City auditors report Urban League misused federal grant funding

Money was spent to repay debt, not for job program, they say

Group given $2.5 million

September 07, 2000|By Gerard Shields | Gerard Shields,SUN STAFF

More details of the Baltimore Urban League's financial woes surfaced yesterday, when auditors reported that the organization misspent most of $741,500 from a federal grant designated for a city job training program.

Auditors in the office of City Comptroller Joan M. Pratt recommended that the Urban League return $306,000 of the money to the city, after a review of nine months of the group's spending showed that the money went for items other than its career center and a welfare-to-work program.

"We ... believe that the Baltimore Urban League used grant reimbursements to pay nongrant expenditures," City Auditor Yovonda D. Brooks told the five-member city Board of Estimates.

The auditors could not identify where the financially troubled organization spent the money and told the city spending board that the group lacks the resources to repay the grant. The audit showed that the organization had $18,733 remaining from the program.

The city audit comes three months after board members for the nonprofit social services group fired its director, Roger I. Lyons, after discovering the league was $800,000 in debt.

Board members for the group, created in 1924 to help the poor, found in March that it owes thousands of dollars in mortgage payments, utility bills, rent and payroll taxes. Since that time, directors have been trying to raise contributions and repay the debt.

The audit findings did not surprise Lenneal J. Henderson Jr., chairman of the 23-member league's board of directors.

Henderson, who has been trying to guide the organization's rebound, said that although he hasn't seen the audit, the findings are in line with what appears to be a past practice: using any funds available to fend off mounting debt.

"We regret that," Henderson said. "But we have tighter controls in place now."

The city Office of Employment and Development asked Pratt's office to review the Urban League's spending of a $2.5 million federal grant administered by the city for a job training program. The review covered a period from July 1 last year through March 31 this year and found that the league:

Failed to pay $180,149 in training and rent costs, expenses intended to be paid by the grant.

Showed a grant cash balance of $18,733, well short of the $92,163 the league should show remaining.

Failed to pay $33,716 in payroll taxes for the period ending March 31, 2000.

Failed to provide proper documentation for $16,480 in payroll costs for the period ending Jan. 14.

Urban League leaders told the estimates board - which includes City Council President Sheila Dixon and Mayor Martin O'Malley - that it could not respond to the city findings yesterday.

Marlene C. McLaurin, executive vice president of United Way of Central Maryland, began serving two weeks ago as the league's interim chief financial officer. She told the board that the earliest she could return with a response to the audit was next month.

"I will assure you that [the response] will be in place in short order," McLaurin said. "We are on our way to recovery."

Providing answers about the spending is important to the Urban League because the group hopes to eventually get more city job training grants, Henderson said. A large part of the group's budget is generated from an array of foundation and government contracts for job placement services, literacy and parenting programs, and efforts to curtail sexually transmitted diseases.

Dixon appeared encouraged by the group's promise to return with answers.

"It looks like they have an aggressive plan with a tight time frame," she said.

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