Executive Summary
Last June, the Auditor's Office issued a Good Government Hotline Tip Report about Multnomah County Animal Service' use of its restricted-use donation accounts. In that report, we found that Animal Services didn't adequately manage or oversee the restricted-use donation accounts, resulting in the inefficient use of county resources.
We recently reviewed Fiscal Year 2024 (FY2024) activity of the Animal Services restricted-use donation accounts. We examined expenditures for Dolly's Fund, the Spay/Neuter Fund, and the Adoption Outreach Fund.
We found that while Animal Services significantly increased spending from the restricted-use donation accounts in FY2024, the increased spending was primarily the result of shifting existing expenses - which in years past had been paid for with General Fund money - to the donation accounts. Donations received for a restricted account should only be used for the restricted purposes.
The purpose of the donation accounts is to expand, enhance, and supplement services for animals and community members through innovative pilot programs, not replace General Fund support. Animal Services should use the donation accounts for their intended purposes.
Background
Restricted-use accounts
The Animal Services donation accounts are restricted-use accounts. According to Governmental Accounting Standards Board (GASB) standards, these funds must be spent only for the restricted purpose for which the account was established.
County policy on the Animal Services restricted-use donation accounts
In 2015, the board adopted Resolution No. 2015-024. The resolution included the following statement (emphasis added):
A growing number of citizens, public and private corporations and foundations are making generous private financial contributions to the Multnomah County Animal Services Division. The donated funds received are designated by the donors to assist the Division in its mission to provide expanded care and medical treatment for shelter animals, enhance adoption outreach programs, improve the shelter facility, and to supplement funding for medical and spay/neuter services for pet owners in financial need.
The resolution provided direction on how these accounts should be used, including that "funds received in the Restricted Accounts shall be expended by the Division in the expressed manner designated by the donor." A description of each restricted-use fund's purpose is provided in the resolution:
- Dolly's Fund for veterinary medical expenses.
- Adoption Outreach Fund to increase pet adoptions.
- Shelter Dreams Fund to collect funds for capital improvements to the existing shelter and/or funds for a new shelter.
- Spay/Neuter Fund to supplement spay/neuter surgeries for pet owners in financial need.
The resolution also set out a specific strategy for the donation accounts "to fund innovative, life-saving pilot programs."
2023 Hotline tip report
In June 2023, the Auditor's Office issued a Good Government Hotline Tip Report about Multnomah County Animal Services' use of its restricted-use donation accounts. In that report, we reviewed whether Animal Services was using these accounts to provide services to animals in its care and in the community.
We found that Animal Services did not have clear policies and procedures in place for managing expenditures from the restricted-use accounts. We also found that Animal Services did not have clear plans for how to use donations and board allocations. As a result, donations from thousands of individuals and annual board allocations intended for the benefit of animals in the community and in Animal Services' care were left unused year over year.
Tip report follow-up
We recently reviewed FY2024 activity of the Animal Services restricted-use donation accounts to determine whether Animal Services had changed its practices over the past year to ensure that donations were used to bolster services for shelter animals and animals in the community. In our review, we examined FY2024 expenditures from July 1, 2023 through May 1, 2024 for the three donation accounts we previously analyzed. As with our previous report, we did not review spending for the Shelter Dreams restricted-use account.
Spay/Neuter Fund
The 2015 Board of County Commissioners resolution states that the purpose of the Spay/Neuter Fund is "to supplement spay/neuter surgeries for pet owners in financial need." Animal Services' website reads that the "fund supports surgeries for low-income families."
In last year's report, we noted that there were very few expenditures from the Spay/Neuter Fund. In FY2024, spending from this account increased dramatically, to $311,115.
Animal Services used about $34,000 of the Spay/Neuter Fund to support Oregon Humane Society's Spay and Save program, which provides spay/neuter surgeries based on financial need.
Based on what Animal Services told us and our analysis, most of the spending from the Spay/Neuter Fund in FY2024 was for the spaying and neutering of unaltered animals adopted from Animal Services. Consideration of financial need was not a factor in the spaying or neutering of these animals, according to Animal Services.
Last year we wrote that "adopting clear policies and procedures around spending donation accounts could help direct spending of this fund, and allow more low-income families in the community the benefit of spay and neuter surgeries for their animals." Animal Services did adopt new policies and procedures around spending donations. But these procedures state that the Spay/Neuter Fund can be used to pay for spay/neuter vouchers for pets who are adopted from the shelter unaltered. This aspect of the policies and procedures is at odds with the resolution. The Board's resolution states that donations to the Spay/Neuter Fund are to be used to supplement spay/neuter surgeries for pet owners in financial need (emphasis added). Additionally, the Animal Services website states that the Spay/Neuter Fund is used to support surgeries for low-income families.
The origin of Resolution 2015-024 was a desire to steward the influx of donations to Animal Services in a way that would "provide expanded care and medical treatment for shelter animals, enhance adoption outreach programs, improve the shelter facility, and supplement funding for medical and spay/neuter surgeries for pet owners in financial need." The donations are intended to bolster available animal services, not replace ongoing General Fund support.
Animal Services should preserve the restricted-use donation funds for their intended purpose.
Adoption Outreach Fund
The purpose of the Adoption Outreach Fund as stated in the 2015 resolution is "to increase pet adoptions." Animal Services' website reads that the fund "helps us promote and increase adoptions of shelter animals. Donations support special outreach events, adoption advertising, and grooming expenses. Donations to this fund also improve facilities for animals we care for at the shelter."
After spending less than $11,000 from the Adoption Outreach Fund in FY2023, Animal Services spent over $195,000 in FY2024. The personnel costs of the Program Communication Coordinator (over $137,000) were the primary expense. Animal Services spent about $43,000 from this account towards advertising and about $14,000 toward other various costs.
Animal Services told us that they assigned the Program Communication Coordinator's salary to the Adoption Outreach Fund beginning in FY2024. This position had previously been paid for by General Fund dollars. While we acknowledge that the Program Communication Coordinator's job may have an effect to highlight adoptable animals, this way of spending money is solely an accounting change; it does not indicate an active effort to enhance adoption outreach efforts.
Animal Services should preserve the restricted-use donation funds for their intended purpose.
Dolly's Fund
Dolly's Fund, as described in Resolution 2015-24, is to be used for "veterinary medical expenses." Animal Services, on its website, further describes how donated funds will be used: "Donations made to this fund helps us provide medical care for animals in need of emergency surgeries and veterinary care before they can be placed into a new home."
Emergency veterinary care provided by DoveLewis Emergency Veterinary Hospital was the source of the vast majority of spending ($145,816) from Dolly's Fund. However, Animal Services also used Dolly's Fund to pay for spay/neuter adoption vouchers.
As stated previously, donation accounts are intended to expand, improve, enhance, and supplement services. Animal Services should preserve the restricted-use donation funds for their intended purpose.
Conclusion
We found that while Animal Services significantly increased spending from the restricted-use donation accounts in FY2024, the increased spending was primarily the result of shifting already existing expenses from the General Fund to the donation accounts. The purpose of the donation accounts is to expand, enhance, and supplement services for animals and community members through innovative pilot programs, not replace General Fund support.
Animal Services management told us they shifted these expenses based on budget constraints, lack of capacity, and accelerating veterinary expenses. Management also told us they recently hired a second veterinarian, which should help with the shelter's ability to complete more spay and neuter surgeries in-house.
Recommendations
- Animal Services should preserve donation funds for their intended purpose, in particular by developing innovative, pilot programs as described in Resolution 2015-024.
About Hotline Investigations
A hotline investigation is not an audit. We follow our detailed procedures in the investigation of hotline tips, which include a preliminary review of the tip and an investigation when our preliminary review indicates it is necessary.
We follow all of the requirements of Oregon Revised Statute 297.765, Policies and Procedures for Local Government Waste Hotlines. Our compliance with ORS 297.765 requires us to determine in writing whether activities are occurring that constitute waste, inefficiency, or abuse. The statute allows us to include other pertinent information in our determination. When we determine that waste, inefficiency, or abuse has occurred, we deliver our findings to the Board of County Commissioners.