In 2020, state auditors made an eyebrow-raising discovery: A nonprofit had spent $750,000 in state money that was intended to combat opioid addiction to instead purchase a former country club and golf course.

The misuse of funds was one of many that prompted auditors to call for better monitoring of state grants, noting in a 2021 report that there’s “no control agency established in State law” for this purpose.

Five years later, such reforms have yet to be implemented.

“It doesn’t appear that all that much progress has been made,” said State Sen. Clarence Lam, a Democrat who was serving as senate chair of the Joint Audit and Evaluation Committee at the time. The issue deserves “a closer look,” he added.

Questions about grant accountability loom amid a tense debate over how the state will balance its budget this year in order to avoid projected deficits. Gov. Wes Moore has proposed controversial budget cuts in several areas, including developmental disabilities and education.

In its 2021 report, the Maryland Office of Legislative Audits (OLA) said it found four state agencies with “a lack of documentation to support grant payments totaling $22.3 million and payments totaling $220,000 that were not made in accordance with the related grant agreements.” The office made several recommendations, including that the state require competition for awards and “use of standardized grant agreements that contain provisions to protect the State’s interests.”

If the OLA’s recommendations were implemented, they “could help with accountability and transparency,” Lam said. “We want to be good stewards of taxpayers’ money.”

The Maryland Efficient Grant Application Council, established in 2020 to find ways of improving the state’s grant processes, was scheduled to release a report in July 2024. However, lawmakers delayed the deadline until 2027. Sen. Cheryl Kagan, a Montgomery County Democrat, proposed the bill implementing the delay.

Kagan said the Moore administration has been “very committed to supporting the nonprofit sector” but that the MEGA Council still has work to do, which is why she proposed the extension last year. She added the council is about “streamlining,” not oversight.

Kagan is also sponsoring a bill this year that would create a nonprofit “navigator” within the Commerce Department to provide technical assistance in grant-making.

The grant accountability issue should be addressed “sooner rather than later,” Lam said, saying the issue has “fallen through the cracks.”

“It’s a good reminder for us to double down on … accountability on our grant spending,” he said.

There’s always a possibility that wasteful or inappropriate spending could be occurring, Lam said. “That’s in part why we have legislative auditors … They go into the agencies and investigate and look into this type of fraud and fiduciary concerns.”

Nonprofits in particular receive millions of dollars in state money, he said, and given the state’s tight fiscal situation, lawmakers need to “make sure” every dollar is accounted for.

Similar questions about financial accountability are swirling nationally as President Donald Trump’s Department of Government Efficiency seeks to cut financial waste, fraud and abuse. Proponents say they anticipate billions of dollars in justified spending cuts. At the same time, critics have expressed concerns about DOGE’s legality, cuts to important services and jobs, and the administration’s access to sensitive information.

Lam describes DOGE’s efforts as “misguided and poorly thought-out.”

“It’s taking a meat cleaver to federal spending and deeply impacting the workforce, many of whom are Marylanders,” he said. “We can be more mindful about how taxpayers’ money is being spent, but I think we need to take a scalpel, not a meat cleaver.”

When asked about accountability for state spending on nonprofits, the state’s audit office said in an email that it “does not do a specific audit of grants to nonprofits and generally does not do an audit focused solely on grants. Rather, we incorporate this activity into our routine audits of State agencies.”

For information about state oversight of grants and nonprofits, the OLA suggested contacting the Governor’s Grants Office or the Charitable Division at the Secretary of State. Both of those offices did not respond to a request for comment.

“Ultimately, monitoring of the grants will fall on the agency responsible for issuing the grant,” the OLA said. The office also said it “continues to review grants during its regular audits and you can search OLA’s website for these findings.”

Have a news tip? Contact Brooke Conrad at bconrad@baltsun.com, 443-682-2356 or @conrad_brooke on X.