The head of Maryland’s Opioid Operational Command Center defended financial practices in the office’s first years of existence on Friday afternoon during a tense legislative hearing sparked by an audit that raised concerns about questionable grant activity.
“Even though the organization didn’t have a good application process, didn’t advertise well and didn’t have a good post-grant management system set up, that doesn’t mean the grants were bad,” said Steve Schuh, the center’s executive director. “That doesn’t mean the programs that were funded were bad. They’re good programs. I haven’t seen anything but good programs and really good work going on as a result of the prior team’s grant-making efforts.”
An Office of Legislative Audits report released Wednesday called into question about $1.3 million in audits awarded by the command center in 2018 and 2019. The office began auditing after receiving a complaint through its fraud, waste and abuse hotline about a $750,000 grant in February 2019 to a nonprofit organization to purchase a former country club and golf course in Caroline County.
Schuh, a former Anne Arundel County executive who was appointed executive director by Gov. Lawrence J. Hogan Jr. (R) in December 2018, noted that grant was approved, but never funded, and defended the command center’s work.
He believes the center’s creation has helped to stem the number of opioid-related deaths in the state, but there remains a public health crisis of unprecedented magnitude.
There were 1,574 confirmed deaths in Maryland related to opioids in the first nine months of 2019. However, in those nine months, fatalities statewide were also down about 5% from the prior year and more than half of counties saw a decline in the number of deaths.
“We’re encouraged by these trends, but we recognize that the fatalities are still very close to all-time highs,” Schuh said. “…We must continue with our all-hands-on-deck effort.”
Schuh said he became aware early in his tenure that the center had shortcomings that needed to be addressed and that he started working to create comprehensive grant procedures.
The office’s new procedures since he’s become chief represent a “gold standard,” for finances, Schuh said.
Schuh also defended some of the office’s work before his tenure started.
“It is understandable that a new office established under emergency conditions and charged with the work of this gravity, did not have the policies and procedures in place that one would expect of a long-established department of state government,” Schuh said.
But auditors said their concerns about specific grants came after Schuh’s tenure began.
The audit did not name the nonprofits whose grants were questioned specifically, but Schuh did during testimony.
He defended a grant to Brooke’s House, a sober home in Washington County that teaches women trades as they recover from substance abuse disorders. While a grant application sought money related to treatment, a grant was ultimately used to purchase a box truck, propane and other supplies, which were questioned by the auditors. Schuh reiterated that Brooke’s House sought and received approval from the command center before using the money for other startup needs.
“They didn’t just run off and spend the money without our knowledge,” he said.
Schuh said the auditors’ referrals to the attorney general’s office for further investigation of that grant and others “was unnecessary and inappropriate.”
In another finding, auditors concluded that a $100,000 grant from the opioid command center to an out-of-state nonprofit was transferred to two private companies to perform drug prevention educational programs at middle and high schools.
Schuh said during Friday’s hearing that the $100,000 grant in question was made to “Life Changing Experiences.” State budgets show grants made to The Children and Parent Resource Group, a North Carolina-based nonprofit headed by Tamika Bain, who is also listed as an employee of Israel-based company Life Changing Experiences.
Schuh conceded the grant was not written in clear language, but was adamant that services were provided as expected, while auditors maintained they’d never received proof of such from the schools or the command center. Schuh acknowledged that the nonprofit should have sought approval before subcontracting the bulk of its contract to a private company.
Auditors suggested that the transfer may run afoul of federal tax laws that say a nonprofit must not be organized or operated for the benefit of private financial interests. Messages left with the nonprofit and the company were not immediately returned after Friday’s hearing.
Regarding the $750,000 grant to “Farming for Hunger,” which was never fulfilled, Schuh said auditors persistently referred to the property as a country club for the purpose of sensationalizing their report.
“The property has long since returned to its natural state and is today undeveloped agricultural land,” he said. However, auditors stood by their characterization because the possibility of a golf course on the land was included in the grant application.
Del. Kirill Reznik (D-Montgomery) pressed Schuh about why no written grant procedures existed within the command center for two years.
“That is a shocking abdication of responsibility on the part of this administration with regard to millions of dollars of taxpayer money and thousands of lives of Marylanders,” Reznik said.
Lawmakers asked to what extent command center employees reached out to existing state offices to replicate their policies on grant distribution, but many of the center’s initial contractual employees are no longer with the office so the answer could not be known.
Hook said that it’s clear the center attempted to release grants as quickly as possible in the early days of its creation, at the expense of tighter financial controls.
“They were concerned about getting money out there to affect the crisis, and that may have been done much quicker than would have been prudent given the lack of procedures,” said Legislative Auditor Gregory A. Hook.
A spokesman for Hogan noted Friday evening that the state recently announced a more than 22% decrease in opioid prescriptions since 2017.
“We are making progress in this fight every day, and giving it everything we’ve got,” Michael Ricci said. “The auditors did their audit, legislators held a hearing about it, and now we can all move forward and focus on saving lives.”