No misuse of monies found
Okanogan County Public Health received two pots of COVID-relief funding through the federal CARES Act, but didn’t spend $246,603 from one fund by the deadline, which the county should have been monitoring, the Office of the Washington State Auditor found in an audit issued at the end of March.
Public Health was dismayed by the auditor’s findings, saying that the county had been fiscally responsible and that the only issue was that the county didn’t have all invoices in time to spend the money by the federal deadline.
Public Health received $575,000 through a contract with Okanogan County for various COVID expenses, including advanced testing supplies, early in the pandemic, for the county’s three hospitals and for clinics. The money also covered staffing, translation of communications into Spanish, radio ads, and a COVID-19 web page, Okanogan County Community Health Director Lauri Jones said. That money, which was administered by the state Department of Commerce, had to be spent — and invoiced — by November 2020.
Public Health also received $356,000 from the state Department of Health (DOH), which had an initial expenditure deadline at the end of 2020, but was extended to March 2021, Jones said.
Two issues contributed to the problem the auditors flagged. Public Health didn’t get invoices from all the entities that ran community testing sites in time to pay them with the COVID funds that had to be spent by November. And Public Health used some of the DOH money to cover those costs, leaving some funds from the county contract unspent, Okanogan County Commissioner Andy Hover said.
Public Health had receipts for about $329,000 of expenses covered by the county contract. But because they used some of the DOH funds to pay for the testing that hadn’t been billed, it left $246,603 sitting in the account beyond the allowable timeframe, Hover said. Although all the funds had come from the federal CARES Act, those had to be accounted for separately, he said.
“The County received the new Coronavirus Relief Fund program funds while trying to react quickly to the COVID-19 pandemic. As a result, the County did not dedicate sufficient time and resources to adequately monitoring subrecipients and program expenditures,” the auditors said in their report, which covered the period from March 1 through Nov. 30, 2020.
There was no misappropriation of funds and the relief funds saved taxpayer money, Jones said. Public Health was aware that some of the money hadn’t been spent by the deadline and contacted the state Auditor’s Office right away, but the auditor wasn’t clear on the process for returning unspent funds and told Public Health to wait until the audit to clarify the return process, Jones said.
Lack of oversight
The auditor’s finding is called a lack of internal control over subrecipient monitoring, said Kathleen Cooper, director of communications for the state Auditor’s Office. From an auditor’s perspective, the money needed to be expended on an allowable activity during the prescribed period of time, she said.
The county had the ultimate responsibility for overseeing that the funds were used properly because the county contracted with Public Health to carry out the testing, Cooper said.
Because of the health crisis, the federal government sent out the CARES Act money very quickly, without the clear guidance that usually accompanies such funds, Cooper said. In fact, some guidance changed after the money had been distributed, she said.
During fiscal year 2020, Okanogan County spent $2.9 million in funds from the Coronavirus Relief Fund program, which included about $1.7 million that it passed through to subrecipients, according to the audit. The auditors didn’t examine all of it, but looked at about $2 million of the county’s total CARES Act expenditures during that period, Cooper said.
Public Health and the county were well aware that they still had money left, but had no way to use it without the applicable invoices, Jones said. Because most of Public Health’s functions are grant funded, the agency can’t simply transfer money from one account to pay for expenses covered by another pot of money. Public Health is a non-taxing district of the county, funded by money from the county, grants and fees.
Local governments don’t often deal with subrecipients, and state and county governments did their best in the absence of clear guidance, Cooper said. Auditors come in at the end of the process, after money has been spent and rules are clear.
There were similar findings for many other counties, including Grant, Pierce, Snohomish, Whitman and Island, during the same time period, Cooper said. Auditors expect to find lapses in monitoring across the state over the next several years, she said.
In fact, findings were so common that the Auditor’s Office published an article in November 2021 alerting counties to the situation. “The State Auditor’s Office is seeing an increase in audit issues around subrecipient monitoring, primarily due to lack of awareness of the requirements,” they said. The article included recommendations for risk assessment and guidance on monitoring.
Anticipating questions and irregularities, state Auditor Pat McCarthy told counties to document what they did and why, Cooper said.
Jones emphasized that the money enabled them to test thousands of people throughout the county, to provide supplies to clinics and hospitals, and to disseminate real-time information to the public in English and Spanish.
COVID expenses were ongoing. It’s unfortunate that the deadline meant Public Health couldn’t use the money for other COVID-related needs, Jones said.
Okanogan County will be sending a check to the Department of Commerce in the next couple of weeks to reimburse the unspent funds, Hover said.