TRENTON - With winter temperatures setting in, New Jersey has ramped up a program to help low-income residents make their homes more energy-efficient using federal stimulus money after a recent audit found the program plagued by mismanagement and possibly fraud.

Community Affairs Commissioner Lori Grifa told lawmakers Monday that the state would easily have 30 percent of the promised 13,000 units done by the end of the year.

The weatherization program is designed to help residents save on energy costs through the installation of insulation and sealing ducts and reduction of heat loss through leaky windows and doors.

The program has been around for many years but typically received as little as $5 million in federal grants annually. In April 2009, it received $119 million over three years as part of President Obama's economic-stimulus plan with the intention of creating green jobs while helping low-income families save money.

The Department of Community Affairs oversees the program but uses government and nonprofit agencies to do the work.

Though the program had been operating for more than a year, a recently released audit showed that as of July, just more than 1,000 units had been completed and only 5 percent of $119 million in federal stimulus money spent, which put New Jersey at risk of losing half the money.

New Jersey was awarded half, or $64 million, up front. The state was promised the other half once it could demonstrate progress, which it classified as 30 percent of the units the state promised to weatherize as having been completed.

The audit also said $2.7 million of $8.7 million in expenditures submitted to the state appeared fraudulent.

The Senate Legislative Oversight Committee asked Grifa and a state Labor Department official to explain the audit's findings and to discover what was being done to fix the program designed to reduce energy use, save low-income residents money, and create jobs.

Grifa said the rapid expansion of the program in 2009 - before she was appointed - exposed weaknesses in oversight, but she also said the state was taking steps to speed up the work and put more stringent monitoring in place.

"We have turned this program around," Grifa said, adding that the program now completes an average of 715 units a month, compared to 129 units it had been averaging earlier in the year.

State Auditor Stephen Eells agreed that the program had made "significant progress" since July, when his audit showed that construction costs fluctuated dramatically, workers were underpaid, and contractors were overpaid, according to the audit.

One weatherization agency charged the program $1.50 for lightbulbs, while another charged $27.

Grifa said she had referred some weatherization agencies to the state Attorney General's Office for investigation.

Despite the increase in homes being weatherized, the program has done little to create new jobs, despite $4 million that was set aside for weatherization job training.