24 December 2009

Texas Agency Slow To Spend Weatherization Funds

The Dallas News

AUSTIN – The state received millions of federal dollars from the economic-stimulus package to help poor Texans cut their energy bills, but by the end of last month, just seven homes had been weather-treated under the program.

The state has spent $1.8 million of $163 million available over the past four months, with most of it going to administrative costs, such as the salaries of state workers.

The weatherization program was a key element of the federal effort to revive the economy, billed as a quick way to create jobs, save energy and cut utility bills.

In Texas, the task has been heaped onto a midsized agency that must figure how to hand out millions more in federal funds to local agencies and governments, but do it carefully enough to avoid wasting money.

Some community action agencies that will spend the money criticize the state's bureaucracy for the length of time it will take to get the program up and running. State officials acknowledge the slow start but say they're trying to ensure there is no waste or fraud. And they say federal red tape has been a problem.

The Department of Housing and Community Affairs is on track to get $327 million overall from the stimulus package – 55 times what the state typically gets in a year from the Department of Energy for weatherization work. It has until March 2012 to spend the money, with a goal of weatherizing 56,000 homes.

'Time and quality'

"It's the intersection of time and quality," said Brooke Boston, a deputy executive director at the state Department of Housing and Community Affairs. "If you could give agencies as long as they wanted, could you feel pretty good about every regulation followed to a T and every residence done perfect? Probably."

By the end of November, the most recent data available, the state had weatherized only seven homes through the stimulus program. Five were done by the Sherman-based Texoma Council of Governments and two by Tri-County Community Action in Center, Texas.

"I didn't expect tens of thousands, but seven is shocking," said Randy Chapman, executive director of the Texas Legal Services Center, one of several groups monitoring stimulus spending in Texas.

Boston acknowledged that federal officials "aren't excited about where we are today, and neither are we."

State officials say they expect a "huge jump" in the amount spent by March. Starting in January, the housing department plans to post data on its Web site projecting the number of homes that local agencies and governments will weatherize each month with stimulus funds.

The trickle of weatherization funds spent reflects the debate that has raged since President Barack Obama signed the $787 billion stimulus bill into law nearly a year ago. Among the questions that have been raised: whether the package was focused on work that would actually stimulate economic growth and job creation and whether government had the capacity to spend a great deal of money wisely but also quickly.

In September, Texas ranked 39th among the states in the amount spent. Texas reported to the federal government that three jobs had been created – all of them state positions. An update is expected early next month.

"No one wants to make mistakes," said Bob Scott, director of weatherization services for the National Association for State Community Services Programs. "They are trying to balance the need to show results quickly with the concern that there is increased scrutiny and accountability."

Some watchdog groups predict that states won't be able to keep a lid on waste and fraud as federal dollars flow through.

"There's all kinds of mischief in people fraudulently applying and getting the money when they're not eligible," said Leslie K. Paige, spokeswoman for the Council for Citizens Against Government Waste in Washington. "And then you have the homes and what work is done, and how you verify that."

Even groups that support the weatherization goal say the task is big.

"They were not an agency equipped to take on $327 million," said McCall Johnson, a clean-energy advocate with Environment Texas. "They didn't have the staff. To gear up for it is a lot."

Beverly Davis, an 84-year-old widow, has waited for work to be done on her Garland home since August 2008.

Davis, who said she lives on about $12,000 a year, said Dallas County Department of Health and Human Services workers recently checked her heating and air conditioning system, but it's unclear when caulking and insulation will be done. The work could have saved her money during the recent cold snap.

"It's slow. I heard they're having problems getting crews together," she said.

Daniel Araiza, a program monitor with the health department, said work using stimulus funds is under way on about 75 homes.

Past problems

Texas has a checkered past with the federal Weatherization Assistance Program, which the U.S. Department of Energy has run since the mid-1970s.

In 2003, a state audit documented how some local agencies that received money did weatherization work for people whose incomes were too high to qualify them for the low-income program:

• One local group, which was not identified, used $202,000 for weatherization work at an apartment complex without analyzing whether the work was needed, according to the audit.

• A second local agency changed expired contracts with firms to pay them more for labor costs, instead of allowing other firms to bid, the audit said.

• State inspectors failed to report that a local agency could not produce an entire set of employee time sheets for the past year. Nonetheless, the agency received federal funds for its work, the audit said.

• State housing officials didn't track the amount of federal funds used to weatherize multi-family dwellings and didn't ensure that local agencies and governments gave the low-income elderly and disabled a high priority for receiving weatherization work, the report said.

The state auditor's office has not done a follow-up review, but housing department leaders maintain the problems were corrected "very quickly" after the audit's release in 2003.

The state strengthened rules to determine how income is documented to ensure that people are eligible for the work at their homes, said Gordon Anderson, a housing department spokesman.

State officials said they have crafted an "aggressive monitoring program" to track how federal stimulus funds for weatherization are spent and will do so, in part, by doubling their energy assistance section from 15 to 30 employees, using federal dollars for payroll costs.

Under the Weatherization Assistance Program, the Energy Department ships money to the states, which then contract with community groups and local governments to spend it.

The local groups then hire contractors to insulate walls and attics, seal cracks, caulk windows, and supply energy-efficient appliances. They also monitor the work.

Under the stimulus program, the Texas housing department will more frequently inspect how the local groups and governments are handling their finances, said Michael DeYoung, director of the agency's community affairs division.

Federal regulations require states to inspect 5 percent of homes under the stimulus program. Texas officials say they will inspect 10 percent and possibly more.

Every three months, the state must send the federal government a report with the names of firms that the local agencies and governments hire to weatherize homes.

"If the agency knows their feet are going to get held to the fire for the quality of their work, then ultimately they are not going to keep using a contractor that gives them poor-quality work," said Boston, the state housing department official.

If the federal government is dissatisfied with how the program is run, it can demand that some of the money be returned.

A Dallas Morning News review of state inspection records found that problems at local agencies and governments this year ranged from zero at the Dallas County Department of Health and Human Services to nine at Tri-County Community Action in Shelby County.

The state said Tri-County's initial and final inspections of homes were "incomplete," and the agency spent federal funds on roof and other repairs that didn't save energy. The state said it plans to resolve its concerns with the agency soon. Tri-County's executive director couldn't be reached for comment.

When the state finds problems, it usually dispatches trainers to local agencies. If that doesn't work, federal funds are cut off until work is documented properly, Boston said. Typically, that happens to one to two agencies a year, she added.

Why the slow pace

State housing department officials cite several factors for the slow pace of spending so far, including a new requirement that contractors pay "prevailing wages" to weatherization workers.

But some of the community service agencies have voiced concerns about the state's oversight.

At a public hearing in April in Dallas, Stella Rodriguez, executive director of the Texas Association of Community Action Agencies, cited the housing department's delays in replacing staff and signing contracts, along with inconsistent inspection reports on Dallas apartments.

The agencies also criticized the state for proposing to send stimulus dollars to cities and small nonprofit groups that have no experience running a federally funded weatherization program. The state later dropped the small cities and nonprofits, but kept big cities, including Dallas and Houston, in the pipeline.

"It's not all the state's fault," said Art Kampschafer, contract manager for Community Services Inc. in Corsicana. "The feds have set up a whole bunch of roadblocks as far as restrictions on the money."

Dallas City Hall has set a goal of spending $13 million over two years to weatherize 1,800 Texas apartments and homes of lower-income residents.

Work is expected to start in March, said Terry Williams, assistant director of the city's housing-community services department. The city is collecting bids and will need City Council approval to award the work, he said.

Yesenia Serrato, a Dallas resident, has lined up weatherization work through the Dallas County Department of Health and Human Services.

"It was just supposed to be for insulation, to replace broken glass in the windows, and put caulking where that is needed," she said. "When they tested the house, they said they would replace all of my windows."

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