City Manager: City had little oversight on Health Gap's taxpayer spending

Read the full audit below

CINCINNATI -- City Manager Harry Black is seeking to recoup as much as $20,000 from the Center for Closing the Health Gap after the city audited how the nonprofit spent $2.75 million in taxpayer funds since 2012.

The audit revealed the city’s contract with the Health Gap was too vague, oversight of the nonprofit’s spending was lax, and questioned if the organization met performance measures.

The audit was released Thursday, two months after a WCPO investigation found the Health Gap, which is tasked with improving minority health in the city’s poorest neighborhoods, was billing the city for questionable expenses.

WCPO’s investigation found the Health Gap, in some cases, did not describe the work subcontractors performed, billed the city for work related to a political group and paid subcontractors before work was completed. 

RELATED: Cranley calls for audit into Health Gap after WCPO reveals questionable spending 

The city audit confirmed those findings, revealed more questionable billing practices and determined the city didn’t have proper controls in place over spending. The Health Gap is led by former Cincinnati mayor Dwight Tillery, and has collected nearly $3.8 million in city funds over the last decade.

"What this audit tells me is that the Health Gap is guilty of a lack of internal administrative oversight and quality control as it relates to the invoicing process…. That’s not a crime,” City Manager Harry Black said in an interview Thursday with WCPO. "And they’re not the only ones: As you know, we’re embarking on another audit of Keep Cincinnati Beautiful.”

Black is still recommending the city fully fund the Health Gap's request for $750,000 in next year's budget. 

"Even in the midst of this audit, the City Manager has placed the Health Gap in the City’s 2018-19 budget at a level of $750,000," Tillery said in a statement Friday. "Like with previous taxpayer dollars, that investment in the Health Gap will yield an extraordinary return in the improved health and well-being of our urban residents." 

Among the findings in the Health Gap’s audit:

  • City employees lacked proper training to review the nonprofit’s billings.
  • The Health Gap double-billed the city for $1,450 worth of consulting work. 
  • Some subcontractor and consulting work the city paid for lacked adequate descriptions of the work performed.
  • The contract was too vague for the city to enforce some of the terms.
  • The city was unable to verify if any of the 83 subcontractors, individuals and firms the Health Gap paid with taxpayer dollars during the last five years were eligible to do work with the city and were not behind on taxes. 
  • The Health Gap never conducted a wage study to see if any of those 83 subcontractors were being paid a fair or reasonable wage.
  • The city will seek reimbursement for expenses it paid for related to the Black Agenda, a local political advocacy group, and Cradle Cincinnati.
  • Subcontractors the city paid might have simultaneously been working as staffer for the Health Gap, which could expose the nonprofit to “penalties imposed by the Internal Revenue Service.” 

Both the city and the Health Gap, share in the blame for the findings, Black said.

"The city bears tremendous responsibility in this … but again that’s still no excuse for not doing complete or accurate work," he said. "All organizations have a professional responsibility."

 

Former mayor Dwight Tillery, CEO of Center for Closing the Health Gap, at Cincinnati city hall on March 15.


The Health Gap will need to be more specific about how it’s spending city taxpayer dollars in future years, according to the audit.

“The language with in the CHG contract creates difficulties in contract enforcement due to its broad scope and the lack of precise definitions of allowable costs,” the audit reads.

Tillery said in a statement Friday that the Health Gap is ready to meet any new standards the city imposes. 

"If more specific language and performance measures are requested as part of the City’s revamped internal review process, than we are more than pleased to comply," Tillery said. 

The city’s audit team also questioned how many people the Health Gap is actually reaching through programming and if the nonprofit is meeting the city’s performance standards.

For example, the Health Gap asked the city to measure its performance by how many people it reaches through a block-by-block health intervention program in Mount Auburn.

But when city auditors requested more detailed information – including names – of the people reached through that program, the Health Gap’s officials refused to provide a list, citing federal medical privacy laws.

“(The Health Gap’s) proposal of performance measurers in which they are either unwilling to invest the time into verifying or unwilling to allow for verification severely exacerbates the difficulty of contract enforcement,” the city’s audit reads.

As part of their contract with the city, the Health Gap was supposed to operate 11 to 14 healthy corner market stores. But when WCPO checked, it found only four were stocked with a variety of fresh fruits and vegetables. While Black admitted, "on that particular element of the contract they were lacking," he does not want the Health Gap stripped of future city funding.

But Black described the Health Gap as compliant through the two-month audit process.

“They’ve been cooperative, they’ve worked with us in terms of getting the audit done and I see no reason to penalize them in terms of cutting off funding," Black said.

He added that all nonprofits that get city funding will face stricter oversight as a result of the Health Gap’s audit.

The city is redoing all contracts with outside agencies that receive leveraged funding starting this year. Under these new uniform contracts, the scope of work that agencies perform in return for city dollars will be "very definitive and very clear," and performance measures will be tighter, Black said.

The city manager's office took over monitoring the Health Gap's contract from the Cincinnati Health Department four months ago, and Black wants to keep up that close oversight.

"We’ll do that until I’m comfortable that we have tightened things up and that we have put in place the appropriate internal controls and oversight mechanisms," Black said.

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