Fort Meade discovers duplicate spending of federal pandemic relief funds

Dustin Burke had barely settled into his position as Fort Meade’s interim city manager when he learned of an alarming discovery: The city lacked the dedicated funds to pay more than $300,000 owed to a contractor for a major project.

Burke said that a city employee alerted him to the problem on March 7. Five days later, the Fort Meade City Commission voted unanimously for an emergency ordinance to transfer $319,058 from its general fund reserves to another budget fund, allowing the city to pay the contractor the money it owed.

The problem arose from faulty accounting for the spending of funds Fort Meade received through the federal American Rescue Plan Act, a $1.9 trillion pandemic relief package approved by Congress and signed by President Joe Biden in 2021.

Last May, the Fort Meade City Commission approved a service agreement with MG Underground LLC, for improvements to the stormwater system along U.S. 98. The agreement cited the federal money as the funding source.

When the city prepared its budget for the 2023-24 fiscal year, though, city staff did not present a related budget amendment to the commission, according to a memo Burke shared with commissioners. As a result, the city “overtaxed” the ARPA fund, the memo said.

When the contractor presented an invoice to the city this month, a staff member discovered the shortfall and brought it to Burke’s attention, he said.

A former city comptroller, who left in January, did not consistently assign budgeted line items, resulting in double booking for funds, Burke said. The ARPA funds had been overextended for fire, water and stormwater projects, he wrote in the memo.

“The invoice item was approved last budget year, and then it wasn't carried over to the current budget year,” Burke said Friday. “So while the expense was authorized, the budget did not get amended to include it. So when the bill came due, there was no means for me to pay it. It has to be budgeted.”

The emergency transfer will cover the overdue invoice and ensure that the construction project continues without interruption, Burke wrote in his memo.

The interim city manager noted that he had only a few days to prepare a suggested plan before Tuesday’s commission meeting.

“This was brought to my attention on Thursday (March 7), and rather than comb through all the different funds and all the different projects (in the budget), this was the quickest way and the least disruptive way to keep things moving,” Burke said.

In his memo, Burke pledged to determine how the mistake occurred and examine the city’s financial procedures to ensure the proper tracking of projects and budgets. He wrote that he will provide a comprehensive report to the commission, ideally within 30 days.

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The city’s staff is searching for budgeted projects that could be reclassified to be covered through Community Redevelopment Agency funding, reducing the impact on the general fund, Burke wrote. Like many cities, Fort Meade employs a CRA to promote revitalization. A large portion of Fort Meade lies within the CRA zone, Burke said.

“There is no long-term expected impact on future projects,” Burke wrote. “The impact is expected to be a series of budget amendment ordinances over the coming months to reconcile budgeted and unbudgeted spending, aligning the City's practices with ordinance requirements.”

Though Fort Meade currently lacks a comptroller, Burke said the city works with an independent accounting firm and is in discussions with a third party to assess its financial procedures. He recommended comprehensive training for city staff, regular audits and increased oversight of financial operations and review of the city’s policies and procedures.

Asked if any staff members might face discipline over the error, Burke said, “I think it’s too early to say. I mean, my priority right now is just to find out how it happened and make sure that we're following the best practices going forward. And if there's any disciplinary action, we’ll have to see.”

Fort Meade Mayor Petrina McCutchen could not be reached Friday. City Commissioner James Watts, one of three members who were in office during preparation of the current budget, said he was “hesitant” to approve the emergency ordinance but did so to ensure the contractor was paid.

“I'm not saying he's (Burke) wrong, but I don't know how bad of an issue it was,” Watts said. “I've been doing this for 25 years now, and I've never heard this come up before.”

Watts said that governments often have to make emergency funding adjustments.

“There may have been other ways to get it done, but this was the way he (Burke) came up with, and he knew how to get it done that way, so I went with it,” Watts said. “But I’m really leery when you start transferring out of your reserve funds, and you don't know what the reserve funds are.”

Gary White can be reached at gary.white@theledger.com or 863-802-7518. Follow on X @garywhite13.

This article originally appeared on The Ledger: Fort Meade discovers duplicate spending of federal relief funding