The Baltimore Health Department failed to collect financial reports from six of its subcontractors, which received more than $8.7 million in federal money, according to an audit set for release today.
The subcontractor the audit highlighted as an issue of "greatest concern" is the $3.2 million Healthy Start Initiative, a prenatal support program for poor women that came under fire last fall amid allegations that the program's administrators misused millions of dollars.
As a result of those problems, Healthy Start's executive director and chief financial officer were replaced.
The Baltimore State's Attorney's Office has launched an investigation.
"The Healthy Start problem is real," city health commissioner Dr. Peter L. Beilenson acknowledged yesterday. "We have definitely changed the practices of Healthy Start since we changed management."
While he had not seen the audit report, Beilenson said, he does not believe there is widespread misspending among the Health Department's subcontractors.
The audit, a copy of which was obtained by The Sun, is part of a review of all city agencies for the fiscal year that ended June 30 last year, by Comptroller Joan M. Pratt's office, which is expected to release the report during the Board of Estimates meeting today.
Pratt and City Council President Lawrence A. Bell III called for the audit in March after allegations of overtime fraud arose in the Department of Public Works.
As a result of alleged fraud in the water and wastewater treatment division, supervisor Charlie Payne has been suspended pending an investigation.
Kurt Kocher, a spokesman for public works Director George G. Balog, said Balog was reviewing the audit and would comment today.
David Brown, a spokesman for Bell, said yesterday the council president had not reviewed the audit.
When Bell called for the review, he said he wanted to ensure that no taxpayer money had been misspent.
In housing department
In addition to the Health Department, the audit questioned such expenditures as $1.68 million in federal Community Development Block Grant money by the city housing department.
"We recommend that the city either provide adequate documentation to establish the allowability of these costs" or remove those charges from the Community Development Block Grant account, the audit says.
In the audit, the Housing Authority of Baltimore City acknowledged that it had inadequate documentation that the block grant money was properly spent.
The city's law department is working with the housing department to correct any discrepancies in the spending records, according to the audit.
The audit also criticized several agencies for failing to file timely financial reports for programs that received federal money.
"While the accuracy of federal financial reporting seems to have improved, there continues to be a problem in timeliness of financial reporting for some programs," the audit says. "The timeliness problem is most prevalent in the health, housing and community development and public works departments."
Mayor out of country
Mayor Kurt L. Schmoke, who is in Africa this week for a meeting of the U.S. Conference of Mayors, could not be reached for comment.
Beilenson said the Health Department is working to ensure that subcontractors file financial audits and other reports in a timely manner.
"We need to get our reports out on time," the commissioner said. "It doesn't mean that there are any fiscal irregularities. It's just something we need to work on."
Beilenson acknowledged that there had been no financial audits of the Healthy Start program for three years.
But he said the program is being revamped with new personnel, and independent audits of the organization's past and current finances soon will be conducted.
Sources familiar with the investigation say that as much as $1.8 million might be unaccounted for in the program.
Schmoke has said that a review of Healthy Start's financial records indicated that several area companies might have illegally profited from the program.
Pub Date: 5/19/99