Federal audit slams Atlanta’s use of grant dollars

The City of Atlanta mismanaged federal grants designed to combat crime and rebuild poor neighborhoods plagued by illegal drug activity, federal auditors say.

Federal auditors questioned nearly $393,000 in spending related to $1.1 million in grants for Atlanta’s “Weed and Seed” program, which is no longer active. Of that, questioned whether the city spent roughly $25,000 required in local matching funds.

“Most significantly, the city charged unallowable and unsupported costs to the grants,” said the audit from the Inspector General for the Justice Department, released this month. It examined grant use over four years.

The audit said the city overpaid one invoice by $11,600 “because it apparently did not review the invoice before making the payment. We asked city officials why this happened but we never received a response.”

Karen Rogers, the former head of the Weed and Seed program, referred comments to Mayor Kasim Reed’s communications department Monday. City officials declined interview requests, but in a statement said they take the audit “very seriously.”

Chief Financial Officer Jim Beard conceded in a June letter to federal auditors the city could be responsible for about $75,000 in unallowable expenses.

Atlanta received seven two-year grants for the Weed and Seed program between 2007 and 2010, according to the Office of Justice Programs.

City officials said the goal of the program was to reduce crime in neighborhoods such as English Avenue and Mechanicsville and noted that due to a variety of public safety initiatives, crime has dropped in each of the targeted communities. The federal program ended in 2011 and Atlanta’s grant dollars expired this year.

The city has had chronic problems in managing federal grants — which accounted for $108 million in city spending in fiscal 2011 alone — in part because the grants aren’t managed by a single accountable department such as finance, said Leslie Ward, the city auditor.

Moreover, city officials have not done away with or revamped departments that have had serious compliance issues, Ward said. Instead, each department is primarily responsible for managing its federal grants, with finance performing some responsibilities such as cutting the check to vendors and contractors, she said.

“We keep getting these nasty federal audits and a lot of the issues are similar,” Ward said. “The city seems to favor the decentralized approach. We really think there should be more oversight by finance.”

Beard said in a statement Monday that the city began tightening its auditing controls in 2011 and is moving towards centralizing its grant management process, which is now housed in the finance office.

The mayor’s office declined requests for an interview Monday to respond to questions about the audit, but in a statement said: “It should be noted that most of the findings in the DOJ audit occurred between 2007-2010, before the stewardship of the city by Mayor Kasim Reed and his administration.”

Several city council members declined to discuss the audit, saying they had not read it. But councilman Michael Julian Bond, who oversees the public safety committee, decried the audit’s findings as a “horrible” reflection on the city. He said he planned to have Rogers, still a city employee, and other officials before his committee to respond to the audit’s findings.

The federal auditors said the personnel costs for the Weed and Seed program they examined were appropriate and that the program met its goals. But administrators missed deadlines to provide documentation and took more than a year to provide records needed to complete the audit after an August 2012 meeting with auditors.

“A city official told us the Weed and Seed director tried to send the documents earlier but ‘the email did not go through,” the 96-page audit said. “We found the City of Atlanta did not comply with the essential grant conditions.”

Other poorly documented spending included nearly $7,700 to a former city official and another $7,700 to a consulting agency, the audit said.

The city also improperly spent $12,300 to lease space for community organizers because the lease was for a period after the grant had expired, auditors wrote. Another $18,000 for salaries for “volunteers” was also questioned.

City Auditor Ward said she was “encouraged” that the mayor’s office was moving toward centeralizing grant oversight.

Last winter, at the council’s request, Ward’s office audited the Atlanta Workforce Development Agency’s use of $6 million in federal money to train workers and get them jobs.

Her office found that department did a poor job at documenting outcomes and also “cherry picked” findings by including police officers and firefighters recruited at job fairs to demonstrate success, Ward said.

The audit found that most of the spending went to staff and ancillary service instead of job training, Ward said, and auditors recommended Mayor Kasim Reed and the City Council consider closing the agency. The audit provoked a blistering response from Duriya Farooqui, the city’s chief operating officer, who in a letter criticized Ward’s recommendation to shut down the agency.

Atlanta City Council President Ceasar Mitchell said audits like these are important reminders of the need for controls and transparency.

He said the Weed and Seed program was effective in improving the communities it served. Still, city officials must now be as responsive to the federal auditors as possible to ensure “not only getting this right, but making sure people understand what happened.”

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