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Oregon auditors flag millions in misspent money in state agencies 

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Oregon auditors flag millions in misspent money in state agencies 

Sep 20, 2023 | 6:43 pm ET
By Ben Botkin
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Oregon auditors flag millions in misspent money in state agencies 
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The Oregon Secretary of State's Office is in Salem. (Michael Romanos/Oregon Capital Chronicle)

Oregon Secretary of State auditors unearthed millions of misappropriated dollars and a lack of oversight and accountability in four state agencies,  according to an audit released Wednesday.

In all, state auditors flagged $35.2 million of questionable spending within the Oregon Department of Human Services, Oregon Health Authority, Oregon Housing and Community Services and Higher Education Coordinating Commission. Auditors found suspect expenditures in federally funded programs that provide emergency rental assistance, help with utility bills and grants for drug addiction treatment programs.

“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.”

The review of federally funded programs comes after the pandemic, when federal funding to Oregon grew and state officials scrambled to get money to help people stay in their homes and access health care. In fiscal year 2022, Oregon received $21 billion in federal aid, nearly double what the state usually received.

The $35.2 million – called “questioned costs” – is expenditures that were paid with federal dollars and should have been funded by the state. They include overpayments to landlords, misappropriated money for renovations and money that’s not tracked appropriately.

“It serves as a flag for federal funding agencies to review the findings and then decide whether the costs are allowable,” Tracey Gates, a principal auditor, said in a statement.

Various issues

Auditors determined the emergency rental assistance program, run by Oregon Housing and Family Services, lacked the necessary safeguards to prevent or detect misspent money.

The agency, for example, did not monitor community organizations that received rent payments and overpaid landlords. The auditors identified $11.2 million in questionable spending, including overpayments, across the state, the report said.

In its response, the housing agency blamed the pandemic, short-staffing and the rapid launch of the program to prevent homelessness on the misspending.

“The work required unprecedented action that sometimes fell short of our usual standards for client assistance payment compliance,” the agency said. “OHCS will use these lessons moving forward should we operate future emergency programs to move towards best practices.”

Auditors also found public schools received federal pandemic food funding for school children while offering fully virtual classes. The funding in question – about $17 million – represents just 3% of the $568 million spent on the pandemic program. 

The Oregon Department of Human Services, in its response, disagreed with the finding and said it followed established federal guidelines to track eligibility.

In another instance, auditors found the Oregon Health Authority gave a $525,272 federal mental health grant to a provider for remodeling a facility – an amount that exceeds the threshold in that federal program. In its response, the health authority said it is awaiting a final review of its expenditures and will request approval from the federal agency if necessary.

At the Higher Education Coordinating Commission, auditors found the agency spent nearly $48,000 of federal money to help Oregonians train and find jobs one year later than the grant allowed. The grant covered a three-year period that ended in 2021 and the agency was still spending the money in 2022. 

The agency agreed with the finding and said it is training staff.