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State audit of COVID spending by 15 towns finds $2 million in ineligible spending

Fifteen municipalities that submitted more than $45 million in COVID spending records to the state were found to have $2.2 million in unsupported expenditure and payroll costs, according to a new audit conducted by the Advisory Firm CohnReznick on behalf of the Office of Policy and Management.

Most flagged costs were due to a lack of proper documentation, reimbursements for food purchased for workers at COVID testing centers, or duties performed for a municipality that could not be properly supported as COVID related. Many of the payroll issues involved overtime payouts that CohnReznick said were not properly supported by town documentation.

The $2.2 million in unsupported expenses and payroll accounted for 4.8 percent of the $45.2 million in total spending, although CohnReznick only tested 26 percent of the total costs submitted by those municipalities.

It is likely that municipalities may take issue with the results of the audit, particularly that many of the findings involve providing proper supporting documentation for expenses and payroll for jobs that employees were doing in the fog of COVID.

Included in the audit was West Haven, where former Democratic State Representative Michael DiMassa, and other town employees, fraudulently took over $1 million in COVID funds and have since pleaded guilty to wire fraud in federal court. The scandal rocked both the town and the State and West Haven was left holding the bag for missing and misused federal COVID dollars.

CohnReznick found more than $100,000 in unsupported costs in the town of West Haven, which mostly came from payroll expenses, including compensatory time ranging upwards of nearly $21,000. “CohnReznick determined the payment does not meet CRF expenditure requirements and should be excluded from CRF reporting,” the report said. 

The auditors also found that West Haven’s expenses for fence repair and storm cleanup at their beach did not qualify for covid relief funds, nor did a $6,730.30 reimbursement to a 1099 employee for activities the town did not identify and did not document how they were Covid-related.

CohnReznick previously audited the town of West Haven in 2022 and identified nearly $900,000 in unsupported spending. The town has been under state supervision for many years, largely due to their poor book-keeping and finances.

West Haven was not alone, however. In Waterbury the auditors identified more than $400,000 in payroll costs they say should be excluded from COVID relief funding; Norwich saw its entire payroll submission of $491,374.80 for human services, youth and family services, the senior center and recreation department flagged because they could not identify what COVID-related activities those employees performed. 

“The municipality made the determination that the payroll should be included in CRF reporting because the employees’ time was ‘substantially dedicated’ to mitigating or responding to the COVID-19 public health emergency, and was ‘substantially different’ work than their normal job duties,” the audit says. “The municipality was not able to identify the activities performed, nor how they were COVID-related.”

Bridgeport saw a whopping $650,961.54 in expenses CohnReznick said were not supported, almost entirely comprised of payments made to the Connecticut Municipal Employee Retirement System for fringe benefit costs. The city could not provide backup and “did not explain the computation methodology for the MERS expenditure submitted.”

The town of Hamden was flagged for $25,571 in expenses, including air conditioning expenses, installation of two doors “to protect town officials and union employees from COVID-19,” and $3,370 for “lawn signs to show appreciation and to thank first responders and other critical workers for their work during the pandemic.”

CohnReznick conducted an initial review last year of all 169 municipalities that submitted their COVID-related expenses and payroll to the state but were asked to drill down on the towns that had the highest number of flagged expenses and payroll submissions, according to the audit.

According to the audit, OPM sent letters to the municipalities titled “Municipal CRF Program CARES Act Auditor Findings/Corrective Action,” but CohnReznick was not involved in the letter or the discussions surrounding it.

Responding to the first CohnReznick audit of West Haven in 2022, Mayor Nancy Rossi said the town was compiling the proper documentation to address the auditors’ concerns, saying she was “confident that we can significantly increase our reimbursement for these COVID-related expenses,” according to the New Haven Register.

CohnReznick said they did not take municipal responses into consideration in issuing their report. ”We did not take the letters, or any responses to those letters from the municipalities into consideration,” the audit said.

This article was corrected to indicate it was 15 towns identified in the audit.

Marc E. Fitch, Senior Investigative Reporter

Marc E. Fitch

Marc worked as an investigative reporter for Yankee Institute and was a 2014 Robert Novak Journalism Fellow. He previously worked in the field of mental health is the author of several books and novels, along with numerous freelance reporting jobs and publications. Marc has a Master of Fine Arts degree from Western Connecticut State University.

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