Some recipients of Montgomery County COVID-19 relief grants were shortchanged, according to the county’s inspector general, who blamed processing errors for faulty eligibility decisions and improper payments.
One problem was the county changing the eligibility standards while the program was underway, after some applicants could not meet them.
In a report released Jan. 12, the county’s Office of the Inspector General reviewed the county’s Public Health Emergency Grant Program to determine if it was well managed.
The County Council established the $25 million PHEG program, which provided grants to small businesses and nonprofits affected by the pandemic, on March 31. The program closed with about $5 million left.
Grants went to applicants that had 100 or fewer employees and had evidence of significant financial loss because of the health crisis.
The program provided grants of up to $75,000, plus mini grants of up to $2,500 to reimburse costs associated with having employees telework from home.
Out of 6,751 applications, 2,342 were approved, for a total of roughly $21 million.
The inspector general reviewed policies, procedures, applications, grant files and other records covering May to October. The review included a sample of 302 approved applications and 208 rejected applications.
Inspector General Megan Davey Limarzi and her staff found errors in processing. They also found that changes to eligibility criteria and calculation formulas were made after the application period ended, but the formula was not applied “consistently.”
Inconsistencies occurred because county staff members did not have enough training and there were several differences in how documents from applicants were stored.
Limarzi pointed to the speed at which the program was set up and opened as a factor in the mistakes. It took two weeks for the program to be developed and initiated.
In a review of 12 applications with processing errors, four received more money — about $31,000 — than they were eligible for, and two did not receive an average of $1,500 that they were entitled to.
Although there were processing problems for denied applications, they did not affect the initial eligibility standards. Finance employees had already established a secondary review process after noticing the problems.
“We observed that the secondary reviews were successful in catching some, but not all, errors that would have negatively impacted eligibility decisions,” the report said.
For the applications that were reviewed by OIG, it took an average of 34 days to process them, excluding any time for processing payments.
Of the 302 approved applications that were reviewed, 25 had processing errors, OIG found. Of those 25, 13 were caused by processors using a superseded formula to determine eligibility.
Initial eligibility for relief required demonstrating at least a 50% revenue loss for March. But some businesses could not meet the eligibility, which caused the county to change eligibility, allowing for the “effect of almost doubling the actual loss of revenue for March.”
Because of the change, applications were reevaluated, but 13 applications that had been approved using the previous formula were not.
If those previously approved applications had been reevaluated, it could have led to more grant funds for those businesses — about a total of $19,000 more, the report found.
“We also found four instances where applying the new calculator had no impact on the award amount because applicants had already qualified for the full amount of the grant,” the report said.
The recommendations from OIG included:
● Avoid changing eligibility criteria and processing methodology after a grant program has opened and started processing applications
● Develop a standardized process to address overpayments and underpayments of grant awards and apply the established process to applicable impacted applications
● Provide specific, standardized and consistent guidelines and training to staff involved in the processing of grant applications
● Discourage processing staff members from using their discretion in making eligibility determinations
● Require processing staff members to upload all correspondence with applications into applicable databases, so there are complete records of what transpired
● Terminate access to grant systems at the conclusion of staff members and contractor involvement with grant programs
● Mandate that staff members and contractors who are no longer involved with a program have no further contact with applicants and that they direct all questions from applicants to a single point of contact
In a response to the report on Jan. 7, Rich Madaleno, the county’s chief administrative officer, agreed with the recommendations.
After the OIG issued a report in mid-October for suggested procedures and practices, Madaleno said the information was provided to the county’s department directors and grant program administrators.
Madaleno wrote that the county removed access to the grant system except for the finance department and county executive’s staff members.
“Since the recommendations are intended to help improve the administration and development of all current and future emergency grant programs, we plan to synthesize the recommendations into a fact sheet to be used by grant program administrators,” Madaleno wrote. “This will ensure that the lessons learned from the PHEG experience benefits the administration of our all current and future grant programs.”
Briana Adhikusuma can be reached at firstname.lastname@example.org.