Scrutinizing Taxpayer Spending: Audits and Oversight at the University of Maryland College Park and Beyond

Recent scrutiny of taxpayer spending in Maryland has brought to light concerns regarding the oversight and accountability of funds allocated to various institutions, including the University of Maryland College Park (UMCP) and nonprofit organizations receiving state and federal dollars. Audits and investigations reveal a complex web of financial transactions, raising questions about transparency, procurement practices, and the effective use of public resources.

University of Maryland College Park: A Legislative Audit

A recently released legislative audit has cast a spotlight on the financial practices of the University of Maryland College Park (UMCP), raising concerns about the oversight and accountability of taxpayer dollars. The audit, which examined the university's finances between January 2021 and January 2024, revealed several issues related to grant awards and contract management.

Financial Overview

During fiscal year 2024, UMCP received $769.4 million in state funding, a significant portion of its overall $2.8 billion in revenue. As of June 2024, the university had 5,300 open research grants valued at $763.5 million. These substantial figures underscore the importance of ensuring proper financial oversight and responsible management of public funds.

Grant Awarding and Payment Irregularities

The audit identified instances where the university failed to adequately review costly invoices for completed work on grant projects, leading to potential overpayments. One example cited in the audit involved an invoice that included $57,388 in direct labor for an employee, reflecting an hourly rate of $243.17, while the grant agreement specified an hourly rate of $117.58.

In response to this finding, the university acknowledged the confusion but clarified that the $117.58 rate represented the raw rate, while the $243.17 rate represented the fully burdened rate. The university expressed regret that subject matter experts were not included in the initial discussion to explain this detail.

Non-Competitive Contract Awards

The audit also revealed that the university frequently awarded contracts without a competitive bidding process, failing to adequately justify the rationale behind these awards. One such award, totaling $2.2 million, was granted to an entity owned by a university faculty member, raising concerns about potential conflicts of interest due to the direct financial relationship.

The university defended its selection process, stating that subrecipients are chosen based on their ability to carry out a portion of the federal program and achieve its objectives. This evaluation involves assessing their qualifications, experience, and capability to perform the required work under the federal award.

Connections Thru Life (CTL): An Audit Delay and Transparency Concerns

Another area of concern involves Connections Thru Life (CTL), a Maryland nonprofit organization that has received over $60 million in taxpayer dollars since 2022. A Spotlight on Maryland investigation revealed that CTL has yet to complete a required audit of its services, raising concerns among accounting experts and fueling broader transparency issues within Maryland's network of taxpayer-funded nonprofits.

Funding and Purpose

The Department of Health and Human Services allocated these funds, designated for the Ryan White HIV program, to the Baltimore City Health Department (BCHD). In turn, BCHD selected CTL to assume the fiscal agent responsibilities for the program in 2022, just months after the nonprofit's establishment. The Ryan White program is designed to provide medical services and support to individuals living with HIV. CTL manages the program's funds in the Baltimore metropolitan area, overseeing and disbursing taxpayer money to specific grantees, including institutions like Johns Hopkins University (JHU) and local health departments in Harford, Anne Arundel, and Baltimore counties. CTL's tax form from 2024 indicates that 100% of its revenue and expenses are related to the Ryan White program.

Audit Requirements and Non-Compliance

Federal regulations mandate that CTL, based in Owings Mills, undergo an audit to assess how it manages the $61.4 million in federal taxpayer dollars received through the Ryan White HIV program. However, CTL's nonprofit tax forms from 2022, 2023, and 2024 state that "no audit has been completed" to fulfill this requirement. The organization also indicates on these tax forms that it has not undergone an independent audit of its financial statements, implying that a third party has not verified the tax forms.

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Oversight Responsibilities

A spokeswoman for the Health Resources and Services Administration (HRSA), which manages the Ryan White program, clarified that BCHD is responsible for ensuring that its subrecipients are properly audited. While HRSA does not have a direct legal or oversight relationship with subrecipients, the recipient (Baltimore County Health Department) is expected to assess and manage any financial or compliance risks associated with a subrecipient's audit status and take appropriate action to ensure compliance with federal requirements and the proper stewardship of Ryan White HIV/AIDS Program funds.

Conflicting Information and Lack of Documentation

A spokeswoman for BCHD asserted that CTL provided a completed audit during BCHD's last site visit at the nonprofit. However, when asked to provide documentation of this audit, the spokeswoman stated that a public information request must be filed. She did not immediately respond to inquiries regarding the type of audit provided and the time period it covered. CTL did not respond to questions about its auditing practices.

Expert Opinions

Erica Harris, a professor at Florida International University specializing in nonprofit accounting and governance, stated that a nonprofit is generally expected to complete a financial audit to confirm its tax forms, followed by a program audit when receiving federal funds. She found it "troublesome" that CTL admitted to not having done either. Brian Mittendorf, a professor at Ohio State University who teaches classes on financial statements for nonprofits, expressed similar skepticism about CTL's inability to undergo a completed audit after three years. He suggested that the auditing concern, combined with the fact that CTL began receiving taxpayer dollars shortly after its incorporation, raises questions about its qualifications to manage such a large taxpayer program. Amanda Beck, a professor at Georgia State University specializing in nonprofit accounting and government auditing, described CTL's inability to produce a completed audit as "really concerning."

BCHD's Response

A spokeswoman for BCHD stated in August that her office is "currently building its capacity" to end its partnership with CTL by moving its work within the government. BCHD did not respond to a question about when that switch would be finalized.

Baltimore City Comptroller's Role

A spokesman for Baltimore City Comptroller Bill Henry stated that his office conducts a performance audit of BCHD that does not include a review of CTL. The spokesman suggested that Baltimore City should "bring more of its administrative work in-house and rely less on third-party vendors."

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Spotlight on Maryland Investigation

The Spotlight on Maryland investigation into BCHD's decision to select CTL to manage tens of millions of taxpayer funds revealed that:

CTL was the only option for BCHD, as the other applicant withdrew.
CTL shared an Owings Mills address, including the exact suite number, with Anderson and Company, a for-profit financial consulting firm.
CTL's 2024 tax form listed employees other than Anderson, as well as specific salaries, for the first time. However, the listed salaries differed from numbers on the nonprofit's contract with BCHD.

Erica Harris described CTL's listed salaries on its tax form as "clearly poor reporting" and "not accurate." She found it "surprising and maybe disappointing from an organization that is touting themselves as a fiscal agent."

Broader Issues of Oversight and Accountability

These cases are not isolated incidents. A recent state legislative audit revealed broader concerns about the oversight of billions in state spending. The audit found that 42 state offices spent a total of $8.5 billion last year with minimal oversight. These offices were exempt or partially exempt from state procurement laws but were required to adopt their own procurement policies. However, several agencies, including the state's Lottery and Gaming Control Agency, the Maryland Corps Program, the Maryland State Archives, and the Maryland Energy Administration, had no procurement policies on record.

Taxpayer advocate David Williams expressed concern over these findings, stating, "It's a problem that almost $9 billion is going to these entities and we just don't know where the money is going." He emphasized the need for increased oversight and accountability in taxpayer spending.

Vendor Payments in School Districts

An analysis of vendor payments in Maryland school districts revealed further complexities in tracking and understanding how taxpayer money is spent. The "Contracted Out" database, compiled by students and faculty at the UMD Philip Merrill College of Journalism, contains information from all 24 public school districts in Maryland. The data, obtained primarily through the state's Open Data Portal, lacks detail. Most districts only report payments exceeding $25,000, the vendor's name, and the zip code where the vendor is based. School districts have varying policies regarding which services they contract out and what constitutes a vendor payment.

Despite these limitations, the data provides valuable insights into school district spending. Harry Roza, director of the Edunomics Lab at Georgetown University, emphasized that vendor data can be a source of potential scandal.

Checks and Balances

While audits and investigations play a crucial role in identifying potential problems, the checks and balances on school spending rely primarily on school boards, who review and authorize vendor payments. Maryland procurement laws apply to school districts, ensuring a level of oversight.

The Role of Advertising Spending

The University of Maryland Global Campus (UMGC) has come under scrutiny for its significant advertising expenditures. UMGC justified its new $245 million, three-year advertising spend by claiming that other online universities are spending even more money on advertising. However, UMGC has not provided evidence to support its claim that these expenditures result in increased revenues and enrollments. State Senator Clarence Lam questioned whether spending a quarter of $1 billion on advertising in the current environment is a prudent decision and whether UMGC and Maryland are receiving value from these expenditures. The Daily Record Editorial Advisory Board raised similar concerns, questioning why there hasn't been more discussion about UMGC's business model and its dependence on advertising spending. The board also criticized the lack of performance metrics to determine whether the advertising is effective.

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