in Houston, Texas

Fraud concerns surface, significant troubles continue in federal stimulus weatherization program

Tuesday, Dec 14, 2010, 08:59AM CST
By Mark Lisheron
insulation

Significant problems with the management and accounting for multimillion-dollar weatherization stimulus contracts have raised concerns of fraud with Texas state officials, whose inspectors continue to criticize the training, workmanship and accounting practices of contract crews.

In a review of inspection documents between Aug. 1 and Oct. 20 obtained by Texas Watchdog, at least a dozen of the 42 agencies taking part in Texas' $326 million stimulus Weatherization Assistance Program were written up for everything from mismanaged or undocumented spending to failing to perform basic tasks like blowing the right amount of insulation into the walls of a home or to repair a broken window pane to make housing units more energy-efficient.

The Department of Housing and Community Affairs has already pulled the plug on two programs for chronic mismanagement, the $5.6 million Community Action Program Inc. in Abilene and the Institute For Rural Development in Kingsville. Another handful of the surviving programs have been placed on a system of justifying each of their expenses before they can be reimbursed by the state, a tactic to address persistent administrative and workmanship problems.

The chaotic bookkeeping practices and questionable billing by several local programs has caused the department to look more closely at fraud, Brooke Boston, deputy executive director for Housing and Community Affairs, said, although she was quick to say that no criminal wrongdoing has so far been uncovered.

"Yes, we have concerns about fraud, and we will disallow costs if they can't be justified," Boston said. "We take this seriously."

Michael DeYoung, weatherization director for the department, said that where inspections find multiple problems, the solution is more training rather than punitive action. 

State Rep. Myra Crownover, vice-chairman of the House select committee overseeing the spending of more than 16 billion stimulus dollars in Texas, was made aware of the negative weatherization reports by Texas Watchdog. Crownover, R-Lake Dallas, said the reports would almost certainly prompt tough questions from her committee and the House in the next legislative session. 

"At first glance, I am extremely displeased with the alleged waste of taxpayer dollars outlined in these reports," Crownover said.

PROBLEMS SO WIDESPREAD IN DALLAS THAT CITY COULD LOSE FUNDING

Boston and DeYoung were both aware of the results of an inspection in August of the City of Dallas' $13.3 million stimulus program. Inspectors issued a written warning that Dallas could lose some of its federal funding for having spent just 15.6 percent of its allotted funding through August, according to the inspection report.

Dallas officials responded with an updated plan that included the startling admission that the program might simply not be able to do what it promised by the Aug. 31, 2011, deadline set for the entire $5 billion program by the U.S. Department of Energy.

And what the program had done so far filled 24 pages in the inspector's report. Inspectors went through 19 homes weatherized by program contractors and found shoddy and incomplete work in all but one of them. Space heaters had not been vented properly, gas stoves continued to give off hazardous levels of carbon monoxide and not enough insulation had been blown into the walls and attics of several units.

The state rejected outright billing for $32,824 and questioned costs totaling another $22,800, much of it for water heaters valued at close to $2,000 each that exceeded the requirements for each housing unit. Water heaters were replaced, and ventilation work was done with no record of testing to prove that the work was needed.

And while concluding that more than eight months after actual weatherizing work began in Dallas much more training was needed, inspectors noted that two of the top officials in the program (unnamed) had never attended a training session. An assistant director (also unnamed) twice signed up for training but did not complete it.

Myra CrownoverCROWNOVER

Calls to officials with the program by Texas Watchdog seeking comment were not returned.

"I expect that I, along with other members of the legislature, will have some serious questions for the City of Dallas regarding their implementation of the weatherization program," Crownover said.

In East Texas, inspectors found weatherization crews putting in tub surrounds, interior molding and exterior trim unrelated to energy savings. Inspectors who audited the Greater East Texas Community Action Program weatherization program recommended that the state not accept $62,308 in work done by the program's contractors. The inspectors questioned a $4,000 roof replacement and the installation of air conditioning units valued at $4,000 to $5,000 in at least three units. Of 24 homes, inspectors found inadequacies requiring a return visit in 17.

A message left with program officials asking for comment was not returned.

SLOW PACE THREATENS FUNDS

Under increased pressure by the U.S. Department of Energy, state officials will begin in January taking money away from agencies moving too slowly or doing substandard work through the program.

Top officials for the state Department of Housing and Community Affairs told Texas Watchdog there may be as many as five of the 42 cities and community groups taking part in the program who could have millions of dollars taken from them and given to better performing agencies. 

Eighteen months after the stimulus bill was passed and nearly a year since weatherization work began in earnest, Texas has spent just $97.4 million or less than 30 percent of the program total through the end of November, according to the department's most recent weekly status report. The state has consistently ranked among the bottom 10 for spending among states.

"Obviously, if you do the math, at the rate we're going now we aren't going to get finished on time," Boston said. "We met with DOE last week, and I'm not going to say they were happy with us, but they're encouraged with the things we're trying to do to speed things up, and they're eager for us to spend the money."

Dallas and East Texas are two of the programs that might be faced with a loss of funding next year if improvements aren't made, Boston said. DeYoung was quick to point out that in most cases the inspections have uncovered a need for more training that will, it is hoped, lead to more thorough documentation and fewer disallowed and questioned costs.

After state inspectors questioned $71,194 in work done by crews for the South Plains Community Action Association in Levelland, executive director Bill Powell said he had contractors do energy audits on the units in question proving the need for the work and submitted them to the state. Powell said the association has accounted for all of the work in question.

Powell echoed a complaint raised from the start of the stimulus weatherization program by the local program administrators: Tethering their modest weatherization programs to the multimillion-dollar federal and state apparatus has been tough. South Plains used to weatherize 30 low-income homes a year. With a federal stimulus drop of $3.4 million over two years, the agency signed on to do 350 homes.

"All of a sudden you have people paying attention to everything we're doing, making a big deal about it," Powell said. "From my perspective, you have people worrying about reports. We worried about the problems our poor people are having with their homes. We've made some mistakes, but we're getting homes fixed up. That's what we're in business for."

Unlike South Plains, the City of El Paso had never done any low-income weatherizing work, but wasn't about to turn away the $8 million it got, Bill Lilly, community development director for the city, said. The city has so far made more energy-efficient about 500 of its goal of 1,200 units by next August.

Lilly, too, said he had contractors come back to units to do energy audits to justify having put in 26 gas furnaces, 21 evaporating water air coolers and 16 water heaters at a total value of $52,200 in units inspected by the state this past August. Lilly also found out that about $25 worth of work would have prevented inspectors from calling for a return to 25 units. Lilly ordered the work done and notified the state.

"You have to understand that there is a tremendous pressure to produce number, numbers, numbers," Lilly said. "We don't deal in numbers, we deal in people. We know we're going to take some lumps, but El Paso is a poor community that can use this money and this kind of work. And we're just going to do the best we can."

 

Contact Mark Lisheron at 512-299-2318 or mark@texaswatchdog.org.


 

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Photo of a worker installing insulation by flickr user Moosicorn, used via a Creative Commons license.


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