State audit of Spokane’s Community, Housing and Human Services finds conflicts of interest, mishandling of money

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SPOKANE, Wash. — A state audit of Spokane’s Community, Housing and Human Services (CHHS) Department found instances of mishandling money and conflicts of interest, which the Auditor’s Office attributes to a former City Council member.

According to the city, findings included issues of procurement, subrecipient agreements, conflicts of interest and the gifting of public funds.

The State Auditor’s Office (SAO) reports CHHS circumvented City policy when it came to awarding contracts—ordinarily, the city posts ‘requests for proposals’ (RFPs) on their website, then performs risk assessments and evaluate proposals from potential subrecipients, or contractors. After this, they would choose a subrecipient and award them the agreement — for example, allowing an organization to run a homeless shelter for the city.

But, according to the audit, no evidence was found that CHHS posted any RFPs or held a competitive bidding process to award certain agreements.

In 2019, these agreements included $881,482, $740,000 and $495,841 for warming center shelter operations, though the SAO does not identify which shelter.

The report indicates two of these agreements appeared to be a conflict of interest; in one case, with a subrecipient agreement being awarded to an organization whose founders contributed to the City Council member’s mayoral election campaign, in another case, a CHHS department director helped award a subrecipient agreement to an organization, then resigned from the city department and went to work for that same organization.

Lastly, the audit reports CHHS reimbursed a consulting firm for two mortgage payments and a car loan, non-business expenses which totaled up to $2,453. SAO says department staff told them their director offered the reimbursement as an alternative to paying them for hours worked in their arrangement.

“Department staff felt pressure and influence from Department directors and those Department directors felt pressure and influence from a City Council member to approve projects, contracts, agreements and transactions that bypassed established internal controls, Department practices and the City’s adopted policies and procedures,” reads the SAO report.

The City says that in light of these findings, they will establish protocols related to purchasing, review existing procedures, and provide training on reporting potential fraud or abuse.

For the full report, you can read it on the State Auditor’s Office website.

After the publication of this story, former City Council President Ben Stuckart reached out to 4 News Now saying neither Jewels Helping Hand nor anyone in their organization ever donated to his campaign, despite never being explicitly mentioned in the audit findings.

Indeed, looking at the campaign contributions in the state Public Disclosure Commission (PDC) website reveals no donations from the organization.

Catholic Charities also addressed the audit findings, urging the city and SAO to re-review the report. The nonprofit argues that no one at Catholic Charities or the Spokane Low Income Housing Consortium implicated in the report was ever contacted or interviewed.

Additionally, Catholic Charities also contests that former CHHS director Kelly Keenan had any involvement in the contracting process for their warming shelter—Keenan stepped down from his position in October 2019, and Catholic Charities says they hired him “months after he left the [employment of] City of Spokane.”

Catholic Charities also disputed the audit findings and Mayor Woodward’s comments indicating “that there have been no policies and procedures in place at the City around subaward management.” The nonprofit says these policies and procedures have existed for years and have been posted online.