Audit: Social services contract rules need update

The city auditor’s team studying the city’s social services contracting process found that even though Austin spends millions of dollars on social services contracts, the city “does not have an explicit definition of ‘social services’ and lacks a formal social service procurement policy.”

Members of the team reported their findings to the Council Audit & Finance Committee Wednesday during a brief meeting prior to the Council meeting about the Land Development Code. Neha Sharma managed the audit and Henry Katumwa was the auditor in charge.

According to their report, the city currently has 132 social services contracts worth approximately $48.7 million spread out over a six-year period, beginning with solicitation for services in Fiscal Year 2014. Of that amount, 79 percent, or $38.3 million, comes from the city’s General Fund, while 21 percent, or $10.4 million, comes from grant funding.

Although Austin Public Health oversees 112 social services contracts, four other departments are responsible for oversight of some contracts. That includes the Downtown Austin Community Court and the Neighborhood Housing and Community Development Department (six contracts each), and the Austin Police Department and the Parks and Recreation Department (four each).

Auditors were asked to compare social services contracts in Austin with similar contracts in other cities. The task proved to be more difficult than expected due to dissimilarities regarding how things are handled in the state’s largest cities.

After the meeting, Stephanie Hayden, director of Austin Public Health, told the Austin Monitor that one of her department’s first priorities would be to work on a definition of social services. “It’s really important for us as a city to have that definition and to have a policy, so it’s clear what goes into social services and what does not.”

The audit also noted that in every other city they studied, social service providers were prohibited from lobbying for contracts. In Austin, social service providers are the only contractors not prohibited from lobbying. Auditors did not say that policy needed to change, but they suggested Council should look at the question.

Council Member Kathie Tovo told her colleagues she remembered when the city changed its policy in 2012. “There was very substantial community feedback” and “a pretty lively community conversation” about the change when it happened.

Auditors found that Austin spends considerably more of its General Fund on social services contracts than San Antonio, Dallas and Houston, although those cities spend more from grants.

In San Antonio, for example, the Human Services Department budget includes a large grant for the city’s Head Start program, according to the audit. In Austin, auditors noted that the organization Child Inc. receives grant funding. Likewise, the budget of the Dallas Office of Homeless Solutions includes grant money from the Housing & Urban Development Continuum of Care. In Austin, that money goes to various community organizations and the city does not compete for the funding, auditors noted.

Every city spends grant money in different ways. Austin spends most of its Community Development Block Grant funding on housing, while other cities spend that money on social services, making comparisons more difficult.

Auditors also noted that “while the majority of stakeholders perceived that the city social services contracting process is adequately transparent and equitable, some expressed concerns. Stakeholders mentioned some challenges such as length and complexity of the process, and burdensome requirements.” Some of the concerns identified by 30 social service providers contacted by the auditors include a perceived lack of equity among stakeholders.

“Many stakeholders we contacted perceived that there are barriers that specifically impact the ability of smaller social service providers to access city social services funding,” auditors wrote.

Auditors also noted that contract activities in five of six social services contracts managed by Neighborhood Housing and Community Development do not align with the department’s mission. City management is in the process of reviewing those contracts to identify the most suitable department for them, according to the audit.

In her response to the audit, Hayden said she and her staff would work with the city manager to develop a funding strategy for social services, looking at what other cities do with their social services contracts. But it will be up to the city manager, city attorney, city purchasing and others to decide what the manager will recommend to Council regarding application of the anti-lobbying ordinance. Hayden said she has worked with lobbying and without and did not express a preference.

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Photo: Stephanie Hayden speaks to the Audit and Finance Committee. Photo by Jo Clifton.

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