Officials worry stimulus could overwhelm groups

WASHINGTON -- Community groups and agencies could be overwhelmed as they receive millions of dollars from a $5 billion stimulus program to make low-income households more energy efficient, some state officials and members of Congress warn. Some of the groups have been faulted in the past for mismanaging thousands of dollars a year in federal aid.

Those officials are worried about the massive increase for a program whose annual budget was $227 million last year. Auditors in five states have reported management and oversight problems in the past four years with weatherization programs, which provide energy-efficient heating or cooling systems and other improvements to lower utility bills.

The Energy Department provides weatherization money to states, which then distribute it to local governments and non-profit social service agencies that screen applicants and hire contractors to perform the work. It seeks to prevent problems by requiring states to file detailed spending plans and holding back half of the funding until recipients show they're properly using the money, according to Gil Sperling, the head of the program.

"We wanted to make sure that if there were problems, we were holding onto some of their money, which would be a greater incentive for (states) to fix those problems," Sperling said.

Auditors in Louisiana, Maryland, Minnesota, Missouri and Pennsylvania have found problems with their states' oversight of weatherization programs. In Pennsylvania, for example, state investigators found in 2007 that many weatherization projects were never inspected, and a failure to coordinate activities of two agencies in Philadelphia wasted $94,000 by weatherizing the same homes twice.

Pennsylvania Auditor General Jack Wagner said he supports the program but worries his state will have problems managing the $253 million in stimulus money. "Contracts will go out quicker, and they will be bigger," he said. "You have to ratchet up your eligibility checks and monitoring of work being done."

Pennsylvania Gov. Ed Rendell, who like Wagner is a Democrat, told the House Oversight Committee last week that state officials initially "didn't have a clue how to ramp up" the weatherization program. Rendell said Pennsylvania is working to bring in private firms to do some of the weatherization work and is imposing stricter oversight.

"When you throw 25 times as much money at this program, you're going to lose 20% to 30% of it to fraud," says Sen. Tom Coburn, R-Okla., a stimulus critic.

Coburn points to Nevada, where a local housing authority has sued to block a $1.8 million stimulus award to Community Services Agency Development Corp., claiming the state did not fund the non-profit last year because of mismanagement. Lori Story, the non-profit's lawyer, denied the claim and said it simply decided not to apply for weatherization funds in 2008.

Officials in Florida don't anticipate problems. The Manatee Community Action Agency on Florida's Gulf Coast typically got $20,000 to $40,000 in recent years to provide air conditioning and better insulation to 20 homes of low-income residents.

Now the agency is set to receive about $2.6 million for such projects. The Bradenton, Fla.-based agency, which has a waiting list of 125-plus homes, has hired two new workers and lined up three more contracting companies and two air conditioning suppliers for the extra work.

"It's a tremendous amount of money," said the agency's executive director, Barbara Patten, who noted the group will have three years to use its stimulus allocation. "I don't anticipate any difficulty in spending it."