Critical report reveals tip of funding iceberg

Monday, February 11, 2002

A recent report concludes millions of dollars of state funding was mishandled because there is so little accountability for how the money is spent. This report, which focuses on one program in Southeast Missouri, is just the tip of an iceberg of sloppy reporting and follow-through.

A big chunk of state government is funded by grants from various departments and agencies. The grants are intended to be dispersed around the state to programs that offer a variety of services.

There are a number of reasons for the grant process rather than having the state agencies provide the services directly. In many instances, the aim is to allow local groups to have a say in how state programs are administered. Obviously, how to tackle a problem in the Kansas City metropolitan area is likely to be considerably different than the approach in mostly rural Southeast Missouri.

Another reason is that the massive grants pay the salaries of service providers without those providers having to be counted as state employees. Recent claims in Jefferson City that the state has reduced the number of state employees in just about every area except prisons overlook the fact that more state money than ever is being used to pay salaries for the delivery of state programs.

As these grant programs have proliferated, most state agencies have been mindful of the need to impose some measure of fiscal responsibility on the grant dollars flowing to not-for-profit agencies that contract to provide program services. Thus, a new industry of fiscal agents has been born. These are organizations that contract to administer grants while other agencies actually provide the services. Fiscal agents find it worth their while to perform these duties, because they get to keep a portion of the grant.

Southeast Missouri State University, when it was approached a couple of years ago to be the fiscal agent for Bootheel Initiatives, at first declined. Later, the university agreed to administer nearly $3 million of grant funding, keeping 25 percent -- almost $700,000 -- to cover costs and to provide some outreach programs.

The Oversight Division of the Committee on Legislative Research, which authored the critical report, claims the Division of Family Services circumvented state law by enlisting the university's help. The report is clear that the university did nothing wrong by serving in its fiscal-agent capacity. University officials say they are no longer involved -- and don't intend to be.

What should be of most concern to Missouri's taxpayers is the fact that this report merely offers a sample of how loosely tax dollars are accounted for. The report pointed out such things as double paying of administrative fees for a Kansas City-area program and the double funding of programs from more than one state agency. Most importantly, the report cites the lack of accountability by the agencies making the grants for how the funds are spent or what good -- if any -- these programs do.

When the governor and state legislators look for ways to trim spending in tight circumstances, they would do well to take a closer look statewide at the many grant-funded programs that are in place.

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