An audit of the Howard County Health Department found that one employee financed a three-year, $24,168 graduate education at the University of Maryland with two state credit cards instead of using the state's tuition reimbursement program. Another was listed as receiving $2,714 for security services when the money was used for an incentive award.
The money was repaid in both cases, and neither employee works for the Health Department any longer, according to the audit, which described seemingly loose budget management.
"Budgets appear to have no meaning and to be of little use," wrote county auditor Lisa Geerman, who said a scheduled review of Health Department expenditures was speeded by an anonymous letter from a department employee alleging irregularities.
"It certainly raised a lot of issues of concern. It didn't appear to be an organization that was particularly well run from a financial-control standpoint," said County Executive Ken Ulman, who took office in December. "There was no evidence of theft," he noted.
But Dr. Penny Borenstein, who ran the department from 2001 until Ulman replaced her this year, defended her administration: "I believe we ran a very efficient and productive organization. When I arrived, many programs didn't exist - nobody had computers."
For example, Borenstein said, the undocumented security payment was an incentive award in disguise. She said she listed it as security expenses in 2005 to spare the feelings of another worker up for a similar award. Borenstein said she personally repaid the money because it was fallaciously recorded. "I took responsibility for it," she said. She also reported the tuition abuse when she learned of it.
Ulman said the top four Health Department officials are new, and a new financial officer is in the process of being hired.
Dr. Peter L. Beilenson, who took over as Howard's health officer in March, said, "We were surprised when we found some of the things the audit raised."
After sorting out confusing budget information, Beilenson said, his administration found that the department is running an annual structural deficit of up to $500,000. He has ordered 10 percent across-the-board spending cuts in all five major administrative sections of the department.
"There were a lot of parts of the Health Department that were unbudgeted," Beilenson said. "They used surplus from one area and put it in other areas, which left us with a structural deficit."
Beilenson said he feels "very comfortable" that the deficit will be eliminated.
Borenstein said there is no structural deficit. The accepted practice, she said, was to use salaries allocated for vacant jobs to fill budget gaps during each year. "We always had more money at the end of the year than was anticipated."
Beilenson said he has also ordered strict controls on budgeting, tuition reimbursement and the use of state credit cards.
"We've made it much tighter," he said, noting that when he was health officer in Baltimore, the agency had only one state credit card compared with 17 in much smaller Howard County.
Borenstein said that during her tenure purchases were discussed in advance with county budget officials. Budgeting was difficult, she said, because the Health Department is a combined county-state agency, and grants come midyear.
Borenstein said she had no personal involvement with credit-card purchases, but she added that she reported the misuse of state credit cards in the graduate tuition case herself.
"That information was brought forth by me to the county." She said the audit's mention of buying 200 computers and monitors for 190 employees is wrong, she said, because there were 236 workers, including contractual employees. Existing computers were outdated and needed upgrading over a two-year period. She said key financial jobs were vacant when Beilenson took over, making it hard to chart expenses.
"Did we have imperfections? Absolutely. Was there fiscal mismanagement? Absolutely not," Borenstein said.
Beilenson agreed that the audit did not count contractual workers and that new computers were needed, but he said they should be replaced gradually, so they will not all be obsolete at once.
The use of 17 state credit cards was also a problem, the audit said. Although each card had a spending ceiling of $1,000 a day, the audit said, some employees spread out larger purchases over multiple days to avoid the limit.
The worker who paid for graduate courses from June 2001 through May 2004 with the cards, for example, was not officially assigned a state credit card, and spread out the charges to stay under the $1,000-a-day limit. The classes were paid for under a budget category for "training courses." That employee's supervisor is also no longer a state health employee, the audit said.
The Ulman administration agreed with each of the 24 recommendations in the audit, many of which have been implemented.
Haskell Arnold, the county auditor, would not characterize the audit's findings, but he said it was not what any administrator would want.
"There is new leadership now. My expectation is it's not going to happen again," he said, adding that his office would recheck the health agency in year.
larry.carson@baltsun.com