12(o) lien. An audit of this program from the accounting firm RMA Associates found a host of problems with this process that made tracking and enforcing this reimbursement impossible.

First, RMA found that the board’s process to track these liens was not in compliance with federal standards. Not only did they not meet federal standards, but RMA found the board’s standards were not sufficient to give reasonable oversight to these liens. Even if it was sufficient, the RRB often did not enter this information into its systems in a timely manner to track. RMA concluded that the board did not ensure all liens were collected.

Because of these insufficient controls, the board couldn’t determine the value of reimbursable sick benefits, but RMA estimated they could have cost up to $359 million. Nobody knows how much of this sum has been reimbursed to the government per federal law, and the board’s shoddy record keeping makes discovering this virtually impossible.

This is not the first time the board has had issues with its record keeping. In 2012, the U.S. Railroad Retirement Board Inspector General audited this same program and came to similar findings, recommending at the time that the board “implement a comprehensive tracking system” for these liens.

It’s egregious that a problem identified over 10 years ago was never resolved. Taxpayers could now be out up to $359 million because of the board’s refusal to maintain basic records.

The #WasteOfTheDay is presented by the forensic auditors at OpenTheBooks.com.