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City not tracking its interlocal agreements

Thursday, August 19, 2021 by Jo Clifton

The city of Austin has entered into a multitude of interlocal agreements, with Travis County, local school districts and even the state of Texas, worth millions of dollars. Yet no one at the city knows exactly how many of these agreements are in effect and the agreements are spread out among departments, not filed in one place, according to an audit presented by the Office of the City Auditor at Wednesday’s Audit & Finance Committee.

Interlocal agreements between Austin and Travis County include a contract for the city to provide animal services on unincorporated county land. In this instance, Travis County pays for the service. Another agreement between the city and the county provides for the city to pay the county to incarcerate people arrested by the Austin Police Department.

An example of a nonfinancial interlocal agreement is the contract between the city and Austin Community College that provides veterinary students with internships at the Austin Animal Center. The city also has an agreement with the state allowing Austin to purchase FedEx services through a contract already negotiated by the state.

Kathie Harrison, who led the audit, explained that each department has its own unique process for storing the interlocal agreements. She said that practices throughout those departments have prevented the city from having a comprehensive overview that would include not only the number of agreements but the amounts of money involved.

As the report states, “With multiple departments involved in managing interlocal agreements that the City Council approved for millions of dollars in authorized funding, the city should establish and implement an effective management process.”

Although the city’s procurement manual says that once Council has approved an agreement, the department involved must send that agreement to the Purchasing Office, which is charged with recording the agreements, this is not happening.

From a sample of 25 interlocal agreements, auditors found that just six (or 24 percent) were recorded in the city’s systems, leaving 19 (or 76 percent) not recorded in the city’s systems. Staff from the Purchasing Office told auditors that while they are responsible for recording interlocal agreements, their authority is not clearly defined, so they have difficulty requiring departments to provide them with information on the agreements. Although they said they might be able to track interlocal agreements by checking City Council agendas, they said their office did not have sufficient personnel to do that task.

City Purchasing Officer James Scarboro told the committee that he and Chief Financial Officer Ed Van Eenoo agreed with all of the recommendations made by the audit relating to management of interlocal agreements.

According to the audit report, Van Eenoo will issue a memo to department directors notifying them about the audit and emphasizing that they have a responsibility to appropriately manage their interlocal agreements. Later, the audit report says, the chief financial officer “will initiate discussions with the city manager’s office to determine which city department and/or program-owner will assume long-term responsibility” for creating and managing the interlocal agreements. Van Eenoo expects to issue the initial notice to department directors by Dec. 1.

Scarboro will have the job of updating the city procurement manual before Van Eenoo gives notice to the department directors on Dec. 1.

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