An internal audit has found half of the grant from the Louisville Metro Council lacked sufficient documentation to determine if the discretionary funds were spent as intended.
Last year, Council President Jim King, D-10, ordered the review in the wake of the ethics controversy involving former Councilwoman Judy Green, who was booted from office over misuse of Neighborhood Development Funds.
The audit looked at 117 grants over the past two fiscal years totaling more $1.9 million in taxpayer dollars and found no wrongdoing. However, it showed the majority of the council’s Neighborhood Development Funds had missing proof of payment, unallowable expenditures or poor documentation to account for the grants.
“The audit was difficult to conduct in that there was a lack of monitoring in place prior to the new administration being there,” says Internal Auditor Ingram Quick, adding the lack of documentation of the grants is troubling.
Among the findings are approximately $238,000 of expenditures in which proof of payment was not provided to the city. It also found inconsistencies and a vague criteria for non-profit groups receiving city funds, including over $6,500 in funds that were spent out of compliance with Metro Government rules.
The report specifically mentions Councilwoman Barbara Shanklin, D-2, who has been embroiled in a series of controversies as of late. The audit says Shanklin may have a conflict of interest in funding the Petersburg-Newburg Improvement Association because she is a board member.
“The Councilwoman’s relationship as a board member with the requesting organization was disclosed on the grant applications and grant agreements for both fiscal years reviewed,” the report says. “But the relationship was not disclosed on the Request for Neighborhood Development Funds attached to the ordinances appropriating the funds.”
During the review period, it was found that Shanklin signed 113 checks on behalf of the group totaling nearly $30,000. It has been reported that some of those city funds went to pay Shanklin's relatives and that family members are associates serve as the association's leaders.
Democratic Caucus spokesman Tony Hyatt says the administration of former Mayor Jerry Abramson failed to properly monitor the grants, and that Shanklin met with the auditor last year to clear up any discrepancies.
“The internal auditor told Councilwoman Shanklin at that time last year that she should not be writing any check for the association,” he says. “From that point forward, she did not.”
But Abramson's finance department had argued that making sure grants were spent properly was a function of the council.
The audit makes several recommendations for the Office of Management & Budget, Metro Council and non-profit groups. Lawmakers adopted some changes to discretionary fund policies last December, but the internal audit says officials should enact a system of an appropriate standard work program and budget for NDF projects as well.
The internal auditor's office also recommends grant applications accurately reflect the time period in which funds will be spent
“What you see in the audit is that some groups are really good at doing that and others are not so good,” says Chris Poynter, a spokesman for Mayor Greg Fischer, adding the new administration implemented policies last year requiring grant recipients to file quarterly reports. “One of the things that Steve Rowland, the chief financial officer is working with these groups to improve their reporting to make sure that folks are bringing us the documents so we have them on file.”