Friday, Aug. 8, 2008

Audit faults Maryland's DNR spending

Projects received iffy state support: report

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Maryland's Department of Natural Resources appears to have flouted state laws to pay for projects that were not eligible, according to a report by the Office of Legislative Audits.

"We also identified numerous internal control and record keeping deficiencies with respect to DNR's operations, including public land leases, purchases and disbursements, federal funds, cash receipts, payroll and equipment," Legislative Auditor Bruce A. Myers wrote in a letter to the leaders for the General Assembly's Joint Audit Committee.

"I hope we're not trying to circumvent the process put in place to protect public property and public interests," said Sen. Verna L. Jones (D-Dist. 44) of Baltimore, co-chairwoman of the committee.

Del. Steven J. DeBoy Sr., Jones' House counterpart, said he is concerned that this and previous audits show that some problems persist at the agency, including a failure to account for spending of special funds. The auditor said better accounting was needed to ensure that limits lawmakers placed on the funds' use were adhered to.

"If this is what's spelled out in legislation, just follow it," said DeBoy (D-Dist. 12A) of Arbutus.

The report covers the period from Jan. 7, 2004, through April 30, 2007, covering more than three years of Republican Robert L. Ehrlich Jr.'s term and the first three months of Democratic Gov. Martin O'Malley's.

The auditors fault the agency for spending millions of Program Open Space dollars on indoor recreation facilities — including community centers, swim centers and golf course buildings. Lawyers for the department say such spending is allowed. And it has been the practice since the 1970s, DNR deputy secretary Eric Schwaab said.

The department will ask the legislature to change the law next year to verify that its longstanding practice is valid, but will continue to award grants to local jurisdictions for indoor recreation projects already "under development," DNR officials said in their response to the audit.

DNR lawyers also disagree with auditors over whether the department — through the Maryland Environmental Trust — violated the law by routing a $400,000 loan to the private Biophilia Foundation, which was not eligible, by passing it through a qualifying land trust.

Schwaab said the environmental trust's board is independent and feels it acted within its authority.

Auditors also criticized the department for not ensuring that the conservation easement it sought in the deal was recorded immediately and for not protecting the public investment by including legal remedies in the agreement.

DNR spokeswoman Olivia Campbell said reasons for the delay were complicated and included waiting so the new owner could take a tax deduction.

Auditors said the department should not make such loans in the future unless it gets an opinion from the Attorney General supporting the practice.

The department agreed to attend to ongoing internal control and recordkeeping deficiencies, telling Myers in their response that they would work with legislative auditors to "determine a special fund accounting system adequate to address statutory requirements" through DNR policy by June 30, 2009.

"We're always concerned about repeat findings," Schwaab said, adding that the current administration is committed to "doing a better job of documenting" and checking the department's work despite having fewer workers.

"The governor is confident in the leadership of DNR," said Shaun Adamec, an O'Malley spokesman.

"The previous administration tended to divert money [but O'Malley] supports using it for … preservation and recreation," Adamec said.

Calls The Gazette made to a spokesman for Ehrlich were not returned by deadline.

DNR agreed in its response to tighten its controls on payroll processing, equipment inventory, cash receipts and employee purchases as well as improve efforts to claim federal funds for which the department is eligible.

Auditors discovered a parks employee had spent about $1,200 more than he should have by buying supplies at extremely high prices. Campbell said the employee no longer has purchasing authority. Schwaab said employees were instructed to do more comparison shopping even if they work in remote locations.

To read the report, go to gazette.net/links