A report Tuesday from Baltimore Inspector General Isabel Mercedes Cumming offered details on the more than $10 million in grant awards that the Mayor’s Office of Homeless Services had to return to the U.S. Department of Housing and Urban Development last year.
HUD had also cleared the city to reapply for $6 million of the forfeited $10 million, though the city has not yet seen those funds returned.
The report cited shifts in leadership, a lack of standard operating procedures, infrequent drawdowns of federally approved funds, unverifiable expenses and grant costs paid outside of contracted periods as the cause.
“Over the past several months, we have worked closely with HUD alongside our internal teams to improve our policies, procedures and practices. Please see below for additional updates as it relates to the investigation,” Ernestina Simmons, director of the Mayor’s Office of Homeless Services, said in a letter to Cumming.
In July 2023, Cumming received a complaint alleging that the city had to return more than $10 million in Continuum of Care grant funding provided to the Mayor’s Office of Homeless Services by HUD because of delayed fund drawdowns and software issues.
Over 50 employees departed the Office of Homeless Services between 2021 and 2023, with witnesses in the report stating that a lack of historical knowledge of operations was passed down in the interim.
Additionally, the Office of Homeless Services was to return $501,684 due to infrequent drawdowns and ineligible expenses as reported by HUD.
The Office of Homeless Services receives federal funding through HUD, which it makes available to nonprofits that apply for program funding. Each nonprofit recipient enters into a contract with the city, which sets guidelines and restrictions for funding their programs.
Once the contracts are finalized, the Office of Homeless Services draws down the grant money from HUD to mete out to each nonprofit through the federal agency’s electronic line of credit control system.
According to HUD, these drawdowns are to happen quarterly. The Office of Homeless Services has 120 days after the completion of a program to pull the remaining funds from HUD.
Irene Agustin, the former director of the Office of Homeless Services, served from June 2021 to September 2023. Agustin declined to be interviewed for Cumming’s report.
Nearly 40 grants totaling $25,444,257 expired in 2022, and approximately $14.7 million was drawn by the Office of Homeless Services from HUD — “significantly past the 120-day deadline,” the report reads. A drawdown report showed that the office submitted five draw requests to HUD between late December 2022 and May 2023, with the majority of returned funds relating back to fiscal year 2020.
Agustin told the city’s Department of Finance in June 2023 that HUD would recall nearly $5.9 million due to lack of drawdowns. Approximately $5.9 million had already been disbursed to nonprofits through the Office of Homeless Services without pulling the funds for reimbursement.
Per a spreadsheet given to HUD in July 2023, the total contracted funding amount equated to $25.5 million, though the city had withdrawn only $14.7 million from HUD.
In total, Simmons confirmed to Cumming that $5.9 million was taken back by HUD due to lack of drawdowns and approximately $4.9 million was returned due to underspending.
HUD approved a request earlier this year from the city for an extension to submit drawdowns for grants for fiscal year 2020. That request for reimbursement was submitted to HUD for approximately $5.9 million. According to Cumming’s report, the office has been working with HUD to provide documentation to substantiate the reimbursement of those funds since 2023. The money hasn’t been paid to the city as of July 2024.