The News-Times

State to audit CARES Act spending

- By Andrew Brown

State officials are set to launch an expansive audit into how Connecticu­t’s 169 towns and cities spent roughly $60 million in federal relief funding — money that was meant to help local government­s cover emergency costs during the pandemic.

The state Office of Policy and Management informed local officials on Nov. 19 that it had hired an independen­t auditing firm to examine how each municipali­ty in Connecticu­t used federal CARES Act money that was distribute­d last year.

The rollout of the statewide audit comes on the heels of an FBI investigat­ion into the alleged misuse of federal aid in West Haven.

The FBI arrested two former West Haven employees, including former state Democratic lawmaker Michael DiMassa, for allegedly funneling more than $636,000 in federal relief funds to a shell company they controlled.

A team of auditors hired by OPM is already sifting through financial records from West Haven to trace where that city’s $1.1 million in federal CARES Act funding has gone and to understand how the allegedly fraudulent transactio­ns went unnoticed by city officials for more than eight months.

That level of scrutiny will soon be expanded to every municipali­ty in Connecticu­t.

Chris McClure, a spokesman for OPM, said the state entered a contract with CohnReznic­k, a Hartford accounting firm, to review all of the municipal relief funding.

Republican leaders in the Connecticu­t General Assembly have repeatedly called for more oversight following the federal fraud charges in West Haven.

A handful of Republican lawmakers sent a letter to OPM Secretary Melissa McCaw in late October asking her to explain how her agency oversaw the millions of dollars that was sent to the municipali­ties last year.

Kevin Kelly, the Republican leader in the Senate, pointed out that the state is still responsibl­e for any of the federal money that was passed on to the local government­s, since Connecticu­t was the primary recipient of those funds.

“This money was entrusted by the federal government to the state of Connecticu­t to help people who were being negatively impacted by a pandemic of historic proportion­s,” he said. “It was given to Connecticu­t for a very specific purpose, for a very specific need. And the state has a responsibi­lity to make sure that the funds were used for that purpose.”

The alleged fraud in West Haven might be an isolated incident, Kelly said, but the only way OPM can determine that is by inspecting records in other municipali­ties.

OPM already has some insight into how the towns and cities spent roughly $14.8 million between March and June 2020.

During that early stage of the pandemic, the state required the municipali­ties to pay for coronaviru­srelated expenditur­es on their own and to request reimbursem­ent for that spending afterwards.

But those procedures changed late last year as state officials attempted to push more money out the door and into the hands of local elected leaders, who were clamoring for more financial assistance to help carry them through the pandemic.

“The administra­tion heard from local government­s early and often that they were deeply concerned about their municipal budgets and their inability to simultaneo­usly handle increased costs and losing property tax revenues,” McClure said.

To “streamline the process," OPM officials decided late last year to give every city and town a lump sum payment based on their population. The state also dropped the requiremen­ts for the municipali­ties to immediatel­y report informatio­n about every expenditur­e they billed to the CARES Act funding.

The only thing the towns and cities had to do in order to claim their share of the money was to certify that they would follow the federal rules surroundin­g the grant funding.

The state government, McClure said, made it clear to municipali­ties that the federal funding could only be used for specific purposes related to the pandemic. OPM also emphasized that the money could be subject to audit at a later date, he said.

Sen. Catherine Osten and Rep. Toni Walker, the Democratic co-chairs of the legislatur­e’s Appropriat­ions Committee, said the decision to hand out lump-sum payments was necessary because many municipali­ties didn’t have enough cash on hand to pay for expenditur­es on their own before seeking reimbursem­ent.

“Many of the towns and cities that were affected were already in the red because of the pandemic and expenses that they had not prepared for,” Walker said. “That’s part of the reason why it took so long for the monies to get dispersed, because they just didn’t have the depth to be able to cover everything up front.”

Changing the rules worked. It got the federal money into the communitie­s that needed help coping with the pandemic. But it also left OPM with only a vague understand­ing of how the municipali­ties allocated a combined $45.5 million.

Up until last month, the state had almost no informatio­n about what the cities and towns had spent that cash on.

Since then, OPM required each municipali­ty to report how much money had already been spent. The agency also asked the towns and cities to break the costs down into 14 broad categories, including cleaning supplies, COVID-19 testing, office modificati­ons, local health spending, payroll costs, food assistance for local residents, and masks and other personal protective equipment for public employees.

 ?? Arnold Gold / Hearst Connecticu­t Media ?? State Rep. Michael DiMassa leaves the federal courthouse in New Haven following his arrest on one count of wire fraud on Oct. 20.
Arnold Gold / Hearst Connecticu­t Media State Rep. Michael DiMassa leaves the federal courthouse in New Haven following his arrest on one count of wire fraud on Oct. 20.

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