The News-Times
‘Slush funds’ come under scrutiny
Auditors recommend more controls on funding projects
By Brian Lockhart
Staff Writer
Updated: 10/18/2009
HARTFORD -- Questions continue
to surround the governor’s hiring
of a University of Connecticut
professor who is working to
streamline government but also
provided the administration with
possibly inappropriate political
advice during the budget battle.
But the slush fund Republican
Gov. M. Jodi Rell used to foot the
$223,406 bill has for years been
a controversial method used by
lawmakers from both parties to
award grants for pet projects.
Rell dipped into what are referred
to at the Capitol as discretionary or
contingency accounts historically
maintained by her predecessors and
legislative leaders in the General
Assembly.
According to the state budget office
and previous legislative leaders,
the accounts -- derided as “slush
funds” -- have existed in one form
or another at least since the early
1990s, first under independent
Gov. Lowell P. Weicker Jr. and then
Republican Gov. John G. Rowland.
Kevin Sullivan, a one-time
Democratic Senate president
from West Hartford and former
lieutenant governor, said the
discretionary accounts began as
an attempt to reduce the number
of earmarks being written into the
state budget.
“I think it was also a reflection
that, historically, people close to
the budget process, their towns
would benefit,” Sullivan said. “It
was a way to empower the leaders
and governor to put some discipline
on what had been a largely
runaway process.” At the same
time, Sullivan said, state financial
support for arts, libraries
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and school improvements was
dwindling, so the discretionary
funds were doled out to rank-and-
file legislators to meet those and
other needs within their districts.
“It’s local projects that may not
have a clear, statewide purpose,”
Sullivan said.
In recent budgets the Senate
president and state House speaker,
both Democrats, had $2 million
each to divide among their
caucuses. Rell had $2 million to
share with the Republican minority.
Former House Speaker Moira
Lyons, D-Stamford, said the
discretionary funds were also a way
of circumventing gubernatorial-
controlled borrowing or bonding for
state projects.
“If the governor has final approval
over a bonding issue and they’re
from a different party, shouldn’t the
other parties (in the Legislature)
be able to put stuff forward they
think is right for their districts?”
Lyons said. “I don’t think that is
inappropriate.”
But there is far more scrutiny of the
bonding process, which involves
the full legislature, a bipartisan
commission chaired by the
governor and whatever state agency
is overseeing a project.
Discretionary or slush money is
currently released by the budget
office at the request of the
governor, Senate president or House
speaker following a routine grant
application process.
When the state auditors of public
accounts last reviewed the process
three years ago, they noted
grants were issued “merely upon
communication from political
leaders” and recommended more be
done to confirm recipients used the
money properly.
“During the fiscal years ended
June 30, 2002 and 2003 the office
issued $1,150,500 and $157,000
respectively in grant funds,” read
the audit. “As of the end of our
field work in June, 2006, the
(budget office) had not received
the required audits or final reports
for five of the grants valued at
$850,000.”
The budget office now keeps well-
organized files for grants, including
a four-page application form,
confirmation an organization is
registered with the secretary of the
state and project descriptions.
Files reviewed by Hearst
Connecticut Newspapers show the
budget office makes a concerted
effort to ensure all the necessary
paperwork is filed before the grant
money is released.
And recipients are required to make
a final report confirming how the
funds were used.
“It may not meet all accounting
standards but it tells a story,” Kevin
Johnston, one of the two state
auditors, said.
But in some cases, the paper trail
does not justify a grant recipient’s
worthiness to receive taxpayer
dollars beyond the fact they exist
and are vouched for by a lawmaker.
“Since (the grants) are so small it’s
unlikely you’re going to get a good,
thorough review of each program,”
Johnston said.
For example, in 2008 former House
Speaker James Amann, D-Milford,
gave $40,000 to a Hartford-based
nonprofit foreclosure mediation
program called Statewide Property
Savers.
Much of the grant application,
reviewed by the Hearst papers, was
filled out by a related organization
but their office phone and Web site
were disconnected as of last week.
Hearst reached Francis Cosgrove,
who was listed in the paperwork
as associated with Statewide
Property Savers, by phone. He said
he has been running the program
voluntarily using his own money
and some grants for 12 years and
has helped 800 people.
But, according to the grant
application, Statewide Property
Savers was established in 2008 and
Cosgrove was not required to detail
his success rate before receiving the
$40,000.
“I don’t advertise,” Cosgrove said.
“It’s 95 percent word-of-mouth ... I
try to get in touch with the lender,
talk to them and find out what’s
happening.” Amann had a vague
recollection of some Hartford-area
legislators setting up a meeting
between himself and representatives
for Statewide Property Savers.
“It’s not like we just give (money
to) some guy off the street who has
a good idea,” Amann said. “I think
there’s a layer of bureaucracy and
protection.”
Cosgrove does appear to be
legitimate. Hearst Connecticut
Newspapers confirmed that
Statewide Property Savers
maintains a third-floor office at
Central Baptist Church in Hartford;
has received some donations
through the United Way; and has
referred some housing cases to the
Attorney General’s Office.
But none of that was evident from
the grant application.
And although Cosgrove is expected
to submit a final report on the
use of the $40,000 -- Cosgrove
estimated he helped 50 clients
-- Jeff Beckham, a budget
office spokesman, said there is
no requirement that staff visit
Statewide Property Savers’ offices
or review case files.
“If we had some indication the
money was improperly spent we’d
have some obligation to find out
what happened and appropriate
steps would be taken,” Beckham
said. “I’m not aware that has ever
happened.”
The state auditors of public
accounts is in the midst of its latest
regular review of the state budget
office, and Johnston expects there
will be continued concerns over the
discretionary funds.
“Although we’ve seen improvements
I think there are still weaknesses,”
he said.
For now the tradition is on hold.
Because of the deficit, the just-
approved 2009-10 and 2010-11
budget for the first time in years
does not contain new slush funds.
“Right now it’s just more like a
concept than any type of reality,”
House Speaker Christopher
Donovan, D-Meriden, said.
Amann only left Donovan $1,500 in
his discretionary fund upon retiring
as speaker earlier this year.
Asked if the discretionary accounts
should be revived during better
fiscal times, Donovan said he would
like greater restrictions.
“You don’t want it to be the idea
... of a slush fund,” Donovan said.
“It gives the wrong impression of
certainly what I’ve seen some of the
money used for.”
Staff Writer Brian Lockhart can be
reached at brian.lockhart@scni.
com.