Auditor: Baltimore hasn't kept track of millions in grant money. (Again)

Baltimore’s top elected officials expressed frustration Wednesday that city government agencies have failed — yet again — to properly account for how they spent grant dollars.

A new audit of how the city manages millions of dollars in state and federal grants has come to the same conclusion that previous examinations have: Grant money coming into government coffers is not balancing out with what city agencies are spending.

“The city is not able to establish accurate balances of grant accounts,” city Auditor Audrey Askew told Baltimore’s spending panel Wednesday.

One possible result, Askew said: “The city could lose its much-needed [grant] funding.”

And that’s a lot of money. The city receives nearly $448 million in grants, or about 16 percent of its $2.8 billion budget.

City Council President Bernard C. “Jack” Young expressed outrage over the findings, arguing that grant management problems should have been fixed by now.

“I don’t understand how we can have a problem with grants,” said Young, a member of the spending board. “That has to really stop. If the grants don’t add up … the federal government is going to come and they’re going to want their money. We’re going to owe thousands, maybe millions of dollars.”

Baltimore’s problem with tracking grant money has existed for years. Several previous examinations have found that city officials have failed to properly account for millions of dollars in grant funds. Each time finance officials have pledged to fix the issues, as they did on Wednesday.

Finance Director Henry Raymond told the Board of Estimates that he has appointed employees to oversee grant management and that the problem would not be repeated next year.

The unbalanced grant ledgers in the last fiscal year are an accounting issue, he said, not the result of waste or abuse.

“We’re training agencies on how to properly use budget account numbers,” Raymond said. “Staff at the agencies are using outdated or incorrect grant account numbers.”

Askew said her audit found a “lack of communication” between agencies that receive grants and the city’s finance department. A lack of formal accounting processes made it impossible to confirm whether grants were being spent for their intended purposes, she said.

Young said it doesn’t “take a rocket scientist” to figure out how to administer a grant correctly.

“This is serious business,” he told Raymond. “I don’t take excuses.”

Young suggested holding back money from city agencies until they get their grant accounting in order.

Mayor Catherine Pugh told Raymond “there really does need to be a closer checking.”

She wouldn’t be the first mayor with such a worry.

In 2014, a finance department study found city agencies couldn't account for as much as $40 million in grant money from state, federal and other sources. The report blamed poor budgeting and oversight, outdated policies and inconsistent accounting procedures

Also that year, the U.S. Department of Housing and Urban Development ordered the city to repay $3.7 million from a grant awarded to serve homeless people. The city had dispersed the money to anti-poverty organizations that didn’t properly document how it was spent, federal officials said.

At the time, the city’s former finance director embarked on a plan to better account for hundreds of millions in grants, including hiring a grants coordinator.

The audit released Wednesday also showed that the city’s persistently inaccurate water billing system remains dysfunctional.

“A significant number of accounts were not billed and a significant number of accounts were billed inconsistently,” Askew told the board, which included her boss, Comptroller Joan Pratt.

Just last month, hundreds of customers of Baltimore’s water system were hit with bills of more than $50,000 each that officials acknowledged were “erroneous” and “inflated.”

Department of Public Works Director Rudy Chow told the board that water-billing errors will decline as the city undergoes “a transition from a very much outdated water system.”

Young again expressed impatience with the billing issues and with the pace of an expensive overhaul of the billing system. He said he frequently gets calls about exorbitant and erroneous water bills.

“Mr. Chow, as you know, the citizens don’t care about that explanation,” Young said. “They care about getting accurate water bills. They have no faith in the system. That’s what they tell us every day. … They don’t care about an old system transferring to a new system. All they care about is getting a correct bill.”

But the audit’s findings were not done frustrating Young.

The report also found problems with the city’s handling of grants intended to help poor families with their energy bills.

The audit analyzed a sample of 114 participants and found “numerous inaccuracies and discrepancies,” including 20 cases of missing documents and 56 cases of a lack of quality control.

In 2015, Baltimore Housing was criticized for approving $6.2 million in questionable payments through the same program, including grants to three dozen households that are not in the city.

City officials then shifted the grant program to the Mayor’s Office of Human Services.

But Young said the change in agencies did little to correct the problems.

“It’s more of the same,” he said.

Terry Hickey, the city’s human services director, acknowledged “the issues with the program” and said he was implementing a “massive restructuring” of staff and vowed to Pugh that the poor accounting would be fixed.

“Madam Mayor, we don’t see these coming up next year,” Hickey said.

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