Inspector General says housing authority needs more control of utility assistance program

A city Inspector General review of the Jacksonville Housing Authority's management of its utility assistance program for tenants recommended making changes to "prevent the wasteful expenditure of governmental funds" in a report released Tuesday.

The Inspector General said its review found that just 13% of the funds distributed to residents on preloaded debit cards were directly paid by residents to utility companies.

The housing authority responded by saying it fully complies with U.S. Department of Housing and Urban Development regulations and "does not view the proper distribution of utility reimbursement payments to eligible families as a waste of federal funds."

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The authority said the changes recommended by the Inspector General either aren't allowed by HUD for the federally funded program or would add unneeded costs for administering it.

The Inspector General, which has oversight responsibilities for city government and its independent authorities, reviewed about $1.99 million loaded by the housing authority onto debit cards for 1,634 tenants for their utility assistance payments from Oct. 31, 2022 to Oct. 31, 2023.

The card service provider's data showed that based on the merchant category codes that track where the cards are used, only $268,473 of the funds put on the cards were spent on utilities, according to the Inspector General's report.

The report notes that card users also could use the cards to get cash at an ATM. Utilities such as JEA accept cash payments in which case there wouldn't be a transaction history on the card for a utility payment.

HUD provides funding for housing authorities to provide utility assistance to qualified tenants that also get federal housing assistance for their rents. HUD gives housing authorities the option of distributing the utility assistance by issuing debit cards. HUD regulations, which the housing authority follows, do not limit the use of the debit cards to just utility payments.

The Office of Inspector General sent a draft report Dec. 7 to the housing authority, prompting the agency's board to meet twice since then to get updates on the status of what the Inspector General characterizes as a "management review."

Board members could not discuss the contents of the report, however, because it was not yet public. The board voted Monday to extend CEO Dwayne Alexander's contract through June 30, a decision that board members said wasn't based on the Inspector General's report.

Mayor Donna Deegan has said in response to reporter's questions that it's up to the board to decide what should happen in regard to the review.

The Inspector General recommended that to stop the "wasteful expenditure of governmental funds" related to the cards, the housing authority should either pay the utility assistance directly to utilities on behalf of residents or it should direct the provider of the debit cards to restrict the use of the cards to just making utility payments.

The housing authority's response said HUD regulations do not allow agencies to restrict how recipients use the debit cards. The authority said while many authorities have moved to use debit cards, others continue to send out checks that recipients cash and then choose how to spend, which is allowed by HUD regulations.

The housing authority said the recommendation to make the payments directly to utilities on behalf of the tenants would increase the cost of running the program. The authority assists residents in four counties who are served by five different utilities depending on where they live.

The housing authority, which has issued debit cards since 2012 for the utility assistance, met "several years ago" with JEA and decided against using that payment method because there were concerns for both the authority and the utility about the administrative burden, according to the authority's response.

"The OIG's suggested changes are neither best practice nor mandatory for the Department of Housing and Urban Development," Alexander wrote.

He said the authority issued "100% of all funding" required by HUD and all of that money went to families that qualify for receiving the utility reimbursement payments.

"There is no misuse of funds or waste of HUD funds," he wrote.

He wrote the amount of utility assistance, which is based on household income and the size of the rental unit, does not fully cover the cost of electric, water and natural gas bills for many residents who get the debit cards. He wrote that 43% of the households examined by the Inspector General got monthly assistance of $1 to $50.

The utility assistance payments help families manage their household budgets to pay for their expenses including keeping the lights on. Alexander said recipients who fail to keep current on their utilities will be evicted if the utility service is disconnected. He wrote that less than 1% of all lease terminations are for utility disconnections.

This article originally appeared on Florida Times-Union: Report criticizes Jacksonville Housing Authority for HUD program