The ADVOCATE
‘Slush funds’ come under scrutiny
Auditors recommend more controls on funding projects
By Brian Lockhart
Staff Writer
Updated: 10/17/2009
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.
How it started
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 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 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.
a $4 million pie
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.
Funds distributed
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
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.
Donation examined
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.w
Much of the grant application,
reviewed by Hearst Newspapers,
was filled out by a related
organization, but their office phone
and Website 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 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.”
Funds on hold
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.”