BY JACOB SZETO

A Secretary of State Audits Division audit report questions if $1.46 million used by the Oregon Commission for the Blind was spent prudently or lawfully.

This audit was not random. It was initiated in March 2007 after the Secretary of State received allegations of mismanaged operations and misused funds. After substantiating several of the allegations, it was found that problems identified in several previous audits were still occurring.

According to the report, $61,000 was used for “purposes that did not always benefit clients and, in some cases, were not allowed by federal regulations.”

Recurring problems included questionable expenditures benefiting employees and non-clients, such as:

• $12,000 for a 7-day trip to the San Juan Islands for 21 participants, of whom only two were clients
• $19,000 for employees and non-clients to attend training and to participate in a healthy lifestyle pilot program
• $1,500 for 20 different food purchases with no documentation for business purpose
• $5,100 for a training and awards dinner in December 2006
• $3,100 for gift cards given to employees at the December 2006 awards dinner
• $1,300 for home internet services for six employees with no documented business purpose
• $600 for a gas barbeque

To put these numbers into perspective, consider that there are 49,919 blind people in Oregon. The Commission’s biennial budget was $15.3 million for 2007-2009 and served about 1,500 blind people in 2008. That breaks down to just over $5,000 for each person served per year, or 12 additional people who could have been served with the $61,000. This is especially relevant considering that the Commission now has a waiting list for services.

In addition to possible inappropriate expenditures, the audit report questions the purchasing process for $1.4 million spent on goods and services. State agencies have procedures for the procurement of goods and services to ensure optimal costs. For purchases over $5,000, generally competitive pricing processes must be followed. The Commission ignored these procedures, which may have resulted in less than optimal pricing.

According to the report, “The commission made some business decisions with little regard for established purchasing and planning processes and did not always ensure client purchases were necessary and reasonable.”

The audit report identifies several instances in which the client purchases were not “necessary and reasonable” and some in which they were excessive. Examples cited include:

• $5,000 for groceries for the staff, program materials and staff salary for healthy lifestyle classes
• $800 for a laptop computer for a client who already earned $70,000 a year, to work at home
• $700 for football jerseys to promote a clients’ coffee cart
• Leather jacket and two bottles of cologne for a client

A letter by the Commission in response to the audit report contests many of the findings and agrees with few. Specifically, the Commission argues that the healthy lifestyle program for the clients was justified.

The Commission states that many clients have “serious chronic health problems…which present significant barriers for these individuals to complete training or to work.” It is assumed that the program in part alleviates these barriers allowing clients to work and complete their training.

The Commission addresses the 7-day trip to the San Juan Islands by stating that they believe there is a direct correlation between work success and independent living, with participation in recreational activities. The Commission also notes that a deceased staff member donated funds specifically for the trip, but that donation does not include the $12,000 of public funds used for the trip.

Regarding $1,500 for undocumented food purchases, the Commission states: “We believe that each of the events…w[as] allowable under federal guidelines.” The Commission acknowledges the lack documentation and claims it is now certain that proper documentation is completed.

The Commission held a meeting with the Department of Administrative Services State Procurement Office to discuss its purchasing process. The commission states that after review, the Procurement Office did not find it necessary to implement any changes for compliance.

The Audit Division stands by their recommendations and findings, “The comments made in there stand” says Don Hamilton, Director of Communications.

Linda Mock has been with the Commission for 30 years and the agency administrator since 2000.  When asked if the audit report was a fair she stated “ I do not have anything to add to the responses found in the report and do not consider it appropriate for me to comment as to whether or not the audit reports are a fair representation.”

The committee is used to scrutiny. Since 1995, the committee has been subject to four audits. Three were initiated under specific recommendation or request and one under standard procedures.

In 1995 the Commission was subject to an audit because of a questionable loan to Blind Enterprises of Oregon, Inc. In this audit it was concluded that the Commission wasted $1.75 million and failed to “properly manage public money and assets entrusted to them.”

Four years later, the Legislative Assembly included a budget note recommending an audit of the Commission. This led to an audit in December 2000 by the Joint Legislative Audit Committee. In this audit the Audit Committee found that “agency expenditures were questionable and that the Commission exercises virtually no fiscal oversight.”

The 2000 audit report has three pages of questionable expenditures. Examples include parties, meetings and trainings at McMenamins, with one event costing $8,025. Also cited in the report is a $321 reimbursement for the Governor’s Hoe-Down, $300 for a Gala Dinner and Dance in San Francisco, and $300 for an employee’s overdue parking ticket.

The latest audit report has demonstrated that the Commission did not learn from its past mistakes.  “We make recommendations with the hope that they will follow them,” says Hamilton.  Without the authority to enforce the recommendations hope is all they have.  For now it is up to the legislators and the Commission.

Related Articles:

Audit reveals questionable spending by Oregon Commission for the Blind by Amy Reifenrath, The Oregonian