A contractor works on weatherization improvements to a home in Grafton, Nebraska. Nati Harnik/The Associated Press
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Federal audits are turning up misspent taxpayer dollars in a $5 billion stimulus program aimed at lowering the utility bills of disabled, poor and older Americans by making their homes more energy-efficient.

In West Virginia, which received $38 million in weatherization funds, some of the money went for lobbying, to consultants who did little work and to recipients with connections to state officials who are doling out the funds, the Energy Department’s inspector general found.

In one case, West Virginia paid $25,000 to a lawyer for writing two sentences stating that weatherization contracts had been reviewed, reportedly after four hours’ work at a state office, according to a report analyzing how the federal stimulus money was used. A $20,000 consulting fee was paid to the former director of the state’s weatherization program after he left the job in May 2009 even though there were no specific work requirements set for the consulting contract.

The federal program’s own watchdog had warned at the outset that some of the money in the Energy Department’s weatherization program, part of the Obama administration’s $787 billion stimulus intended to give a jolt to the economy, could be wasted.

“I have said from the beginning of the [economic] recovery program that weatherization is high-risk,” said Earl Devaney, who as chairman of the Recovery Transparency and Accountability Board is Washington’s top cop overseeing how stimulus dollars are spent. Noted Devaney in a statement to iWatch News: “There was little in the way of internal controls.”

Mismanagement in West Virginia ranged from giving preferential treatment to state employees and their relatives, to shoddy work at the homes of disabled and poor people who were supposed to benefit the most, the Energy Department’s inspector general report found. “We found problems in the areas of weatherization workmanship, financial management, prioritization of applicants for weatherization services, and compliance with laws and regulations,” the report said.

Between September 2009 and August 2010, for instance, more than half of weatherized homes that were re-inspected needed to be redone because of faulty work, the report said. Meanwhile, $2,500 was spent on lobbying in Washington – even though such use is expressly forbidden – to “get the word out” that there wasn’t enough funding to administer stimulus programs, it said.

Concluded the inspector general after looking at West Virginia’s books: “The risk of failing to achieve Recovery Act goals, along with the risks of fraud, waste and abuse, remain at unacceptable levels.”

While the Energy Department’s inspector general has examined only a handful of states, it has found evidence of a range of misspending and waste.

George Collard, an assistant inspector general for the Energy Department, said the audits show the quality of the states’ programs varied greatly, and that infractions often are minor. West Virginia is one of the states with “more significant miscues,” Collard told iWatch News. “That’s not to say there haven’t been problems in other states.”

Critics say the audits show that abuses might be widespread.

“You see a lot of smoke. There’s got to be a fire,” said Steve Ellis, the vice president of Taxpayers for Common Sense, a nonprofit watchdog that follows government spending. The question is: “How much?”

A 2010 special report by the Energy Department inspector general warned that the weatherization program had made “little progress” in achieving its stated aims — helping large numbers of poor Americans lower their heating bills.

States seemed to face the biggest challenge, said Collard, in managing the program’s finances and making sure that the work on homes was of sufficient quality. One problem has been the sheer volume of money that flowed into state agencies ill-equipped to cope with it. As part of its job-creation stimulus law, the federal government rushed money to the states, which then handed it out to community action agencies.

West Virginia, for example, received almost eight times its usual weatherization funding through the federal stimulus grant.

Ellis, of Taxpayers for Common Sense, said community agencies weren’t prepared for such a big increase in funding. “These were groups used to drinking out of the water fountain at the elementary school,” he said. “And they got a fire hose of cash.”

At least seven more Energy Department audit reports are anticipated before the end of the year.

West Virginia officials have said they are working to improve administration of the weatherization program.

“The State of West Virginia has made a number of improvements in how they implement the weatherization program,” said Kathleen Hogan, the deputy assistant secretary for energy efficiency. “However, as this report shows, there is work still to be done.”

Collard was hopeful that West Virginia and other states would be able to fix their programs. “While our audits have identified problems with varying levels of degree, the departments and states have been proactive about the findings of the Office of Inspector General.”

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