Auditor General DePasquale Says Homeless People in Pennsylvania Hurt by DCED’s Inept Oversight of Federal Programs
Auditor General DePasquale Says Homeless People in Pennsylvania Hurt by DCED’s Inept Oversight of Federal Programs
Says DCED delays left agencies serving homeless people waiting for up to 15 months for funding
HARRISBURG (Dec. 9, 2015) – Auditor General Eugene DePasquale today said that his audit of the Department of Community and Economic Development’s (DCED) oversight of two federally funded programs to help prevent homelessness has major flaws that need to be addressed before more of Pennsylvania’s most vulnerable families lose out on assistance.
“Local agencies working to prevent homelessness should be able to rely on DCED for prompt and efficient distribution of federal funds or the people they serve could literally be left out in the cold,” DePasquale said. “People should not have to live on the street, in the cold when there is money available to help agencies provide services to them.”
In April, DePasquale launched a performance audit of DCED’s oversight of two programs that receive a total of approximately $20 million per year from the U.S. Department of Housing and Urban Development (HUD):
• The Emergency Solutions Grant (ESG) program distributes approximately $5 million annually to counties, cities, and shelters to serve a broad range of housing needs for victims of domestic abuse, persons with disabilities, and displaced families.
• The HOME Investment Partnership (HOME) program distributes approximately $15 million annually to help local agencies expand the supply of decent, safe, sanitary and affordable housing for low-income individuals.
Audit findings
The 75-page audit report released today covers July 2011 through June 2014, with updates through September 2015. The report includes five findings and 34 recommendations for improvement. Among the findings, DCED:
• failed to recapture and reallocate unspent ESG funds in a timely manner which jeopardizes funds for counties’ Homelessness Prevention and Rehousing programs,
• delayed executing ESG contracts with grantees for four to nine months resulting in delays providing services to help people avoid homelessness,
• failed to conduct on-site monitoring for one-third of the 59 ESG contracts executed during the audit which could increase the risk that funds would not be used to alleviate homelessness,
• failed to review and timely recapture unspent HOME program funds that could be reallocated to other grantees working to address homelessness, and
• provided inadequate oversight of HOME grantees — such as skipping nearly 75 percent of on-site monitoring in 2014 and 95 percent of the required fiscal operations monitoring — increasing the risk that the funds would not be used for providing quality affordable housing to low-income Pennsylvanians.
“Based on today’s report, and last year’s audit of DCED’s job creation programs, this agency is more focused on compliance — checking-off boxes — than on the performance and effectiveness of initiatives intended to help people,” DePasquale said.
The audit notes that in the HOME program, DCED does not have a clear timeline for reviewing applications for funding. During the audit period there were 15 months between application reviews, leaving applicants — and the people they serve — in limbo waiting for funding.
“There is no excuse for DCED taking up to 15 months to do paperwork,” DePasquale said. “This is federal money waiting to be used while DCED procrastinated. The federal programs include administrative costs, so DCED should be able to hire the staff necessary to make sure operations are as efficient and effective as possible in helping people avoid homelessness.”
Impact of the delays
DCED’s failure to promptly reallocate homelessness funding has caused some counties to miss out on subsidies that could have been used to meet the needs of the homeless people in their region.
“We looked at examples of six counties that did not receive funding requested in 2011 and 2012. We found that if DCED did a better job reallocating unspent ESG funds in a timely manner, counties whose initial applications may have been rejected, in part because of limited funds could have been re-considered,” he said, noting that DCED recaptured $944,486 of unspent ESG money from 2011 and 2012, but did not reallocate any of the funding until 2014. DCED is waiting for federal permission to reallocate $129,486 of that funding, or the funds will be returned to HUD.
In these six examples, at least 380 people — men, women, and children — could have been helped with Emergency Solutions Grant funding from DCED:
• Cumberland County requested funding to help house at least 15 homeless families. The money could have been used for such programs as rental assistance for immediate housing and case management services to help them get back on their feet.
• Franklin County requested funding to provide short-term rental assistance to help keep 120 families in their homes.
• Butler County requested funding to help support its Safe Harbor shelter which, at the time of the application, was housing twice the number of people it was intended to serve — 30 people crammed in a shelter built for 15.
• Erie County requested funding to provide rental assistance to keep 150 families, including women and children and the elderly, in their homes.
• Chester County requested funding to help 70 families with rental applications fees, security deposits, back rent and utility payments.
• Lycoming County requested funding to help 10 families through its Rapid Re-Housing Assistance program and case management services through the YWCA Liberty House.
“These are just a few examples of how homelessness affects people across the state in every county and community, regardless of size and demographics,” DePasquale said. “The local agencies trying to address homelessness face plenty of hurdles; they should not have to deal with a state agency so consumed by bureaucracy that they lose sight of the people who need assistance.”
DCED’s poor performance on programs to prevent homelessness also caught the attention of HUD which conducted its own review of the agency in 2012 and 2014. In response to HUD’s findings, DCED began implementing corrective actions, including employing new fiscal monitoring procedures and hiring a third party vendor in June 2015 to clear a backlog of 175 HOME program monitoring visits by May 31, 2016, at a cost of $715,629.
The auditor general’s review noted some improvements, but continued to find deficiencies in DCED oversight. Today’s report includes 34 recommendations for DCED to help improve homelessness prevention programs in Pennsylvania.
“I am pleased to say that DCED agrees with our findings and has pledged to implement our recommendations,” DePasquale said.
“I am confident that if our recommendations are promptly implemented, Pennsylvania will be better equipped to help some of our most vulnerable families and individuals who are homeless or at risk of homelessness, and provide quality affordable housing to low-income residents in need.”
DCED’s response to each audit finding is included in the special performance audit report on oversight of homelessness prevention programs which is available online here.
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EDITOR’S NOTE: Following is a list of the 34 recommendations Auditor General DePasquale make for DCED to help improve homelessness prevention programs in Pennsylvania.
Auditor General Eugene DePasquale Makes 34 Recommendations for DCED to Help Improve Programs to Prevent Homelessness in PA
Finding 1 — DCED’s failure to reallocate vital unspent funds of the Emergency Solutions Grants in a timely manner jeopardizes funds for counties’ Homelessness Prevention and Rehousing programs.
1. Perform the midway spending requirement analysis at the 50% 12-month spending deadline and timely correspond with appropriate grantees who failed to meet this requirement.
2. Maintain the midway spending requirement analysis and related decision-making documentation.
3. Be proactive in developing a plan to reallocate the funds recaptured, as a result of the midway spending requirement analysis, during the contract period. Consider the procedures suggested in the finding.
4. Develop written procedures for performing the midway spending requirement analysis and the resulting recapture of funds process. These procedures should include, but not be limited to, the following:
a. Performing the analysis, including when the analysis should be performed.
b. Ensuring documented supervisory review of the analysis and conclusions reached.
c. Developing a plan to reallocate the recaptured funds, ensuring that the process is objective and unbiased.
d. Timely contacting grantees that failed to meet the 50% 12-month spending requirement.
e. Timely amending the contracts for any funds recaptured.
Finding 2 — DCED’s contract delays result in unmet spending deadlines, jeopardizing available funding vital for homelessness prevention and rehousing programs.
1. Expedite the contract execution process to allow grantees the maximum time possible to expend program funds within the allowable contract period.
2. Develop an effective tracking system to monitor the various phases of the contracting process to ensure that all contracts are fully executed in the most expeditious time possible.
3. Follow-up with grantees when signed contracts are not returned timely.
4. Communicate all expenditure deadlines to grantees in both the award letter and the contract to afford grantees adequate time to expend funds and submit invoices to DCED requesting reimbursement within the required deadlines.
5. Develop written policies and procedures for ESG application review process. These procedures should include, but not be limited to:
a. Completion of established DCED checklists to document the completeness of the application submitted by each applicant.
b. Completion of established DCED forms to summarize the applicant’s prior performance for any previous ESG contracts which is used when considering awarding future ESG funds.
c. Process for scoring points and ranking each application during the review process.
d. Process for determining which applicants to recommend for funding based upon the checklists, forms, and scoring.
e. Criteria and guidelines for determining amount of funds to be awarded to recommended applicants.
6. Consider incorporating the evaluation of applicants’ past contract performance into the objective scoring system.
7. Provide the director approving awards with all relevant information including the scores for each applicant in order to allow for a more informed decision about the recommendations for awarding ESG funds.
Finding 3 — Deficiencies found in DCED’s on-site monitoring of Emergency Solutions grantees increases the risk that ESG funds will not be used for their intended purpose of alleviating homelessness in Pennsylvania.
1. Conduct on-site monitoring of ESG grantees to eliminate the 2011, 2012, and 2013 ESG program years’ backlog by December 31, 2015.
2. Develop and execute an on-site monitoring schedule for the 2014 ESG program year and future program years that allows on-site monitoring to be completed during the contract period.
3. Finalize written policies and procedures for the ESG on-site monitoring process. These procedures should include, but not be limited to, the following:
a. Timelines for conducting on-site monitoring, issuing report letters, and responding to grantees’ corrective action plans.
b. Supervisory review and approval of the on-site monitoring documentation and conclusions reached prior to issuing the report letters to the grantees.
c. Procedures for following up with grantees that do not respond timely to report letters that contain findings, concerns, and recommendations.
d. Criteria and guidelines for the compliance areas being monitored.
e. The extent of documentation needed to conclude as to whether the compliance criteria have been met.
4. Until such a time that HUD issues updated guidance that includes the new ESG-specific criteria, DCED should ensure the monitoring of all the ESG-specific criteria is performed and documented.
5. Ascertain the best approach for efficiently completing on-site fiscal monitoring and ensure that on-site fiscal monitoring is completed as required.
6. Ensure the monitoring documentation is properly filed and maintained.
7. Issue the report letters in a timely manner to allow the grantees to correct any deficiencies and timely develop corrective action plans.
8. Timely follow up with grantees that have been issued report letters but have not responded within the 30 day time frame requested by DCED.
9. Timely respond to grantees that have responded to the monitoring report letters issued. DCED should indicate its acceptance with the corrective action plans or, if necessary, what changes need to be made to make the plan acceptable.
10. Ensure a supervisor has reviewed and documented his/her approval of the on-site monitoring documentation, including conclusions reached, prior to issuing report letters to the grantees.
Finding 4 — DCED failed to timely review and recapture unspent HOME program funds and deficiencies identified in its application review and award process.
1. Ensure any unspent funds are recaptured timely from the grantees by requiring the grantees to submit a final fiscal status report within 30 days after the close of their contract and DCED recapture any unspent funds within 60 days after the close of their contract.
2. Develop written procedures and guidelines for its application review and selection process and ensure that these procedures are implemented properly during the review and selection process.
3. Perform application joint reviews at least semi-annually to award HOME grants more timely.
4. Develop and utilize an objective scoring system for awarding HOME grants.
5. Ensure adequate segregation of duties exist over the application review, selection, and approval process.
6. Provide a summary of all applicants to the director for review and approval, including applicants that have been recommended, denied, and carried over for future consideration, and the justification for each.
7. Promptly notify all applicants when they have been denied funding.
Finding 5 — Inadequate oversight of HOME grantees increases the risk that HOME funds will not be used for providing quality affordable housing to low-income Pennsylvanians.
1. Finalize formal written program monitoring procedures by obtaining HUD approval and ensuring proper training of appropriate staff.
2. Eliminate the program monitoring backlog by May 31, 2016, by monitoring the third party vendor to ensure it properly and timely conducts and completes these program reviews.
3. Once backlog is eliminated, ensure adequate resources are available to properly and timely complete program monitoring, including timely follow-up of any noncompliance or other issues identified.
4. Eliminate the fiscal operations review backlog by June 30, 2016, by dedicating sufficient resources to conduct and complete them, including timely follow-up with the grantees to correct any weaknesses identified.
5. Establish timeframes for completing the grantee invoice reviews, including eliminating the quarterly review backlog.
6. Dedicate sufficient resources to ensure that invoice reviews are completed in accordance with established timeframes.
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