HUD audit: Northumberland County misused $177,873
An audit from the U.S. Department of Housing and Urban Development recommends Northumberland County repay $177,873 in grant money for a homelessness prevention program.
The 19-page report, released Wednesday, states the county must repay the amount because of unsupported documentation for its Homelessness Prevention and Rapid Re-Housing Program (HPRP).
Commissioner-Chairman Vinny Clausi said in a press release the county tried to do the right thing to help its citizens.
"The county is now being punished for doing right by the people who are victims of flooding. We tried to help them out as much as we could and now they are smashing us. The county was encouraged to spend this money as fast as possible with little guidance from the state," Clausi said.
Commissioner Rick Shoch, who initially raised questions about the grant and the way the program was run, knew his instincts were right.
"Unfortunately, this situation was avoidable if we had tackled the problem from the beginning, but here we are," Shoch said. "We all recall the meeting when Commissioner Clausi said I was hurting his feelings over this matter, but we see the problems now. We've all tried to clear this up, but here it is."
The audit recommends Northumberland County repay $15,183 for the ineligible expenditures identified, provide documentation to support the $159,149 in unsupported expenditures identified by the audit or repay the money, and remit $3,541 in program funds in the county's grant account.
All these funds will be sent to the state Department of Community and Economic Development (DCED) to be sent back to the U.S. Treasury.
Not by ARRA rules
According to the findings in the audit, the county did not administer the program according to American Recovery and Reinvestment Act (ARRA) requirements, where $1.5 billion was set aside for homelessness prevention funds across the nation.
Northumberland County used only $291,829 of the $365,361 it was allotted, leaving a balance of $73,532, which was returned to the state.
The audit states that the county did not always:
- ensure program participants were eligible for assistance.
- maintain complete documentation in the participant files.
- ensure it incurred only eligible expenses and properly supported them.
- make draws from the correct grant line items.
- perform required unit habitability inspections.
The audit also showed the county did not return $3,541 in unused program funds as required, leaving the funds in their grant account.
County requested audit
Northumberland County was approved for the program funds in 2009 to provide financial assistance and services to prevent individuals and families from becoming homeless and to help those who were experiencing homelessness to be quickly rehoused and stabilized.
The state monitored the county's administration of the grant through desk reviews in May 2011 and January 2012 and found Northumberland County did not maintain adequate documentation to support the eligibility of program costs.
In July 2012, the commonwealth performed an on-site monitoring review of the county's program. The state reviewed 153 participant files and determined the county made ineligible payments totalling $188,525.
County officials did not agree with the conclusions and requested the audit from the federal agency.
According to HUD, Northumberland County provided financial assistance totaling $173,295 to 205 program participants. Auditors reviewed only 199 participants because the county did not provide the files on the other six.
The audit showed 43 of 199 did not meet eligibility requirements; $32,061 was spent in those cases.
Documentation showed 25 participants received $15,476 in program funds while also receiving rental assistance from other housing subsidy program, which is prohibited.
In one example, a participant received $1,200 in rental assistance; the county paid $600 from HPRP program funds with the other $600 coming from the county's homeless assistance program.
HUD guidelines states rental assistance payments cannot be made to eligible individuals or families who are receiving help for the same period and for the same cost types from another housing subsidy program.
Another 14 participants were ruled ineligible because they did not meet income requirements. Documentation in the participant's files showed their family income exceeded area median income limits.
Conflict of interest
One participant was ruled ineligible because of a conflict of interest, the audit reported. The participant, Michael Faust, occupied a home co-owned by his sister, Kathy Jeremiah, who is also grant writer for the county planning department and administered the grant.
Faust received $950 from the program to pay delinquent water and electricity bills. Jeremiah said she had no direct connection with the grant being awarded to her brother and that the money went straight to the utility companies.
The audit showed the grants manager, Jeremiah, was responsible for administering the grant and received training and guidance related to the program.
One participant, the audit reads, received $500 to obtain immediate housing; however, documentation showed the participant had $25,000 in a bank account available for use, but Northumberland County did not require the participant to use his personal funds.
Another 102 participant files did not contain required documentation, according to the audit. Because of that, financial assistance payments of $86,424 were ruled unsupported, along with another $3,877 for the missing files of six participants.
The HPRP program was also flagged for erroneously drawing down money from the wrong accounts. The inspector general's auditors reviewed all $69,425 of the county's expenditures for the housing relocation and stabilization services activity, but found that it did not always comply with these requirements.
The audit showed the county also erroneously drew down $42,770 from the financial assistance activity fund for the salaries, benefits and other costs associated with the case manager who assisted with providing stabilization services. Those funds should have came from the housing relocation program.
Auditors also reported the county did not follow up with inspection requirements.
"Of the 205 participants, 51 had moved into other units. (Northumberland) County was required to inspect those 51 units. It did not inspect 40 of the 51 units as required," the audit report read.
County officials agreed it did not do the inspections because it lacked the resources necessary to conduct them.
In its conclusion, Northumberland County reported to the auditors it has resumed working to obtain further documentation and supporting evidence for the deficient participant files and looks forward to working with HUD and the Commonwealth to address the audit issues.