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Paterson State of the City
Paterson Mayor, Andre Sayegh, announces guaranteed income for some residents during his State of the City address, Ash Wednesday, March 2, 2022.
Kevin R. Wexler, NorthJersey.com
PATERSON — Overdue municipal audits have prompted the New Jersey health department to put a hold on five Paterson grant applications for $1.9 million worth of services, including funding for childhood lead programs, according to state and city officials.
The stalled applications reflect the latest developments in a year-long problem, a situation that prompted state health officials last October to impose a moratorium on city grant requests and subsequently in March to designate Paterson as a “high risk” for funding.
Despite multiple inquiries, Mayor Andre Sayegh’s administration has not responded to questions about the reason for the tardy audits. The mayor has not made any public statements about the grant moratorium — which lasted for about four months — or the “high risk” designation by the state health department.
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Paterson Press recently obtained through a public records request correspondence between state and city health officials over the past year that shine a light on a problem that previously had been kept quiet.
The mayor’s chief of staff, Habib Kader, issued a statement about the stalled grants this week, but he did not provide an explanation for the late audits.
“Due to the delayed completion of the 2021 audit report, the Paterson Division of Health was classified as ‘high risk’ for various grant funding opportunities which resulted in a hold on accessing grant funds,” Kader said. “Monthly meetings were held to address the issue.
“Currently, the absence of the 2022 audit report has placed the Division of Health in the same predicament, preventing access to grant funding,” Kader said.
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“Furthermore, without an engagement letter from the auditing company for the 2023 audit, the DOH’s grant applications will not be processed,” Kader said. “The DOH has been instructed not to resubmit applications until a 2023 audit engagement letter is available. The city has maintained ongoing communication to rectify this issue.”
Delayed grants would cover these services
State health department officials this week provided a list of the Paterson grant applications that are being delayed because of the overdue audit documents. They are all applications for funding from the state’s 2024 fiscal year, which ended June 30:
- Office of Local Public Health / Strengthening Local Health: $406,046
- Office of Local Public Health / Childhood Lead: $645,000
- Division of HIV, STD (sexually transmitted disease) , and TB (tuberculosis) Services / STD Services: $80,224
- Division of HIV, STD, and TB Services / HIV Services: $400,000
- Division of HIV, STD, and TB Services / TB: Ambulatory Care $127,026, and TB Services $224,036. (This is a two-year grant that began in in the 2023 fiscal year.)
City Council President Alex Mendez said he contacted the Sayegh administration after Paterson Press asked him about the health grant situation. Mendez said officials attributed the audit delays to the COVID-19 pandemic and the fact that there are two vacant positions in the city finance office, including assistant chief finance officer.
“I was never concerned when you called me, but now I feel better after talking with the administration,” the council president said. “The city isn’t going to lose any grants. The state is working together with the city on this.”
The New Jersey health department imposed its moratorium on Paterson grant applications on Oct. 12, 2023, according to an email from a state official to the city.
“It has come to our attention that the 2021 audit report for Paterson City is currently unavailable, and regrettably, no definitive time frame for its submission has been provided,” said the email from state grant management officer Jorge Lozano.
“We must emphasize that, in light of this circumstance, the Department and Grant Administrators are compelled to impose a strict moratorium on the processing of any new awards for those entities not in immediate compliance with our audit requirements,” the email said.
That moratorium impacted two grant applications — one for $406,046 for a Strengthening Local Health grant and another for $645,000 for a Childhood Lead Program — according to a state spokesperson.
The state lifted its moratorium in February after getting the 2021 audit from the city, the spokesperson said. The two grants then were processed, and the funding was provided to the city, the state said. “No disruptions in grant activities were reported,” the spokesperson said.
Paterson classified ‘high risk’ for state grants
But after reviewed the city’s 2021 audit, the state heath department sent Paterson another email on March 19, 2024 saying the city would be classified as “high risk” under its grant policies.
That designation stemmed from the fact that the 2021 audit was “significantly late” but also because of some of the audit’s findings, the email said. In particular, the state cited the audit’s mention of Paterson’s “failure to furnish detailed reports or journal entries with accompanying explanations to substantiate grant-related expenses recorded throughout the year.”
“Additionally,” said the state in its email, “the auditors identified Paterson’s deficiency in furnishing documentation concerning payroll expenses. This shortfall raises concerns about the availability of documents that would demonstrate that grant funds were used to fund eligible employees and activities in alignment with the funding opportunity.”
In that March email, the state told Paterson it would hold “monthly technical assistance meetings with city officials to fix the problems that resulted in the “high risk” designation.
Paterson Press attempted to contact City Council President Alex Mendez about the health grant situation, but Mendez did not respond.