State: Stimulus money misspent

Wednesday, December 22, 2010

Federal stimulus money spent on home weatherization improvements for low-income-families is being wasted or misspent, according to Tennessee's Comptroller of the Treasury.

Most of the egregious waste appears to be in big cities. However, Blake Fontenay, spokesman for Comptroller Justin P. Wilson said Tuesday that problems were found in all 18 parts of the state where non-profit agencies administer the federal money.

That includes the Fayetteville-based South Central Human Resources Agency, which serves Marshall, Bedford and other nearby counties. However, Fontenay could not identify a specific issue of waste or misused federal money in South Central Tennessee. That may be in the final report to be issued March 31.

The weatherization program conducts an energy audit of a residence for people who qualify as living in a low-income household. A "Blower Door" is attached to find drafts. Insulation and weather stripping are installed with the idea of lowering energy costs to heat and cool homes, thereby reducing costs -- some of which are paid by the Low Income Home Energy Assistance Program paid by the federal government.

While conceding some problems were found during normal follow-up inspections, Emily Satterfield, the weatherization program director for this area, said none were as bad as insulation poorly wrapped around a water heater with duct tape. That was an example in Nashville illustrated by a photo in Fontenay's release on Monday.

That's when the treasury's comptroller outlined results of the review of the Weatherization Assistance for Low-Income Persons. Wilson sent the report to Virginia T. Lodge, commissioner of the state Department of Human Services. Lodge's agency distributes money to the South Central Human Resources Agency, and 17 other non-profit organizations in Tennessee.

Calls to the state Department of Human Services' Division of Community Services resulted in no contact with an official who would or could comment. A return call was promised.

In April 2009, the U.S. Department of Energy awarded the state $99 million in American Recovery and Reinvestment Act of 2009 (ARRA) funds for the program, plus another $7 million in non-ARRA funding during fiscal year 2009-10.

Comments from Satterfield on Monday substantiate a Nashville Public Radio report Tuesday saying that the massive inflow of money, with deadlines for spending to stimulate the economy, overwhelmed the 18 agencies. Consequently, the Comptroller's Division of State Audit would find misuse of federal money.

"We are having some difficulties with some of the new contractors," Satterfield said, again apparently substantiating the radio report that indicated subcontractors of contractors may have hired others to help with the work.

Tradesmen installing insulation and related work "have been trained," Satterfield said. "They received the required TVA training that the state provided for one day.

"We've had some issues identified, but we've corrected them," she said. "We've not had to fire a contractor."

Inspections of contractors' work have been conducted by auditors hired by the agency in Fayetteville. "We use one contracted auditor and we have three agency auditors who've been with us for quite a bit of time," Satterfield said.

"I can see how this could happen if you don't go back and check on them," she said after receiving a copy of Fontenay's report issued Monday.

"Sometimes when you weather strip a door, it makes it hard to open and close the door," Satterfield said. "And the client might take the weather strip out, and so it wouldn't be as tight as it was when we looked at them.

"I know we're all being audited by the state," she said. "They send a group out to look at your files, or to look at the houses themselves."

Satterfield has been administering the weatherization program for several years, so she's familiar with the requirements, adding, "Some new contractors are totally trained into what we want done."

State Sen. Bill Ketron (R-Murfreesboro) represents Marshall County and he's become aware of the weatherization program, most recently because of a request from a woman in Columbia.

"It's up to the agency to interview the contractors," Ketron said.

If abuse is found and substantiated as intentional misuse just to get federal money, then "punitive action should be taken," the state senator said. "They're not only taking advantage of the system, but they're taking advantage of the poor people who need it."

Ketron did not point a finger at any one of the 18 agencies, contractors or subcontractors, but Fontenay said "All these sub recipients had issues identified."

The South Central Human Resources Agency is among many non-profit organizations created nationally because of the Johnson Administration's Great Society initiative that called for the creation of private organizations to administer human services through contracts with the government.

Examples include "meals on wheels, transportation vans taking people to a doctor and dentist, Head Start - a whole array of services - and it's up to them to contract that out," Ketron explained.

Auditors reviewed files for 444 weatherized homes. Deficiencies were found in more than half. Some files lacked adequate documentation, including verification that applicants met income eligibility and completed inspection reports to indicate work was properly performed.

State auditors visited 84 homes that were supposed to receive weatherization. In nearly half, inspectors approved the work but contractors had not performed some weatherization measures, had not properly completed the required weatherization measures or had performed work that was not allowable under the program.

Other deficiencies included the use of uncertified or unauthorized persons to perform energy audits and the use of one unlicensed contractor. In some cases, improvements such as stairs and ramps were built using program funds, even though they provide no weatherization benefits.

Moreover, the auditors noted several instances where critical weatherization measures were recommended but the measures were not performed or should have been recommended and authorized, but were not, such as fixing broken window panes.