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Audit: City Council awards millions in grants with no competition and little oversight

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The Portland City Council awards millions of dollars worth of grants every year without competitive bidding and mostly does not verify that the money is spent as intended or achieves the intended results, according to an audit released Thursday by City Auditor Mary Hull Caballero.

The audit found grants totaling $9 million to $17 million a year for the past five fiscal years that went to outside organizations for activities ranging from arts performances to social service programs. Many of these grants are for activities that don't fit comfortably into the city's bureau structure, and are administered out of the offices of the mayor and commissioners, where the staff is not trained to oversee them, according to the audit.

"The City Council does not conduct any upfront planning to define the program objectives for grants they fund, but instead provides grants directly to specific organizations and activities. There is no competition to ensure that public money is provided to organizations best able to provide the services. "Transparency of these grant awards is also limited, and it is difficult for the public to track who receives grants," reads the audit, titled, "City Council Grants: No competition and limited oversight."

The audit can be read at www.portlandonline.com/auditor/index.cfm?c=69674&a=560518.

Examples of recent grants include: $1.3 million for a downtown sobering station; $561,000 for community college scholarships; $190,000 for the Symphony in the Park program; $75,000 for tax preparation assistance; $50,000 for a community learning center for sustainable food systems; and $40,000 for youth work force development.

"The organizations receiving grants directly from City Council may be excellent organizations providing critical services to Portlanders. But there are many excellent organizations providing critical services in Portland. Without a competitive grant selection process, Council can’t know if they are funding the most effective organization — and if an organization doesn’t know to request grants directly from Council, it would never have an opportunity to receive a grant. Once funded, the inconsistent approach to contract monitoring leaves the City at risk of paying for activities that are not fully delivered, or not delivered well," the audit reads.

According to the audit, although all grants over $5,000 must be approved by the council, requesting them is an informal process between the mayor and commissioners and not always accompanied by self-explanatory paperwork. In addition, once grants are approved, they are frequently added to the base city budget and the expenditures continue for years without further review.

The audit says some grants may have been missed and the total spending may be higher because of problems identifying all of them.

To help resolve the problems, the audit recommends the council and City Budget Office issue new rules and guidelines for awarding them, develop new procedures for tracking them better, and approve a system for reporting outcomes to the council.

In a Jan. 15 letter of response, Mayor Charlie Hales and Budget Director Andrew Scott say the council is aware of the problems and has taken steps in recent years to assert more control over the grants. They did not say, however, that the council will end such grants.

According to the letter, recent steps include the drafting of a Special Appropriations Grant Management Guide and the creation of a Special Appropriations Request Form to better manage and track such grants.

"Please express our gratitude to your staff for their work on this audit. We appreciate the opportunity to improve the transparency and management of City Council grants. We look forward to working with our valued grantees to forge an even better partnership in order to provide the most efficient, effective, and equitable services for our community," the letter says.