HUD May Have Broken Law When It Paid Salary of Senior Advisor

The Housing and Urban Development Department may have broken the law when it paid more than $620,000 in compensation to a senior advisor on detail from a non-profit organization.

HUD “incorrectly” used funds from the Office of Public and Indian Housing and the Office of Housing to pay $622,369 in salary and benefits for a senior advisor to Secretary Shaun Donovan from 2011 through 2014, according to a new report from the department’s inspector general. The department also overpaid for the advisor’s services by $2,365 more than the initial amount agreed upon when it reimbursed his employer, Community Builders, Inc., an affordable housing developer.

Congress directed HUD in its fiscal 2011 spending law to pay all senior and special advisors to the secretary directly from the Office of the Secretary’s budget to increase accountability. “Despite the direction in the House report and guidance from its own appropriations attorney, HUD reimbursed Community Builders, Inc., for the senior advisor’s services from [Public and Indian Housing] and Office of Housing funds,” stated the May 30 memo from HUD Regional IG for Audit Gerald Kirkland to Acting Deputy Secretary Helen Kanovsky and Deputy Chief Financial Officer David Sidari. That could amount to violations of the Antideficiency Act, which places limits on expending and obligating government funds.

Kirkland’s memo said HUD “may” have violated the Antideficiency Act when it paid the Community Builders employee from the wrong coffers, noting that under HUD’s fiscal 2003 Appropriations Act, the department’s chief financial officer “is responsible for investigating potential violations, determining whether actual violations have occurred, reporting on any such violations, and ensuring HUD takes action.” 

Federal employees who violate the ADA face administrative and/or penal sanctions, which can include suspension from duty without pay, removal from office, fines or imprisonment. The Government Accountability Office keeps track of agencies' ADA violations. Several agencies, for instance, are listed on GAO's website for violating the law in fiscal 2013.

HUD spokesman Jerry Brown said the department has "infrequently" been found to be "antideficient." 

Agencies can bring non-federal employees on board for a short time under a hiring authority when it serves a public good and is mutually beneficial. Under an Intergovernmental Personnel Act agreement, the worker on detail remains an employee of his permanent organization, and returns to that employer at the end of the detail. As part of the agreement, the agency and the organization work out cost-sharing, which typically includes reimbursing the non-federal employer for the detailed employee’s compensation.

Under the arrangement HUD had with Community Builders in the case the IG looked at, the department agreed to reimburse the group a yearly maximum of $205,000 ($155,000 in salary and $50,000 in benefits) for the employee’s services, which was “significantly less than his salary” at Community Builders, the IG report said. “The employee served as an advisor to the secretary; therefore, HUD’s reimbursements to Community Builders, Inc., should have been made from the Office of the Secretary’s executive direction account.”

The employee’s primary job was as a project manager for the department’s Rental Assistance Demonstration program, which uses different financing tools to help preserve and rehab the government’s affordable housing stock. A Jan. 13, 2011, email from the department’s assistant secretary for public and Indian housing said the employee was to be paid by Public and Indian Housing and would be physically located in that office. But according to the IG audit, “there was no evidence that the senior advisor reported to or was housed within PIH.” Documents and video show that the employee was a senior advisor to Secretary Donovan, the IG concluded.

HUD officials in response to the audit said they would investigate whether the department violated the law and if so, “take any necessary and appropriate administrative and other actions” against any employees responsible. HUD also pledged to ensure that those on detail under the hiring authority have a proper agreement in place beforehand and that the department pays employees from the appropriate pool of money.

Brown said the department is just beginning the investigation, and is hoping to leverage some of the IG's work in its own assessment. "We have to be thorough in our review if we are to stop this from happening again," he said. When asked whether HUD would have to reimburse PIH and the Office of Housing somehow for the funds that were used to pay for the senior advisor's salary, Brown said it was too early in the investigation to discuss specifics.

(Image via In Green/Shutterstock.com)