Flood of relief funds could lead to waste and fraud
HARRISBURG — At the end of May, Gov. Tom Wolf signed off on a plan to spend $2.6 billion that Pennsylvania received as part of the federal stimulus package, an unprecedented flood of funding to provide needed relief for nursing homes, small businesses and local governments.
Now comes the tricky part. With some federal officials warning of “unmatched prospects for fraud, misuse of the funds, and other criminal conduct,” the rules for exactly how the money can be spent, who can benefit from it, and how details will be made public remain largely unwritten.
State agencies, already stretched thin responding to the COVID-19 outbreak, will have to oversee new programs created virtually from scratch. The rules they enact will determine just how easy — or hard — it will be to follow the money.
But unlike the normal course of developing new programs — which can take months or years — some of these initiatives worth hundreds of millions of dollars will be stood up in a matter of weeks, with officials scrambling to quickly get the money out the door.
As it stands, only a handful of the new programs are required by law to report to the General Assembly on their progress.
That could create a recipe for waste, fraud or abuse, said Daniel Mallinson, an assistant professor of public policy and administration at Penn State Harrisburg.
“That’s always a tension with
these kinds of stimulus programs,” Mr. Mallinson said. “The intention is to get money out fast, to help people that need it now, but good government oversight is generally not fast.”
The $2.6 billion spending plan covers the lion’s share of Pennsylvania’s discretionary funding from the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act, which Congress passed in March. About $1 billion has yet to be allocated.
The money comes in addition to $2.5 billion in federal aid for state agencies, earmarked for specific programs, as well as direct funding for hospitals and nursing homes.
A federal oversight committee created by the CARES Act recently warned that the influx of federal dollars offers “unparalleled opportunities to assist those in greatest need,” but also “unmatched prospects for fraud, misuse of the funds, and other criminal conduct.”
One of the largest chunks of funding in the state’s plan allocates $175 million, as well as up to $175 million from a separate source of CARES Act money, for an ambitious new initiative where the state Department of Human Services will pay health systems to increase nursing homes’ testing capacity and improve their infection control practices.
Nursing homes are the epicenter of the coronavirus outbreak in Pennsylvania. As of Saturday, 4,092 residents of nursing and personal care homes had died after contracting the virus, accounting for almost 70% of all deaths in the state attributed to the coronavirus.
“Where will the money go, what are the guidelines about how it will be used — that’s all unknown,” said Diane Menio, executive director of the Center for Advocacy for the Rights and Interests of the Elderly. “I want to make sure that it accomplishes what it sets out to do — that’s hard to tell from looking at a piece of legislation.”
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