RICHMOND, Va. -- Millions of federal dollars flowed into the City of Richmond during the beginning of the COVID-19 pandemic to help those who were struggling. Nearly two years later, the city's watchdog found black holes in the record-keeping of how that money was spent.
The city received about $40 million in CARES Act funding in the summer of 2020 which was meant to serve as immediate aid for impacted Richmonders. By December 2020, the city had already gone through 94% of it. CARES Act dollars strictly aimed to cover necessary costs incurred due to the public health emergency between March 2020 and December 2021.
4th District Council Member Kristen Nye, who sits on the audit committee, said the council and the mayor directed the city auditor, Lou Lassiter, to investigate how the money was spent in Richmond to catch any issues before having to file reports with the federal government.
“The whole purpose of doing the audit is not to do a 'gotcha.' It's more to find the holes in government and to make sure that as we move forward, that they're fixed," Nye said.
After reviewing the completed audit, Nye said she was concerned about gaps in cash distribution and that most of the issues listed in the audit involved the Office of Community Wealth Building, the city department which addresses poverty.
“Since then, there's been a change in leadership in that office, as well as some internal controls that have been put together," Nye said. "I personally will be monitoring that department."
Lassiter found issues in the following areas:
- The city gave nearly $20 million to third-party contractors to provide services during the pandemic. However, there was not adequate oversight or monitoring of grants to make sure recipients spent the money in accordance with standards listed in the contracts and in compliance with federal guidelines.
- At least $84,000 spent on rental assistance was noncompliant with federal standards or wasted on duplicate payments. Lassiter noted that the number is based on a small sample, and the total amount of ineligible payments may be significantly higher.
- Staff members who processed assistance for businesses and non-profits also participated in the screening and approval of applications. Lassiter also said he could not determine if $50,000 in business aid was spent allowably due to a lack of documentation of how the money was spent.
- More than $400,000 used to help Richmond Public Schools students with virtual learning was not spent effectively. Lassiter said proper controls, procedures, and training were not in place to ensure the program operated efficiently.
- The city did a poor job keeping records of more than $1 million worth of gift cards distributed to citizens. The auditor couldn't account for potentially dozens of cards that could total up to $44,000.
"My biggest concerns came from the items that were related to cash, like gift cards that were distributed. There were definitely some holes in tracking who received them," Nye said.
Mayor Levar Stoney agreed with the auditor that the city hall has room for improvement in money management.
“I think it comes down to better bookkeeping, right? And so more training on how we go about bookkeeping to make sure we can keep track of those dollars," Mayor Stoney said.
The mayor also defended the work of essential employees during the peak of the crisis.
“Remember, this was an emergency situation. And local government, that's where the rubber meets the road. We had to step in right away, make sure folks stayed in their homes, make sure folks got fed, and we did exactly that," Stoney said.
Lassiter made eight recommendations in which city departments can better document and manage funds in the future. He also suggested the city eliminate the use of gift cards for assistance moving forward.
All recommendations were accepted by city hall leaders, and Nye said she will make sure each change is met by the deadlines set forth by Lassiter.
“It's really important as we continue to take these ARPA [American Rescue Plan Act] dollars from the federal government that we are spending them wisely and that there is accountability for all those dollars," Nye said.
