Spending Practices Questioned County Severed Link With Group; Federal Rules Not Followed

Creative billing and loose financial controls have the state auditor’s office questioning the way a local committee spent public money.

The audit confirms suspicions that led Spokane County commissioners to cut the county’s ties with the independent Spokane County Community Network last year.

The audit found that the network didn’t follow federal regulations for the way it spent 1997 grant money intended to help Spokane kids and the down-and-out.

At least $59,000 of the spending may have been inappropriate, the auditor concluded. Most of the problems stem from the network’s contract with Darby Team Consulting, which did administrative work for the network.

The firm sometimes double-billed for relatively small amounts, auditors found, and charged the network for time spent soliciting work from other government agencies. In most cases, the firm’s practices had the network board’s blessing or are chalked up to accounting errors.

Consultant Carol Darby said Thursday that she hadn’t yet seen the audit, so was unable to comment about specific findings.

“We knew that an audit was going on and we welcomed that,” she said.

Laura Porter of the state’s Family Policy Council, which oversees the Spokane network and 53 others in communities statewide, said the network corrected most of the problems before the audit was conducted.

“The checks and balances really worked,” she said. “The county raised concerns and the network changed its practices and there was accountability, which is what the public really wants.”

Yet when county officials raised their concerns last year, Porter’s predecessor denied any serious problems.

“We have not encountered anything that is inappropriate, only a matter of best and better practices,” said David Brenna, who since has transferred to another state agency.

Created by the Legislature in 1994, the 54 networks were told to find long-term solutions to child abuse, youth violence, youth drug abuse, teen pregnancy, domestic violence, high-school dropouts and teen suicide. Each network is managed by a board of 23 volunteers from various nonprofit and government agencies.

The networks’ mission was controversial from the start. Many social service providers wanted the money used to help people immediately. Instead, much of it was used to study ways to make the delivery of services more efficient.

In Spokane more than half the network’s money for 1996 and 1997 went to consultants. Board Chairman Vic Forni said the network is done conducting studies, and that most of its money now goes to agencies that help children.

For the two years ending in 1999, the Spokane network received $330,000 in federal grants.

The federal government requires that the network contribute $1 from the community for every $4 of the grant. The local donations can be cash, services or other in-kind contributions.

For six months in 1997, Darby’s contract called for a billing rate of $105 an hour. As The Spokesman-Review reported last year, Darby actually charged $65 an hour, so the network could report the $40 difference to the federal government as an in-kind donation.

“We consider this an ineligible (grant) match,” wrote the auditor, who noted that in an earlier 1997 contract, the firm listed its hourly rate as $65 an hour, not $105.

The auditor found that the network reported money it paid the consultant as “direct program costs” or “infrastructure costs,” rather than using the more accurate heading of “administrative costs.”

Had the costs been reported accurately, the network would have exceeded by nearly $16,000 the amount of grant money eligible for administrative costs.

Among the auditor’s other findings:

Darby billed for time spent at meetings “that did not appear to be related” to network business. “In each of these cases, we noted that (consultants) obtained additional unrelated contracts from these entities.”

Another consulting firm related to Darby’s billed both the Spokane network and the Stevens County Youth and Family Network for work done in Stevens County. The bill to each was $3,326.

Darby overbilled by 30 percent for a temporary office worker she hired to help with work generated by the network.

The network used $3,200 to pay Darby for lobbying the Legislature not to cut off the flow of money. Some of those bills were labeled “legislative education” because network board members correctly noted that federal grant money can’t be used for lobbying.

The network spent $3,500 on food at a conference it hosted for social service providers. Like the lobbying, that’s an inappropriate use of the federal grant money, the auditor reported.

Darby double-billed for two days’ work, claiming different activities on each bill.

“The network paid both (bills),” the auditors wrote. “We question costs of $1,170.”

Darby double-billed for $58.37 worth of supplies purchased on July 2, 1997. One of the bills says the supplies were bought with a check; the other says it was a cash purchase.

Porter said she doubts the Spokane network will have to repay any of the federal money since it has more than enough in matching funds to meet its obligation. She said it’s too early to tell whether the state will ask Darby to repay any money from the network.