UPDATE: Stimulus Funding Report Released

ROCKFORD (WIFR) -- A nearly $300,000 mistake could cost the City of Rockford big time. Layoffs, consolidations, and funding cuts are all on the table as city leaders come up with a plan to pay back the money to the federal government. City leaders say the funds were mismanaged.

"Today it's not a question of the amount we need to pay back, it's a question of the terms by which we're going to pay the money back," Rockford Mayor Larry Morrissey, said.

The mayor is talking about nearly $300,000 in stimulus money the city has to give back to the federal government. An audit found the city's Department of Human Services misused the funds.

“We need to make improvements; we made mistakes," Mayor Morrissey, said.

What were those mistakes? The federal government says the city had to use all the money by September 2010; however the audit shows leaders spent $72,000 after the deadline. The Rockford Area Economic Development Council, Winnebago County State's Attorney’s Office, and the nCenter were also named in the report. Each received some of the city's stimulus money, but didn't properly report how it was used. Now the city wants RAEDC to repay the $100,000 it received, taking $50,000 each year for the next two years. Morrissey says recaptured loan funds should also help pay down the debt.

To make sure it doesn't happen again the city recommended major changes in the 21 page report. It includes creating a committee to make sure grants are used correctly and consolidating the Human Services Department into the city's Community and Economic Development Department. Mayor Morrissey says that won't affect Human Services programs like LIHEAP and emergency shelters, but the reorganization will likely affect city workers.

"There are structural changes implicated in the reports recommendation and that very likely could result in layoffs," he said.

Although none of the changes are final, Morrissey says he wants city council to take action before the month is over.

The government hasn't given the city a specific timeline yet on when the $300,000 needs to be repaid, but it's possible the city won't have to pay back everything. The state has the final say on about $140,000. Morrissey says the state told the city it will only have to repay about $40,000.

ROCKFORD (WIFR) – The City of Rockford has admitted to misusing hundreds of thousands of dollars in stimulus money. The news comes more than two months after an audit was done by the federal government.

In the over 20-page report, the city has agreed to return nearly $300,000 to the Federal Government. The city used that money for things it shouldn’t have and also used some of the money after the dates set out in the federal government’s guidelines. The report also includes many recommendations to make sure this doesn’t happen again.

Some of those recommendations include setting up a grant program compliance section within the city’s finance department and dedicating a city attorney or contracting an outside attorney to that section. That group will then report to city leaders on a quarterly basis. The city also wants to consolidate the human services department into the city’s community and economic development department. Part of that restructuring includes forming an early childhood committee with District 205 and local leaders. The big concern is how this could affect people who receive services through human services like LIHEAP. The mayor says it won’t.

The mayor pointed out with this report, the federal government’s report didn’t suggest an intentional wrongdoing. He didn’t want to address personnel issues as far as if anyone will be fired or disciplined because of the mistake. He did say if the consolidation of the human services department goes through, there will likely be layoffs.

The money that was spent went to the RAEDC to help create jobs. It also went toe the N Center for youth which is no longer in existence. Some money also went toe the Winnebago County State’s Attorney’s Office for programs that prevent violence.

ROCKFORD (WIFR) -- Below is a release from the City of Rockford regarding the report in response to stimulus grant fund audit findings.


ROCKFORD -- Mayor Morrissey released an internal report in response to the U.S. Department of Health and Human Service Office of Inspector General July 2013 Report ("OIG Report") regarding Community Service Block Grant dollars that were provided under the federal stimulus Recovery Act. At the directive of Mayor Morrissey, an internal review of the OIG Report was conducted to make recommendations for internal corrective action as well as make recommendations to the City Council for improved policies and procedures within the Rockford Human Services Department.

Highlights of the report include the following:

  • The OIG Report found that $205,296 were "unallowable costs" according to applicable federal requirements. This included $123,530 in grant funds that were inadequately documented, $72,669 in costs that were incurred outside the budget period, and $9,097 in entertainment costs that were not allowable according to federal grant policies.

  • In addition, the OIG Report found that #141,796 in costs that "may not have been allocable" to the CSBG-R grant award. The OIG Report also recommended that Rockford Human Services revises its policies and procedures regarding documentation, charging of costs, and monitoring procedures to ensure that costs charged comply with applicable Federal requirements.

  • In total, the City and state have agreed with the OIG Report that Rockford Human Services should return a total of $298,671.84 to the Federal Government.

    It should be noted that nothing in the OIG Report suggested intentional wrongdoing, fraudulent practices, illegal activities, or self-dealing by any City staff or sub-grantee with regard to the funds in question. All program fund expenditures were approved in advance by the State of Illinois DCEO staff.

    The failures identified within the OIG Report focuses on the a lack of adequate documentation, lack of program administration, expending funds outside the grant period and expending funds not deemed allowable according to federal guidelines.

    In the 20-page report, management recommendations include:

    1. Return $298,671.84 in CSBG-R monies back to the U.S. Department of Health & Human Services via the Illinois DCEO. While the State of Illinois DCEO, who administered the CSBG-R grant program, gave no indication that there was a problem with the contracts or the reporting that Rockford Human Services was submitting in support of the program until after the OIG Audit, mistakes were made, not only by the City of Rockford and Rockford Human Services Department but the agencies that were sub-grantees under the CSBG-R program.

    2. Establish a Grant Program Compliance Section within the city of Rockford Finance Department, with direct support from the Rockford Legal Department. The City currently does not have the structure and capacity to adequately respond to this increasing federal regulatory environment. The City Report recommends the formation of a Grant Program Compliance Section focusing on financial accoutring, training, reporting, and auditing of grant agreements and programs for adherence to Federal and State rules, as well as local purchasing and contracting procedures. Part of the recommendation also includes dedicating a large portion of a City Attorney or outside contractual legal services to support the Grant Program Compliance Section.

    3. Restructuring the Rockford Human Services Department. The City Report highlights that Federal funding is continuing to decline, even as federal oversight and regulatory control is increasing. Consequently, the Report recommend that the Rockford Human Services Department be consolidated into the City's Community & Economic Development Department. As part of the restructuring, the Report also calls for the formation of an "Early Childhood Committee" to be established between the City, Rockford School District 205, local leaders and leaders in early childhood to develop conceptual plans for restructuring and improving the current Head Start programs to the U.S. Department of Health & Human Services.

    Our reporter, Marissa Sherer will have more on this story tonight on 23 News.

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