Rockford's Independent Newspaper

No intentional wrongdoing in city’s handling of stimulus cash

By Jim Hagerty

ROCKFORD – Although the Office of Inspector General is requiring the city to repay more than $300,000 in federal stimulus money, officials say it is not because of intentional wrongdoing.

In 2009 and 2010, the city received $1.1 million in grant money as part of the Federal American Recovery and Reinvestment Act. Funds were distributed to several city partners, sub-grantees like the Rockford Area Economic Development Council (RAEDC).

In 2013, an audit of roughly $600,000 found that Rockford did not have adequate levels for review in place and did not adequately document $305,287.

“There were many things that were done in a compressed manner,” Human Services Director George Davis said. “That led to not really putting requirements on sub-recipients that, under other conditions, we would have.”

Davis said the city followed the program’s guidelines but ran into a challenge of how to spend a total of more than $7 million within a year.

“One could certainly argue in hindsight that things should have been followed more stringently, but we were going to leave significant amounts of money on the table, or we were going to follow a fairly reasonable procedure that didn’t necessarily pass scrutiny after it was reviewed in terms of the documentation. When you try to take a program that is less than $1 million and all of the sudden give that program $7 million and say, ‘You’ve got 12 months to spend it,’ there are going to be issues. I can’t say that we, knowing what we know now, would do things differently, but our response would probably be to leave a lot of that money on the table.”

Davis added that projects funded under the grant were considered appropriate at the time. Each was approved by the Illinois Department of Commerce and green lighted by city council.

“We didn’t violate our normal procedures,” Davis said. “The only thing that really occurred is our ability to document how the recipients used the funds and their ability or failure to provide us proof that they passed muster of the federal government was at issue.”

Rockford was among several cities that received federal funds that were later audited, Davis said.

Third Ward Ald. Chad Tuneberg was not on council in 2009 but said the situation could have been avoided had the city–then under direction of former City Administrator Jim Ryan and ex-Mayor Larry Morrissey–passed on the grants altogether.

“Come, let’s feed at the trough,” Tuneberg said to describe the stimulus program. “We had this big sum of money we had to spend as quickly as we could. And of the amount they audited, approximately 50 percent was found to be in violation. That’s concerning to me. And I am imagining it was used in such a way that fit the guidelines of this national program, which is why I vehemently disagreed with so much of this. And I see some of the expenditures that were not filed correctly went to paintball and movie tickets.”

The paintball expense was part of $9,0971 charge that also included the rental of a movie theater for the Youth Advisory Council.

“Rockford did not provide an explanation for us to determine how these costs related to the overall goal of the Recovery Act award,” the Office of Inspector General’s report said.

The Recovery Act aimed to spark the U.S. economy with $1 billion in Community Service Block Grants in cities across the county.

Besides the $100,000 paid to the Rockford Area Economic Development Council and funds allocated to the Youth Advisory Council, the rest went to the Winnebago County State’s Attorney’s Office; nCenter, Rock River Training; various subcontractors and miscellaneous charges.

“It’s ridiculous that part of this program that bloated our national debt has now gotten our own city into this situation,” Tuneberg said. “It’s infuriating.”

Davis called the situation embarrassing but reiterated that nothing nefarious was afoot.

City Administrator Todd Cagnoni said the next steps are to repay the money to the Illinois Department of Commerce and Economic Opportunity and examine possible recovery options.

“We have communicated with the parties that were sub-recipients,” he said. “We will be working with those agencies to recover what costs we can under the existing agreements that were done at the time.”

Funds allocated to RAEDC will be paid from the city Redevelopment Fund. The rest are general-fund expenses.

The Breakdown

$100,000, Rockford Area Economic Development Council: There was not adequate documentation demonstrating how the funds were spent.

$95,991, Winnebago County State’s Attorney: Personal expenses and training costs related to senior-abuse and first-time juvenile offender’s programs were inadequately documented.

$72,669, Miscellaneous: Funds were outside the allowable funding period.

$15,000, The nCenter: The center closed before the audit was done. Details of how the money was spent was not properly documented.

$9,097, Youth Advisory Council: Rockford did not provide an explanation that allowed the inspector general to determine how these costs related to the overall goal of the Recovery Act.

$8,530, Various Subcontractors: Documentation of subcontractor supplies and meeting experiences was inadequate.

$4,000, Rock River Training: Cost basis for determining expenses was inadequate. R.

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