By Michael Kleen ~ Published September 18, 2013 at the Rock River Times
After weeks of delay, the City of Rockford finally released the results of its internal review of the U.S. Health and Human Services Office of Inspector General’s audit, which covered roughly $599,000 in federal stimulus funds spent in 2009 and 2010. This memo, written by Rockford City Administrator James Ryan, raises several alarming questions about the possibility of wrongdoing by City staff and its grant recipients. There are, in fact, at least two instances where further investigation may be warranted.
The first demonstrates a clear failure (whether intentional or not) to follow stimulus fund guidelines on the part of Rockford Human Services Department staff, and may constitute, at the very least, a neglect of duties.
George Davis, Executive Director of the Rockford Human Services Department, first became aware that the Office of Inspector General was looking into Rockford’s use of federal stimulus funds in the fall of 2011. He told City Administrator James Ryan, “Given our general accounting practices and Department fiscal procedures I don’t expect that we will have any significant issues.”
Director Davis stated in a letter dated March 5, 2013 to Sheri Fulcher, Regional Inspector General for Audit Services for the DHHS, “…we followed the requirements for documentation as we understood them at the time.” He told the Rockford Register Star on July 26, 2013, “It’s not a case where we had explicit guidelines and instructions and didn’t follow them. We had no unique guidelines.”
According to James Ryan’s memo, however, Community Services Director Jennifer Jaeger (her name is oddly omitted from the memo) was directly responsible for the overall management of the regular Community Service Block Grant (CSBG) program. She was also responsible for the overall management of the CSBG-R program (the Federal stimulus funds). Director Jaeger reported to George Davis, and according to James Ryan, “he relied heavily on the Community Services Director to administer the CSBG program in accordance with established guidelines, laws, and procedures.”
James Ryan concluded, “it is clear that there were explicit guidelines and instructions from the very onset of the CSBG-R Grant Agreement with the DCEO, and they were not followed in accordance with the Grant Agreement.” If the Community Services Director knew what the guidelines were and did not follow them, and the Executive Director of Rockford’s Human Services Department repeatedly denied that fact to both his superiors and the press, does that not constitute (at the very least) a willful neglect of his or her duties?
The second instance in which further investigation may be warranted concerns $100,000 in stimulus funds given to the Rockford Area Economic Development Council (RAEDC). The funds were requested for a job development program “in which 22 people were to be served for the purposes of job creation and retention.” Later, both RAEDC and Rockford Human Services asserted that amount went toward staff salaries. RAEDC could not show a connection, however, between the staff salaries and any job development program.
According to City Administrator James Ryan, “While RAEDC did provide a report detailing activities, the personnel involved in the activity, and the hours and wages dedicated to the activity, it was clearly done post facto.” Meaning, RAEDC created this report after the auditor raised questions about how the money was spent.
Ryan again concluded, “reports were not being done appropriately from the very inception of the grant award to the RAEDC,” and “RAEDC was not adhering to the grant requirements as set forth in the contract.”
A City press release was careful to point out that, “It should be noted that nothing in the OIG report suggested intentional wrongdoing, fraudulent practices, illegal activities, or self-dealing by any City staff or sub-grantee with regard to the funds in question,” This statement particularly stands out when put side by side with a sentence on page 8 of the memo recommending that the City “seek a release of liability from further action on the matter from the Illinois DCEO and OIG.”
If City staff were so confident that wrongdoing had not occurred, why would they feel the need to explicitly state that fact, and why would City Administrator James Ryan seek a release of liability from further action? What further action could there be? There are only two possibilities: 1) The State or OIG can audit the other half of the stimulus funds. 2) The State or OIG can seek a criminal investigation or legal prosecution related to their findings. By asking for release of liability, the City of Rockford gives the appearance that conditions exist for either of these two actions to take place.
As we have seen in more than one instance, the City itself has provided ample justification for further investigation into this matter from the Illinois DCEO and OIG.