Why Should Delaware Care?
As Delaware gears up to release $13 million from a fund meant to reduce overdose deaths and mitigate the opioid crisis, the commission responsible for managing the funds voted to revamp its grant process. The new oversight mechanisms will be stress-tested on the largest round of grants distributed to date.
A Delaware commission that’s doled more than $15 million to private organizations to fight the state’s opioid crisis is set to be reformed, nearly one year after the state’s attorney general said the program is “rife with potential for fraud, waste, and abuse.”
At a meeting this month, members of the commission responsible for selecting grant recipients for Delaware’s opioid settlement fund voted to restructure its grant-awarding process, including by adding new staff to evaluate applications for the money.
During the meeting, Joanna Champney, co-chair of the Prescription Opioid Settlement Distribution Commission, said one of the main priorities is to improve how effectively the state monitors grant recipients.
It comes after more than nine months of controversy and allegations of fraud haunted the $250 million fund that the Delaware Attorney General’s Office won in legal settlements with opioid manufacturers and distributors.
The controversy began in June when Attorney General Kathy Jennings sent a letter to the commission calling for a freeze on all future grants until an independent consulting firm could review the program.
It continued later last year when members of the commission debated whether to allow additional grants to flow to previously awarded organizations. Then-Lt. Gov. Bethany Hall-Long, who chaired the commission last year, had said those recipients needed the additional dollars to fight the opioid epidemic.
At a commission meeting last summer, one grant recipient called Jennings’ request for a pause on the dollars a “witch hunt.”
Jennings’ office retorted that the dollars at issue are not “monopoly money.”
At the time of the debate, Hall-Long was a leading candidate for Delaware governor.
The most recent chapter in the controversy came last month when the Delaware state auditor released a report that found a Georgetown homeless shelter that received more than $100,000 to combat opioid addiction failed to meet the obligations of its state grant.
Now, the Prescription Opioid Settlement Distribution Commission intends to distance itself from any possible conflicts of interest, even going so far as to prevent the state’s top substance abuse agency from collecting opioid settlement grants.
In addition to serving as co-chair of the opioid commission, Champney also is director of the Division of Substance Abuse and Mental Health. She said this month that her division will no longer receive grants from the opioid commission in order to avoid any perception of conflicts.
What’s changing?
After Jennings’ released her June letter warning of possible fraud, the opioid commission hired Social Contract, an independent consulting firm, to review the state’s process for awarding opioid settlement grants.
Months later, the firm released its findings outlined in a 171-page report at an October commission meeting. As part of its investigation, Social Contract interviewed commission members, their staff, and consultants, and included their comments in the report but kept them anonymous to allow them to speak candidly.
As a result of the report, the opioid commission established a new manual for how it will award and track settlement grants.
Among the changes, the opioid commission may require up to four people to review a single application, depending on the size of the grant requested. Previously, the process had been criticized for its opaqueness.
“We do not know who the people are that read these applications,” one interviewee said in the Social Contract report. “We’re not provided with a transcript or anything of their deliberations.”
One change which was scrutinized at a recent public meeting was that after the commission reviews and scores the applications, they would review the entire grant portfolio in executive session, away from the public purview.
“As a public body, I would ask you to reconsider the executive session for review,” Jill Fredel, the communications director for Newark-based recovery provider atTAcK addiction, said at a recent public meeting. “I’m not sure what the thinking is behind that, but I think public bodies operate best in the sunshine.”
Another change increases oversight over grantees and their progress reports to the state.
Spotlight Delaware previously reported that the commission did not hold itself to its own reporting standards, allowing organizations to go months or even a year at a time without submitting progress reports to the state.
The commission will maintain its previously established rules to require monthly monitoring reports, as well as required site visits by commission staff to check on progress. It will also require more substantial reports that quantify the impact of their grants and include detailed financial reports showing how funds were spent.
State audits find issues
A performance audit published by the state last month found one grant recipient, Higher Ground Outreach, spent its award on rent and overhead expenses that had no “direct correlation” to a signed contract between the organization and the state.
“Expenditures were not in compliance with allowable costs and permitted uses of grant funds and that grant reporting deliverables were not met,” the audit said.
According to Higher Ground’s contract with the state, the shelter was supposed to hire two peer specialists to support people with addiction. But the audit and one of its directors said that didn’t happen.
Instead, its two directors backfilled the positions themselves because of staffing shortages. Higher Ground did not respond to a request for comment at the time.
In a Facebook post following the audits, Higher Ground House thanked the state for the grant but said it’s a small organization that “never had a grant before.”
“Some minor errors were made during the grant process,” the organization said in the post. “We are growing and we now have people in place to assist us and guide us moving forward.”
The most recent findings released by Delaware Auditor Lydia York came in a batch of reports scrutinizing the spending of four grant recipients from the opioid commission.
York’s office will audit at least eight more organizations that received dollars from the opioid fund.
Among those eight are the Congo Legacy Center, which last fall almost lost a building through foreclosure that it spent $475,000 to renovate via opioid grant funds.
York told Spotlight Delaware the audit on Higher Ground did not indicate any fraud, and said that since the organization is run by two people, it lacks the financial infrastructure to properly maintain the records required of them.
The audit said Higher Ground did not keep thorough documentation to show it was doing the work it promised to do in its contract. Receipts they did keep show expenditures that were unrelated to the scope of work it agreed to with the state.
“We were unable to determine the accuracy of the monthly status reports because no supporting written documentation was available for us to review,” the audit said.
Higher Ground’s audit investigated spending from August 2023 to February 2024, which up until that point, the organization received $40,000. The state then took a random sample of 30 expenditures made by the organization.
According to the report, 77% of those purchases were spent on overhead expenses not in line with its contractual obligations.
A joint statement from commission co-chairs Jennings and Champney, stressed the audit is not a criminal investigation, nor did York’s office find fraud.
“Today’s audit underscores the need for that direct work and for the Commission’s broader efforts to implement stronger oversight protocols,” the statement said. “That is not an attack on Higher Ground’s goals; in fact, its worthy goal is precisely why stronger monitoring and oversight are so critical.”
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