New Jersey's Weatherization Program Squandering Millions

The 2009 stimulus package included a section for weatherization programs around the country. New Jersey was entitled to $119 million under the ARRA of 2009, but has spent only 5% of the amount thus far, and much of that has been squandered.

This program is desperately in need of reform or elimination. The intentions of the program -to improve weatherization and improve efficiencies of homes owned by low-income households - may be worthy, but this program isn't the way to get it done. The State Auditor's audit bears this out:

According to a report released this week by State Auditor Stephen Eells, the program’s cost controls weren’t being effectively implemented.

The audit determined that $2.7 of the $8.7 million in expenditures reported so far were considered fraudulent and the payments were stopped. Weatherization agencies are provided advance funds but must submit reports on the expenditures.

Of the $119 million, New Jersey was awarded half, or $64 million, upfront. The state was promised the other half once the it could demonstrate progress, or that 30 percent of the units the state promised to weatherize are completed.

The report noted that the lack of oversight resulted in varying construction costs, underpaid workers, and “unreasonable spending.”

Eells said that the spending problems were the result of “inadequate review of financial reports and a lack of guidance from the state and federal agencies.”

Auditors visited four weatherization agencies and found that of the reported $614,000 in expenditures, $54,000 were “unreasonable.”

For example, one weatherization agency spent $1,499 for in-dash GPS systems when a cheaper a $200 portable model would have worked. Another agency was reimbursed more than $17,000 for vehicles it purchased prior to the grant funding.

Construction costs fluctuated dramatically. One weatherization agency charged the program $1.50 for light bulbs, while another charged $27; the audit did not specify how many bulbs were purchased in each instance. Another weatherization agency charged $10 for a dryer vent, while a similar installation cost $126, according to the report.

The problems are a combination of businesses taking advantage of what they perceive to be free money and government programming that doesn't establish benchmarks, reasonable costs, or effectively target waste in the program.

This program could have been more successful if the state funneled the money to upgrading state office or schools (or both) with more efficient boilers and HVAC systems. This would have reduced costs to taxpayers over the long term and improved long neglected infrastructure. Homeowners can do many of the same projects for a fraction of the money spent on the stimulus weatherization program on their own or via their own contractors.

In fact, it might have made more sense for the state to arrange a weatherization rebate program allowing low income homeowners to apply for rebates for the work done rather that the system that was put into place. While this might not have eliminated the bogus requests and outlandish costs, it would have accelerated the spending within the state on weatherization programs and gotten people working on these projects.

A rebate system would have made more sense in that the state could have set up an application form putting together the contract/proposal form that homeowners could use to apply for the funds and contained the necessary protections to the homeowner and contractors. Work on each project would have been contingent on approval by the state - protecting homeowners from being hit with unexpected costs (or a provision to allow for a maximum unexepcted costs) and giving all parties a measure of certainty in upgrading homes around the state.