Tuesday, September 25, 2018 by Jo Clifton

Health department audit shows flaws in system

Austin Public Health’s contracts with the African American Youth Harvest Foundation do not require sufficient documentation to allow the department to adequately monitor the contracts, according to a draft audit report released Monday.

In criticizing the health department’s monitoring of the contracts, auditors noted that the contracts do not require the foundation to provide documentation, such as receipts, bank statements and payroll records. The City Council Audit and Finance Committee will hear a discussion of the audit at its meeting on Wednesday.

The city has paid Youth Harvest Foundation $920,000 under the two contracts since 2014. One contract is to provide services to African-American youth and families to enhance their quality of life. The second is to provide a series of youth conferences at select Austin Independent School District middle and high schools.

The committee received the initial draft at its May meeting but did not accept the report at the insistence of Mayor Steve Adler, who requested additional documentation.

The latest version of the audit also notes that one contract with the Youth Harvest Foundation allows the group to count clients served by partner organizations toward its own performance goals. That means that public health staff could not determine if expenses were valid and allowable before approving payments and could not determine how many clients the Youth Harvest Foundation directly served. “As a result, it is unclear how effectively” the foundation is spending city money, auditors said.

Auditors said that even if the contracts had been written to allow for effective monitoring, the process used by the health department made such monitoring ineffective. For example, one manager in the health department told auditors that the monitoring staff did not compare the stated salary for certain positions with the amounts paid.

Auditors recommended that the director of Austin Public Health seek reimbursement for any payments made to the foundation that were unjustified or not allowed under the contract. In addition, they recommended that the director request additional supporting documentation and contact other funders of the foundation to obtain their monitoring reports.

In addition, auditors said the department should ensure that the staff members responsible for monitoring the foundation have an appropriate understanding of their role. That lack of understanding appears to be demonstrated by the fact that the department would inform the foundation of the specific scope of its on-site monitoring as well as which exact files would be examined, auditors said.

“Based on documentation provided by the Youth Harvest Foundation during the audit, it appeared that the City overpaid (the foundation) $18,600 for wages and salaries during a three month period reviewed for this audit,” auditors said. But after a subsequent review of the foundation’s documentation, public health staff said there was no overpayment. “However this review … resulted in the identification of several other issues with Youth Harvest Foundation’s performance under the contracts,” auditors wrote.

Auditors also faulted the health department for failing to look into allegations by AISD that the foundation had overcharged the district by $49,000, causing the district to terminate its contract. Foundation employees apparently told contract compliance staff that they had not received a monitoring report from AISD, and city staff did not follow up with a request to the district for that information. The foundation subsequently sued the school district, but a judge dismissed that lawsuit.

In her response to the audit report, Austin Public Health Director Stephanie Hayden wrote that her department would be doing a comprehensive assessment of its contract monitoring and management responsibilities. She agreed with auditors’ recommendations to request additional supporting documentation related to payments and to ensure that her staff understood its monitoring roles.

Foundation CEO Michael Lofton strongly disputed the original audit’s conclusions about his organization, sending the auditors an eight-page rebuttal of their findings.

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Photo by John Flynn.

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Office of the City Auditor: This city department is created by the city's charter in order to establish and ensure "accountability transparency, and a culture of continuous improvement in city operations."

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