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Reforms pledged at environmental agency Fiscal changes planned in wake of critical audit of Department of the Environment.


Maryland Environment Secretary Robert Perciasepe vows to reform his department's fiscal management in the wake of a scathing legislative audit, which found that the agency had mishandled or failed to collect millions of dollars in federal grants and state funds.

Perciasepe, who took over as secretary of the state Department of the Environment last December, said last night that he already has taken steps to correct some of the financial problems cited by the legislative auditors and he plans to complete his internal overhaul within six months.

"We're taking this seriously," he said. "We'll do what we have to do."

He also acknowledged that his department could do more to keep track of hazardous waste shipments in Maryland. But he took exception to the auditors' assertion that his agency fails to adequately oversee the shipment, storage and disposal of hazardous wastes.

In a report that echoed one issued two years ago, the auditors found that the environmental agency had "significant weaknesses" in its financial controls. The 23-page report rated the department "very poor" on its accounting and on its compliance with state laws and regulations.

The report is likely to focus critical scrutiny on the department's spending at a time when legislators are seeking to reduce the state's budget deficits. Perciasepe is expected to be called before fiscal committees in Annapolis to respond to the auditors.

The audit, covering from June 13, 1988, to last Jan. 9, found, among other things, that the department:

* Failed to resolve a 2-year-old dispute with the Environmental Protection Agency, which is demanding repayment of $2.3 million in federal sewage construction grants.

* Circumvented competitive bidding requirements by negotiating $679,504 increase in a $2.1 million contract for a new computer system after accepting sealed bids on the project.

* Lost $77,000 worth of interest income by failing to request federal funds soon enough.

* Failed to move promptly to collect $386,000 in reimbursements for hazardous-spill cleanups last year, and another $150,628 in sewage sludge permit fees.

The auditors said the department has failed to correct 13 of 20 fiscal problems found in the agency's May 1989 audit.

Among them were lax controls on logging in cash and checks -- conditions auditors say contributed to an embezzlement in 1988 of $130,000 from the department. An employee was convicted in that case.

Perciasepe said he has begun shaking up the department's fiscal management since he was promoted from deputy secretary to succeed Martin W. Walsh Jr., the department's secretary during most of the time the audit covered.

The top three fiscal managers, including the department's data processing director, are being replaced, he said.

Meanwhile, Perciasepe said, EPA has reduced its demand for repayment from $2.3 million to about $580,000 now, and he hopes to negotiate a resolution of the dispute soon.

The department is taking quicker action to recover costs associated with hazardous waste cleanups, he said, and the agency is scheduled to become one of the first in state government to establish a computerized central accounting system.

The auditors also found that the agency had corrected only eight of 33 problems they found two years ago with hazardous waste oversight.

The report faults the department for not checking to see if manifests of waste shipments matched what was actually received for storage or disposal, and it notes that more than 120,000 shipments of more than 900,000 tons took place in the 2 1/2 years covered by the audit.

The audit's criticism echoes complaints from environmentalists

about the state's hazardous waste oversight. Mary Rosso, president of the Maryland Waste Coalition, said she has questioned the reliability of shipment manifests in the past, but has been unable to get department officials to take action.

Perciasepe contended that the department already checks on hazardous waste shipments through random truck inspections and other reports, but he acknowledged that the agency should check shipment manifests more carefully. He said a computerized records-scanning system is being set up to do that.

The environment secretary dismissed other criticisms of the auditors, though, notably their recommendation that the state offer the public "bounties" for reporting hazardous waste violations. The agency already offers a toll-free hot line, he noted.

"We continue to believe that while there are always ways to make things better, we have one of the better hazardous waste programs in the country," he said.

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