The Advocate

The ADVOCATE ‘Slush funds’ come under scrutiny

Auditors recommend more controls on funding projects By Brian Lockhart Staff Writer Updated: 10/17/2009

accounts began as an attempt to reduce the number of earmarks being written into the state budget.

HARTFORD -- Questions continue to surround the governor’s hiring of a University of Connecticut professor who is working to streamline government but also provided the administration with possibly inappropriate political advice during the budget battle.

“I think it was also a reflection that, historically, people close to the budget process, their towns would benefit,” Sullivan said. “It was a way to empower the leaders and governor to put some discipline on what had been a largely runaway process.” At the same time, Sullivan said, state financial support for arts, libraries and school improvements was dwindling, so the discretionary funds were doled out to rank-andfile legislators to meet those and other needs within their districts.

But the slush fund Republican Gov. M. Jodi Rell used to foot the $223,406 bill has for years been a controversial method used by lawmakers from both parties to award grants for pet projects. Rell dipped into what are referred to at the capitol as discretionary or contingency accounts historically maintained by her predecessors and legislative leaders in the General Assembly. How it started According to the state budget office and previous legislative leaders, the accounts -- derided as “slush funds” -- have existed in one form or another at least since the early 1990s, first under independent Gov. Lowell P. Weicker and then Republican Gov. John G. Rowland. Kevin Sullivan, a one-time Democratic Senate President from West Hartford and former lieutenant governor, said the discretionary

“It’s local projects that may not have a clear, statewide purpose,” Sullivan said. a $4 million pie In recent budgets the Senate President and state House Speaker, both Democrats, had $2 million each to divide among their caucuses. Rell had $2 million to share with the Republican minority. Former House Speaker Moira Lyons, D-Stamford, said the discretionary funds were also a way of circumventing gubernatorialcontrolled borrowing or bonding for state projects. “If the governor has final approval over a bonding issue and they’re from a different party, shouldn’t the

other parties [in the Legislature] be able to put stuff forward they think is right for their districts?” Lyons said. “I don’t think that is inappropriate.” But there is far more scrutiny of the bonding process, which involves the full Legislature, a bipartisan commission chaired by the governor and whatever state agency is overseeing a project. Funds distributed Discretionary or slush money is currently released by the budget office at the request of the governor, Senate president or House speaker following a routine grant application process. When the state Auditors of Public Accounts last reviewed the process three years ago, they noted grants were issued “merely upon communication from political leaders” and recommended more be done to confirm recipients used the money properly. “During the fiscal years ended June 30, 2002 and 2003 the office issued $1,150,500 and $157,000 respectively in grant funds,” read the audit. “As of the end of our field work in June, 2006, the [budget office] had not received the required audits or final reports for five of the grants valued at $850,000.” The budget office now keeps wellorganized files for grants, including

a four-page application form, confirmation an organization is registered with the Secretary of the State and project descriptions. Files reviewed by Hearst Newspapers show the budget office makes a concerted effort to ensure all the necessary paperwork is filed before the grant money is released. And recipients are required to make a final report confirming how the funds were used. “It may not meet all accounting standards but it tells a story,” Kevin Johnston, one of the two state auditors, said. But in some cases the paper trail does not justify a grant recipient’s worthiness to receive taxpayer dollars beyond the fact they exist and are vouched for by a lawmaker. “Since [the grants] are so small it’s unlikely you’re going to get a good, thorough review of each program,” Johnston said. Donation examined For example, in 2008 former House Speaker James Amann, D-Milford, gave $40,000 to a Hartford-based nonprofit foreclosure mediation program called Statewide Property Savers.w Much of the grant application, reviewed by Hearst Newspapers, was filled out by a related organization, but their office phone and Website were disconnected as of last week. Hearst reached Francis Cosgrove, who was listed in the paperwork as associated with Statewide Property Savers, by phone. He said he has been running the program voluntarily using his own money

and some grants for 12 years and has helped 800 people. But, according to the grant application, Statewide Property Savers was established in 2008 and Cosgrove was not required to detail his success rate before receiving the $40,000. “I don’t advertise,” Cosgrove said. “It’s 95 percent word-of-mouth ... I try to get in touch with the lender, talk to them and find out what’s happening.” Amann had a vague recollection of some Hartford area legislators setting up a meeting between himself and representatives for Statewide Property Savers. “It’s not like we just give [money to] some guy off the street who has a good idea,” Amann said. “I think there’s a layer of bureaucracy and protection.” Cosgrove does appear to be legitimate. Hearst Newspapers confirmed that Statewide Property Savers maintains a third-floor office at Central Baptist Church in Hartford; has received some donations through the United Way; and has referred some housing cases to the Attorney General’s office. But none of that was evident from the grant application. And although Cosgrove is expected to submit a final report on the use of the $40,000 -- Cosgrove estimated he helped 50 clients - Jeff Beckham, a budget office spokesman, said there is no requirement that staff visit Statewide Property Savers’ offices or review case files. “If we had some indication the money was improperly spent we’d

have some obligation to find out what happened and appropriate steps would be taken,” Beckham said. “I’m not aware that has ever happened.” Funds on hold The state Auditors of Public Accounts is in the midst of its latest regular review of the state budget office, and Johnston expects there will be continued concerns over the discretionary funds. “Although we’ve seen improvements I think there are still weaknesses,” he said. For now the tradition is on hold. Because of the deficit, the just approved 2009-10 and 2010-11 budget for the first time in years does not contain new slush funds. “Right now it’s just more like a concept than any type of reality,” House Speaker Christopher Donovan, D-Meriden, said. Amann only left Donovan $1,500 in his discretionary fund upon retiring as Speaker earlier this year. Asked if the discretionary accounts should be revived during better fiscal times, Donovan said he would like greater restrictions. “You don’t want it to be the idea ... of a “slush fund,” Donovan said. “It gives the wrong impression of certainly what I’ve seen some of the money used for.”