Weatherization stimulus off to cold start

NEW YORK (CNNMoney.com) -- It was supposed to be fast and easy: Pay a bunch of out-of-work contractors to outfit old homes with new furnaces or insulation. It would put people back to work right away, and at the same time cut energy use and save people money.

So as part of the stimulus program, Congress gave the Energy Department's Weatherization Assistance Program a big funding boost. The program, which fixes up homes for low-income people and usually has a budget of around $200 million a year, got a $5 billion injection.

Yet a year later, just $441 million has been spent, raising questions as to just how effective the program is at stimulating the economy.

"It's an example of good intentions that weren't really thought through," said Kevin Plexico, a researcher at Input, a firm that tracks spending in the public sector. "You just don't have the capacity to absorb that amount on the local level."

There are a few problems holding up the spending.

Private contractors doing the home retrofits suddenly had to be paid a "local prevailing wage," usually something higher than the minimum wage. That was not required before stimulus.

Even if the wage isn't much different, the local governments and non-profit agencies that run the program now have to verify each week that the correct wage is being paid.

"It's a lot of paperwork," said Rose Jackson, housing and weatherization director at the Alamo Area Council of Governments, a San Antonio-area community service agency.

Jackson said her staff had to attend trainings and workshops on the new requirements, and didn't even get the money from the state (which acts as a middle man between the Department of Energy and the local agencies) until this past summer.

But Jackson said her program is now ready to go.

Stimulus has more than doubled her budget, from about $3 million a year to over $7 million. In turn, she's doubled the size of her staff, recently hiring an additional eight workers for administrative functions and to perform energy audits.

"Can we spend the money, is there a need," Jackson asked. "Oh yeah."

Her optimism echoed that of state officials, who were chided recently in the Dallas Morning News for having weatherized just seven homes in the whole state of Texas as recently as last month.

Now that number is up to 49, said Gordon Anderson, a spokesman for the Texas Department of Housing and Community Action.

While 49 is hardly impressive for a program that has $327 million to spend, Anderson said renovations at an additional 2,149 homes are underway.

"We wanted to create a strong foundation at the beginning of the process so we get strong results at the end," he said, noting that the state also had to deal with concerns about historical preservation in older homes when setting up the program, which held things up at the start. "I think we're going to substantially ramp-up in the next quarter."

The Energy Department acknowledges the program was slow moving at first.

"We got less done over the summer than we would have liked," said Matt Rogers, senior advisor for Recovery Act implementation at DOE. "But I think we're now running at a full rate."

Rogers said he thinks nationwide about 20,000 to 25,000 homes are now being weatherized a month, up from about 8,000 a month before stimulus. Ultimately, he hopes to weatherize 600,000 to 700,000 homes before the money either runs out or has to be returned to federal coffers in early 2012.

In New Jersey, some of that money couldn't come fast enough.

John Ioannou, a former carpenter and building inspector, has been doing energy audits for the Urban League of Morris County for the past eight months.

Ioannou noted how most of the people getting work done under this program are poor and elderly, sometimes living in terrible conditions. He told of drafty windows and doors, homes with practically no insulation, and furnaces that don't work.

"They greet you at the door and they have coats and jackets on," he said. "It's sad out there."

What the New Jersey program needs is advertising, he said. "I talk to my friends, and they don't know about the program," Ioannou said.

With such a huge increase in funds nationwide, and the need for the work to be done so quickly, there are also concerns the work won't get done right.

The Energy Department's own inspector general recently audited the weatherization program in Illinois. The audit turned up serious flaws, including a failure by the state to audit local programs and faulty instillation of a gas stove by contractors, which it said could have resulted in serious injury.

Last month the inspector general issued a "management alert," saying "we identified significant internal control deficiencies in the management of the Weatherization Program in Illinois which require immediate attention."

DOE's Rogers said the problems in Illinois have been addressed, and added that DOE, state and local agencies need to remain vigilant in monitoring all work.