TRENTON – Department of Community Affairs Commissioner Lori Grifa told the Assembly State Government Committee that her office is conducting a forensic audit of a third-party administrator of the state weatherization program, with possible criminal charges in mind.
“If that’s where the forensic audit leads us, then the chips fall where they may,” Grifa said.
A state auditor’s report released last month detailed lax fiscal controls over $2.1 million in state funding for the program, one of three such black-eye audits for the program in the past few years.
The situation is “between a serious problem and an outright scandal,” Grifa said, laying much of the blame on the New Jersey Community Action Association (NJCAA), which administers the $119 million three-year federal stimulus program.
State Auditor Stephen Eels also testified before the committee today, calling the federal funding for the program a “substantial increase” over past years, which put his department on guard.
In his opinion, spending controls at the DCA weren’t stringent enough for the increased funding level of the program. Had the department had a more detailed budget that included salaries and specific line items, they might have been able to identify inappropriate spending, he said. His department will provide a follow-up report by next March.
Federal regulations require the NJCAA to submit an audit to the DCA by March 31, but Grifa said that the audit still has not been submitted by the organization.
Committee Chairwoman Linda Stender, (D-22), of Fanwood, wondered why the audit pinpointed inadequate budgetary controls and circumvention of procurement regulations at the DCA, not the NJCAA.
“Frankly, I find it a little bit unfair,” Grifa said. Without the federally-required audit, her department had no ability to foresee these issues. “We rely on (the audit’s) integrity,” she said, which is now seriously questionable.
Stender reminded Grifa of some of the grimy details of the state auditor’s report, like funding spent on political receptions and country club bills.
“It’s shocking,” Grifa said. “We are very lucky that we had the ability to use the (state) auditor,” to get an immediate report.
The NJCAA is not cooperating with DCA oversight, Grifa said, specifically requests for the missing audit and the hiring of a forensic auditor. Now it’s the DCA who are doing the hiring, bringing in the Mercadien Group from Hamilton to review NJCAA books.
Also, the transfer of database information and contracts for “green” job training, outreach, and marketing from NJCAA to DCA has not yet been completed, Grifa said, because the program administrators are non-responsive.
Stender said the NJCAA’s phone was disconnected recently, although their website is still up and displaying recently released program bid requests.
“(The DCA) will review the proposals and we will (administer) the awards,” Grifa said. “I will probably send them a cease and desist letter.”
She said the DCA’s forensic auditor engaged with the NJCAA a few weeks ago, and expects a snapshot update in 45 days.
The state auditor found a shortfall of $600,000 in the accounting records for the program.
“Whether the state would be obliged to reimburse the federal government for (the missing funds),” Grifa said, “I just don’t know (but) there will be accountability for the folks at the NJCAA.”
The DCA is also addressing other problematic issues with the program, like the elimination of questionable contractors.
Following a state comptroller’s audit reporting billing irregularities, she said the department dismissed seven of 22 contractors for “abysmal failure” or “accounting issues,” like one contractor – referred to the state Division of Criminal Justice – who billed $27 for a light bulb.
Ells said he also referred some of the state audit details to the Division of Criminal Justice, which has just started an investigation.