Audit bureau wants details on how state is spending nearly $6 billion in federal ‘emergency’ funds
The Legislative Audit Bureau criticized the state Department of Administration for its lack of openness in how it is deploying $5.7 billion in federal health emergency funds granted to Wisconsin.
The audit report, released Wednesday, comes months after the Badger Institute first called for a comprehensive audit of all state spending of funds provided through the CARES Act, American Rescue Plan Act and the Investment and Jobs Act.
For two years the Badger Institute has tracked the spending, raising questions about the need for the funding, the way it has been spent and the lack of transparency and accountability on the part of Gov. Tony Evers and the Department of Administration, which have sole discretion for the dispersal of the federal funding.
In its relatively small sampling of nine programs funded with 412.6 million federal dollars through June 2022, State Auditor Joe Chrisman said the DOA failed to provide the Audit Bureau with explanations for how and why it decided which programs should be funded.
In general, the governor’s and DOA staff relied on the public and representatives of the organizations and companies affected by the response to COVID-19 to determine how to allocate the federal funding, according to the report.
The Department of Revenue assessed tax data to determine damage done to state businesses. The Wisconsin Economic Development Corporation and other state agencies provided input, the report said.
The Evers administration supplied that general information after the Audit Bureau first requested it, most of it anecdotal, none of it documented, according to the report.
The bureau made clear the audit does not draw conclusions about how the state had so far spent federal funding or whether DOA and state agencies have been acting appropriately in their spending.
Instead, the Audit Bureau recommended the DOA begin documenting how its spending decisions are being made. The state ought to designate which state agency is overseeing which programs.
Agencies should explain the benefits of and why the funds are needed for each particular program and disclose the amount expected to be spent on the program, according to the audit report.
And the documentation should make clear if the funding will be used to fund new programs which, as the Badger Institute recently reported, would have to be supported with state or local tax money when the federal funding is exhausted.
The bureau’s report also suggested the Legislature could make a change in state statute to require the DOA to periodically report on its federal spending.
The audit concludes by recommending the DOA present a progress report on these recommendations to the Legislature’s Joint Legislative Audit Committee by Feb. 17, 2023.
The DOA has a lot of work to do to meet that deadline. The state has yet to receive the second half of the $5.7 billion total in COVID relief funds. And while most of the first half has been obligated to local governments and programs, only $813 million or 32% of that first half has been spent, according to a DOA document obtained by the Badger Institute.
While the Audit Bureau reviewed nine programs, the Badger Institute did a review of progress reports for 162 programs across all state agencies in the state’s Recovery Plan Performance Report for the U.S. Department of the Treasury published July 31.
Of those 162 programs, just 16 provided any information about spending or progress. In almost all cases, programs were either not yet started or the information was reported as “not available.”
Because so little of the CARES Act and ARPA funding is being tracked at the state level, the Badger Institute has relied on very spotty documentation by the Treasury Department and through records requests of local governments throughout the state.
We’ve recently found that those governments are making use of a Treasury rule change to divert hundreds of millions of dollars in health emergency funds into their general funds to plug holes in their current budgets for the day-to-day operations of their counties and cities.
And in communities that have resisted using federal bailout money for government services, we’ve reported that some cities are sitting on piles of federal money and asking for local property tax increases.
So concerned have local governments been about following the rules, that tens of millions of ARPA dollars have been spent on the administrative costs of spending ARPA dollars.
Because of the dearth of documentation, the waste, fraud and abuse so often found in major government spending programs, as we’ve reported, is only beginning to emerge.
At the height of the COVID-19 panic, as we later uncovered, most of the county jails in Wisconsin bought ultraviolet, germicidal robots at $40,000 apiece to disinfect their jails, even though staff continues to disinfect them by hand.
In May 2020, in that same climate of pandemic panic, the House of Correction in Milwaukee County spent $6 million in CARES Act funding to convert one of its buildings to a COVID care facility. As reported just this week, 90 inmates spent two weeks in November 2020 in the facility.
It was never used again.
Mark Lisheron is the managing editor of the Badger Institute’s Diggings magazine. Permission to reprint is granted as long as the author and Badger Institute are properly cited.