Grant money meant to fight poverty is seeping elsewhere, analysis shows

PRESIDENT LYNDON Johnson's notion of a "Great Society" was embodied by his 1964 speech that declared the "War on Poverty."

That war was abandoned long ago, but a legacy lives on in City Hall in the Mayor's Office of Community Services (MOCS).

MOCS is expecting a huge influx of new money into its $12 million budget, set to come from President Obama's recovery act. It could receive up to $6 million for local agencies charged with fighting poverty.

But, according to an "It's Our Money" analysis, more than $1 million of the agency's current budget is being spent on salaries in other departments. And very little data is being collected to ensure that those being served by MOCS-financed programs are actually in poverty.

MOCS is supposed to be the city's primary anti-poverty agency. It's mostly funded through a program called the Community Services Block Grant.

Under federal guidelines, grant money can be used for a wide variety of programs and services, but those services can only go to people who live at or below the federal poverty guideline. That guideline is currently $26,500 a year for a family of four.

Wadell Ridley, who served as MOCS executive director for the past 18 months before leaving for another job last week, says the programs run directly by the department collect information to determine if people being served live in poverty.

"There is an intake process," Ridley said. "People have to prove their income eligibility. That could be a tax return or a W2 form."

Last year, MOCS reported to the state that 55,134 people were served by grant-funded programs. However, income data was only available for 10,555 of those served. That's because many of the departments that receive money through MOCS apparently do not collect information about income eligibility.

The bulk of federal grant money sent to other departments is used to fund six older adult centers run by the Recreation Department. While many of the seniors served by the programs may be in poverty, the centers are open to anyone who walks through the door.

The following departments get funding from MOCS to pay for salaries:

* Mural Arts Program, one position ($47,840).

* Mayor's Office, one position ($9,182).

* Mayor's Office on Disabilities, one position ($41,241).

* Law Department, one position ($8,849).

* Recreation Department, 38 positions ($552,956).

* Health Department, 11 positions ($443,168).

Despite repeated requests, the city failed to provide any documentation from these departments about the income levels of people being served by programs funded though MOCS.

While state officials declined to comment on the current situation, those responsible for oversight of the grant have expressed concerns about how the money was being spent in the past.

Until last year, federal block grant dollars were being used to partially fund the Mayor's Action Center, which was responsible for answering information requests about city government and services. State officials responsible for oversight raised concerns because the majority of people being served by the Mayor's Action Center were not poor.

"It was our impression that the last administration was using funds to essentially answer phones for people who were complaining about city government," said Ken Klothen, who served as deputy secretary for community affairs at the Department of Community Economic Development before resigning in May. "We didn't think that all of that activity was sufficiently related to Community Services Block Grant goals. We viewed it as casting too broad a net."

The rationale for using federal grant funds for staffing at recreation centers and other programs is that some percentage of those who participate in the programs meet the poverty guidelines.

"If you can show [the state] the direct correlation between what a person does and those eligible for service by Community Services Block Grant funds, then it's justified," said Klothen. "But it becomes an accounting issue, because you have to show that the service percentage is the same as the percentage of a person's salary."

For their part, city officials acknowledge that the current system is problematic. But the policy of using MOCS as a piggy bank for city departments predates the current administration.

According to Ridley, "These memorandums of understanding [between MOCS and city departments] go back four or five years."

Ridley says they are looking to make changes, but are worried about maintaining programs funded by federal grant dollars. "Our concern is how do we continue to provide the service?"

This was a challenge even before the recession; the city has the highest poverty rate of any major city except Detroit. One in four people lives below the federal poverty guidelines.

"I don't think anyone is arguing that this is being done in the right way," said Doug Oliver, Mayor Nutter's spokesman. "We need to take a long look at MOCS and make it operate better. We need to deal with all of these issues, like homelessness and hunger. We're trying to look [at poverty] in a more strategic way."

Whether that gets accomplished before the new money arrives is only one issue. How the federal government views the city's accounting for its spending of recovery dollars, especially for anti-poverty efforts, could become an even more complicated issue.