The federal government has ordered Baltimore to pay back $3.7 million from a homeless services grant, saying the city and its subcontractors cannot sufficiently account for how the money was spent.
But anti-poverty organizations say a federal audit unfairly vilified their work, and they blamed the U.S. Department of Housing and Urban Development for providing poor accounting guidelines during a rushed rollout of stimulus funds several years ago.
"The resources were being pushed out the door very quickly without clear guidance," said Kevin Lindamood, CEO of Health Care for the Homeless. His organization received about $900,000, which auditors said was spent properly. "What I fear is being lost is the incredible amount of good that was done through this program. Hundreds of people were able to get housing."
The federal order to pay back millions of dollars — a copy of which was obtained by The Baltimore Sun — is the latest development in a long dispute stemming from President Barack Obama's signature 2009 stimulus program, which provided $1.5 billion across the nation for homeless prevention and intervention efforts, including $9.5 million in Baltimore. Funds were supposed to be used to help homeless people find housing and pay utility bills, among other efforts.
But the HUD inspector general found that the city, its contractor and subcontractors could not document that some of the money had been spent appropriately on the homeless, according to federal documents obtained by The Sun.
The money represents about a third of the $9.5 million grant the city received, much of which it turned over to the United Way of Central Maryland as contractor. City officials have disputed HUD's conclusions, contending that the federal government rushed the grant process and deserves some of the blame for poor oversight of spending. United Way officials say the organization complied with the terms of its contract with the city.
Nevertheless, city officials set aside $7 million in the current budget in the expectation that a portion of the grant would have to be repaid.
Mayor Stephanie Rawlings-Blake said Tuesday that despite the accounting problems, she was "very proud" of the work her administration has accomplished on homeless services.
"I think it is pretty clear that there was no indication of fraud, waste or abuse, and that is significant," Rawlings-Blake said of the audit. "We were able to work with HUD to significantly reduce the amount [the city would have to repay] and we are working to shore up the accounting measures and accountability measures. ... They were trying to get a lot of stimulus money into the community and that happened. It certainly didn't happen in a way that any of us had wanted with respect to the accounting."
City Councilwoman Helen L. Holton, the chair of the budget committee, said she was glad the audit was completed.
"Maybe the lesson learned will be, when we are given money for the disenfranchised, we have to be vigilant in making sure that's where it goes," she said
The federal government has been critical of other cities' management of homeless services grants, though auditors generally questioned smaller dollar amounts in those cities. New York, Los Angeles, San Francisco, Las Vegas, New Orleans, Memphis, St. Louis and Newark have all been the subject of critical audits from the HUD inspector general.
In Baltimore, the money to be repaid includes $523,000 that was awarded to St. Vincent de Paul of Baltimore. John Schiavone, president and CEO, said he was "very disappointed" to learn of HUD's order. He said his organization used its funds "properly and in accordance with the purpose of the program, which was to help homeless families rapidly transition from shelters to stable, permanent housing."
"In fact, over the course of three years, the [grant] funds enabled St. Vincent de Paul to rapidly rehouse over 100 homeless families," he said in a statement.
Also to be repaid is $683,000 given to People Encouraging People. The auditors reviewed the group's spending and found "only 3 clients with documented eligibility." Dale Meyer, the president of the organization, took issue with those findings.
"To say those people weren't eligible is semantical," she said. "These people met the need requirement, and our fiscal documentation was found to be impeccable." She said the group was faulted for failing to ask clients whether they could find someplace else to stay without the organization's help — a question they didn't know they had to pose.
"When people came to us with eviction notices, we thought it was our job to help them maintain their homes. The funds were used for the reasons they were intended," Meyer said.
Lindamood said his organization used the money it was given to provide housing for about 75 people, most of whom are in permanent housing now. One of the formerly homeless men is now in college, he said.
"There are any number of examples that show the program did an awful lot of good," he said.
The 2012 HUD audit found that city officials did not understand their responsibilities or develop a plan before rapidly awarding money. Baltimore's Office of Human Services did not properly manage the grant, auditors said, failing to oversee programs and awarding cash for services that might not have been eligible.
Disputing the results of the audit in a letter to HUD, Kate Briddell, director of Baltimore's homeless services program, faulted federal officials. "Guidance was negligible, at best," she wrote.
The audit called on the city to demonstrate that the grant money was used properly or reimburse the federal government. The city had contracted with the United Way to manage about 93 percent of the money, or $8.8 million.
Mark Furst, president and CEO of United Way of Central Maryland, said his organization acted as the "fiscal agent" for the grant money, disseminating funds "earmarked to support eviction prevention and rapid re-housing."
"The contract specified that the City was responsible for developing requests for proposals; selecting direct service providers; and monitoring the performance and expenditures of the direct service providers," he said in a statement. The United Way, he said, "performed in full its duties under contract."
The Prisoners Aid Association of Maryland, a defunct organization, could not produce files to show how $392,000 was spent. But a former officer there contends that the city government never delivered some of the money.
"They never gave us all the money we were supposed to get," said Frank H. Marchant, former director of the organization. "We had to close our doors because they wouldn't pay us."
City Councilman Robert W. Curran noted that the audit determined that some organizations, such as the Associated Catholic Charities, had sound accounting practices. But he worried about others. "I'm concerned that some groups didn't use the money as intended," he said.
Lester Davis, a spokesman for City Council President Bernard C. "Jack" Young, said he was "extremely disappointed" by the audit's findings.
"He's going to reach out to a number of individuals for personal explanations about exactly what went wrong and ways to prevent something like that from ever happening again," Davis said.