When Gov. Martin O?Malley announced on Friday that the state would be shutting down and selling the warehouse for surplus state property in Jessup, it marked the end for a facility that has consistently received poor marks from state auditors for sloppy bookkeeping and bad management.
Even the numbers O?Malley cited for an operation that is supposed to be self-supporting understated how far off the mark the agency was from making a profit.
Office of Legislative Audits and data from the Department of General Services show until this year, the agency had rising sales but expenses rising even faster, leading to lower net income.
Most of the inventory at the 60,000-square-foot warehouse is made up of discarded desks, chairs, file cabinets and other office equipment.
Auditors told the Joint Audit Committee, “Several factors could contribute to the decline in net income including stolen or missing property, excessive sales discounts and unnecessary expenditures.”
A response from General Services Secretary Alvin Collins, who reminded Legislative Auditor Bruce Myers that he was new to the job, said another reason for the reduced income was repayment of $500,000 loan from the general fund for a loss the agency had in fiscal 1998.
Auditors uncovered the following multiple problems during a three-year period:
» Poor record keeping, including not knowing if property transferred from another state agency actually arrived in the warehouse.
» No records on damaged property.
» Poor inventory control.
» No documentation for employee discounts.For example, computer monitors were priced at $15, but sometimes sold for less.
A 2005 audit also found that surplus state vehicles were sold to the general public at prices lower than those a designated state auctioneer got for similar vehicles. Despite a ban on the practice by the department secretary, the agency still sold 36 vehicles directly to car dealers in 2006.
Collins agreed to correct most of the shortcomings. But he said the state must come up with a new way of selling or transferring surplus property to other state agencies, nonprofit groups and the general public.
“The function itself is required,” DGS spokesman Dave Humphrey said. “You don?t necessarily need a warehouse.” Over the next few months, the department will be setting up a process, probably using the Internet.
The warehouse, outbuildings and its 9.8 acres in an industrial area have an estimated valued of $2.4 million.
