Nearly 95 percent of $119 million in federal stimulus money sent to New Jersey last year to help low-income residents make their homes more energy efficient remains unspent, according to an audit that shows that the program has been plagued by mismanagement since it started.
The weatherization program is designed to residents save on energy costs through the installation of insulation, sealing ducts and stopping heat loss through leaky windows and doors.
It is overseen by the Department of Community Affairs, but uses government and nonprofit agencies to do the work. At the outset, DCA planned to complete 13,000 units. To date, just over 1,000 have been completed.
According to a report released this week by State Auditor Stephen Eells, the program's cost controls weren't being effectively implemented.
The audit determined that $2.7 million of the $8.7 million in expenditures reported so far were considered fraudulent and the payments were stopped. Weatherization agencies are provided advance funds but must submit reports on the expenditures.
Of the $119 million, New Jersey was awarded half, or $64 million, upfront. The state was promised the other half once it could demonstrate progress, or that 30 percent of the units the state promised to weatherize are completed.
The report noted that the lack of oversight resulted in varying construction costs, underpaid workers, and "unreasonable spending."
Eells said that the spending problems were the result of "inadequate review of financial reports and a lack of guidance from the state and federal agencies."
Auditors visited four weatherization agencies and found that of the reported $614,000 in expenditures, $54,000 were "unreasonable."
For example, one weatherization agency spent $1,499 for in-dash GPS systems when a cheaper a $200 portable model would have worked. Another agency was reimbursed more than $17,000 for vehicles it purchased prior to the grant funding.
Construction costs fluctuated dramatically. One weatherization agency charged the program $1.50 for light bulbs, while another charged $27; the audit did not specify how many bulbs were purchased in each instance. Another weatherization agency charged $10 for a dryer vent, while a similar installation cost $126, according to the report.
The report also said that DCA failed to enforce the federal government's wage requirement that all workers make at least $17.40 per hour plus benefits.
Some agencies paid their employees this amount, while others used contractors that did not. Of 54 contract employees whose wages were audited, 29 of them were paid less than the required minimum wage.
Even the oversight was lax, the report found. Two agencies were reimbursed a combined $37,000 for auditing fees even though audits had never been performed on the agencies.
Meanwhile, few of the 13,000 units that the state hoped to complete work on before April 2012 have been finished.
Mercer County has been awarded $4 million in funding but has completed just seven units, despite reporting more than $250,000 in costs; Passaic County, which reported $59,000 in costs has complete zero units.
The program has been around for years, but has received modest grants. In 2004, it received only $4 million.
DCA Commissioner Lori Grifa said that the program wasn't prepared to grow so quickly.
"The rapid expansion of this program in 2009 to meet tight federal timelines exposed weaknesses in DCA's monitoring and record keeping protocols," Grifa said in a written response to the audit, adding that DCA has taken corrective action to increase oversight.
Following a March audit that examined managerial issues and eligibility controls, DCA replaced two program supervisors and another was reassigned.
Grifa said an accountant was also hired in May to help with general oversight of the local agencies.
Environmentalists worry that the lack of progress so far could jeopardize funding for the program.
"There are consequences to the failure of this program to do its job," New Jersey Sierra Club Director Jeff Tittel said. "It means more people in New Jersey will be suffering through a cold winter, higher unemployment, more expensive energy bills and more pollution."