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Oregon auditors raise questions about millions of dollars in state agency spending

Oregon State Office Building

During the height of the COVID-19 global pandemic, the Oregon Housing and Community Services agency delivered millions of dollars in aid to try and prevent people from being evicted.

At the time, it was well documented the rollout was botched. People complained of waiting weeks without hearing about their applications and there were a myriad of technical difficulties.

It turns out, the agency also had no controls in place to ensure the federal money it sent to local programs aimed at helping struggling tenants was spent appropriately.

In an audit released this week by the Oregon Secretary of State’s office, auditors flagged more than $35 million across 10 state programs that serve the most vulnerable state residents as being possibly misspent.

The Oregon State Office Building in Portland, located in the Lloyd District, houses the state agency that handles chronic disease. The building overlooks the Pearl District, one of the healthiest parts of the state.

The Oregon State Office Building in Portland, located in the Lloyd District, houses the state agency that handles chronic disease. The building overlooks the Pearl District, one of the healthiest parts of the state.

Laura Klinkner / OPB

“Our financial audits are a critical part of keeping Oregon government accountable to its people,” Audits Director Kip Memmott said in a statement. “This year’s statewide audits found some significant issues that we think are important to bring to the attention of Oregonians, the Governor, and the Legislature.”

At the state’s housing agency, auditors found the lack of monitoring in the emergency rental assistance program was so pervasive that auditors issued what’s known as an “adverse” opinion for the first time in more than two decades. Basically, the controls put in place to monitor any misspent funds were so weak, that they would not prevent or even detect if the money was being spent incorrectly.

Auditors randomly tested 61 payments of emergency rental assistance. In one, they discovered a landlord was incorrectly paid $2,700. In another example, rent was doubled, resulting in an overpayment of $5,910. Officials also highlighted seven payments where rental assistance grants had already been paid, resulting in overpayments of $4,191.

The state’s housing agency didn’t dispute the findings.

“Had we not been operating during a global health pandemic and had we had adequate time and staffing, we would have addressed this issue more carefully as we have in previous years,” housing staff wrote in response to the audit. “However, given that this was a new program that lacked sufficient time and resources to design, launch and operate to meet the pressing needs of Oregonians facing eviction and homelessness, the work required unprecedented action that sometimes fell short of our usual standards for client assistance payment compliance.”

The audits were part of an annual review of how the state is complying with federal guidelines. It’s a requirement if the state wants to continue to receive federal assistance. In previous years, Oregon usually received about $12 billion each year from the federal government. But during the pandemic, that funding spiked. In 2022, Oregon received $21 billion in federal aid, according to the secretary of state’s office.

The audits this year are noteworthy because there are more documented cases of financial errors and questions about how the money was spent in previous years. What will happen as a result of the audits is unclear.

“It’s up to the federal granting agencies,” Tracey Gates, a principal auditor with the division said in a statement. “They are responsible for following up on our findings and only they have the authority to enforce grant requirements. This could include sanctions or a change in future funding, but it could also result in a clarifying change to the requirements.”

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