To better account for hundreds of millions of grant dollars, Baltimore finance officials have a plan to overhaul city policies, train staff and keep records in a centralized database.

Harry E. Black, the city’s finance director, said the project should take about a year to complete and cost between $300,000 and $500,000. The city also has hired a grants coordinator to oversee the money, which accounted for about 13 percent of the budget last year, or $332 million.

“Whatever we receive, we want to make certain it’s aligned with the city’s priorities and goals and that we are managing this process and the funds … in the most efficient and effective way,” Black said.

The action follows a September study that found city agencies couldn’t account for as much as $40 million in grant money that Baltimore received over the last several years from state, federal and other sources. The report blamed poor budgeting and oversight, outdated policies and inconsistent accounting procedures.

Bill E. Harris, of Glen Burnie, was hired this month to serve as the first ever citywide grants management director. Harris worked for contractors that did business with federal agencies, including the Department of Labor and Department of Health and Human Services.

Black said the city expects to hire a second person to help manage the grants by June.

Harris and his deputy will lead the efforts to write new policies and procedures, using best practices from other large cities.

The goal is improve oversight of the grant application process — including whether the grant’s purpose matches the mayor’s priorities — and better control the receipt of the money and the monitoring of subrecipients, Black said. Doing so will allow the city to better “track, monitor and enforce compliance,” he said. “We’ll know what’s going on at every corner of the city.”

By putting all of the records into an internal database, finance officials also will have access to real time data, Black said.

Employees throughout the city, including those in the finance, law and planning departments, will receive mandatory training on the new policies, likely by this winter.

Centralized oversight will allow finance officials to more fully evaluate all of the funding implications tied to grants, Black said. Money from the state and federal government often come with strings attached, such as commitments for future spending and the creation of new positions.

“Just because it’s free money doesn’t mean it’s actually free,” he said.

The September study was first commissioned in the fall of 2012, as part of an annual series of reviews on various city budget functions. Black said the plan addresses a long standing issue of having no centralized grant oversight and insufficient technology.

“With the mayor’s direction and leadership, the finance department undertook this study to identify opportunities to enhance the city’s grants management process,” Black said.

The city recently learned it would have to repay $3.7 million to the U.S. Department of Housing and Urban Development from a homeless services grant awarded under the stimulus program.

But officials say the issue was not related to internal grant management procedures. The city dispersed the stimulus money to anti-poverty organizations that didn't properly document how it was spent.

HUD also had declared the city ineligible for new grants to help pay for the removal of dangerous lead paint from homes two years ago, but the federal agency has since reversed that decision.

Through the process of developing the new grants management system, Black said he expects the city will account for the $40 million by the end of the year. Once the accounting is complete, the city will know whether any general fund dollars will be needed to reconcile the books.

ywenger@baltsun.com

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