Defenders of D.C.’s bloated bureaucracy avow that our government is large because the city does more to help the poor. As if the condition of our housing projects, clinics, and schools doesn’t sufficiently belie this claim, a recent audit charges that city officials have mismanaged a fund designed to shunt money toward low-income residents.
In 1980, Mayor Marion Barry signed an order stipulating that if D.C. residents die intestate, and if after seven years no heirs can be located, the decedents’ estates “escheat” or pass to the city. The proceeds are held in trust in the Escheated Estate Fund. A steering committee of four city officials—the secretary of the District of Columbia, the mayor’s chief of staff, the chief financial officer, and the director of human services—administer the fund to organizations that must spend the grants “only for projects that will benefit low-income residents of the District of Columbia.”
Yet according to a report released by D.C. Auditor Russell A. Smith on Feb. 23, much of the $1,941,224 collected by the Escheated Estates Fund between 1988 and 1993 was granted to organizations that “were not established to serve the needs or interests of the poor” such as “organizations for domestic violence, anti-drug/drug-control activities, a suicide hotline, public school activities, group therapy, music therapy, and garden development.”
“Notwithstanding the worthiness of these projects,” the audit notes, “grants to them were inappropriate in that they did not solely benefit those individuals that the Fund is intended to serve.” For example, the steering committee granted:
Not only did the committee award grants to organizations whose benefit to the poor is tangential at best, but it did not ensure that money given to more appropriate advocates was actually spent on clients. Instead, continues the audit, “funds disbursed for a substantial number of the 242 grants were used to directly benefit the organization receiving the grant” for such things as “salaries, stipends, equipment, supplies, and transportation.” For example:
In a letter responding to the audit, Marianne C. Niles, the acting secretary of D.C., defends the city’s grants, saying that “neither the law nor the guidelines require that the grant confer a direct benefit on the poor or that the project benefit the poor exclusively. [The statute] does not require a direct or exclusive benefit, but simply a benefit. While I agree that the committee should more closely adhere to its eligibility criteria, I disagree with any condemnation of grants to organizations that also provide services to persons other than low-income.”
Other criteria were ignored as well. The fund’s guidelines stipulate that each group receive no more than $10,000 every three years, except when emergency funds are needed for food, clothing, and shelter. But of the 24 organizations that exceeded that cap, most sluiced the extra cash to ongoing projects, stipends, and, in the case of an organization called S.A.N.D., $5,093 on “food for thank you celebration for students of Springarn High School.”
Other grants just disappeared into a thicket of shoddy record-keeping and enforcement. Seventy percent of the grantees did not file legally required quarterly reports justifying their expenditures. When the steering committee wrote one such group, Herb Work Natural Therapy, to ask how it spent two grants of $4,800 each, the post office returned the letters marked “addressee not known.”
In a 1989 audit chronicling the same type of mismanagement, former D.C. Auditor Otis Troupe recommended that the steering committee conduct its meetings in public, and publish an account of its grants in the D.C. Register. Since that recommendation has gone unheeded, Smith recommends—and Robert Reid, the District’s controller concurs—that the Escheated Estate Fund be terminated and monies deposited instead in the city’s General Fund.
If the D.C. Council acts upon Smith’s recommendation, the poor may not be the heirs of escheated estates. But at least the city won’t be subsidizing greeting-card companies.