Executive Summary
Through the Good Government Hotline, the County Auditor’s Office received a report regarding Multnomah County Animal Services. Based on the tip, we reviewed whether Animal Services was using its restricted-use accounts to provide services to animals in its care and in the community.
Restricted-use accounts are accounts with specific purposes as outlined by a county resolution. The restricted-use accounts include donations from community members, and one of the accounts includes $25,000 set aside by the Board of County Commissioners each year.
Our investigation revealed that Animal Services didn’t adequately manage or oversee the restricted- use accounts, resulting in the inefficient use of county resources. We found that donations along with board allocations have outpaced spending in most years for each of the restricted-use accounts, leaving each restricted-use account with growing unspent balances over the last nearly five years. The significance of this is not the large balances themselves, but what these balances indicate: lost opportunities to use these funds to provide important and necessary services to animals and the community. People who donate to these restricted-use accounts have a reasonable expectation that the money they donate will be used to the benefit of animals in the community within a timely manner. Additionally, if the board sets aside resources in a given year for a specific purpose, it is reasonable to expect those funds will be used for that purpose during that year.
We recommend that Animal Services adopt policies and procedures for managing the restricted-use accounts. In particular, the policies and procedures should describe how the funds in the accounts will be spent to the benefit of animals in the community in a timely manner. To ensure that donations are used as expected and in a timely manner, we recommend that Animal Services pause soliciting for donations from the public until it develops a plan for using the funds, and has processes and procedures for spending funds from the restricted-use accounts.
Background
In 2009, the Multnomah County Budget and Finance Office directed the Animal Services Division to discontinue the trust funds it had been using to receive donations, and to establish restricted accounts. Restricted accounts are to be budgeted in the division's annual budget, and expenditure authority for the restricted accounts comes from the adoption of the annual budget by the board. The Budget and Finance Office created four restricted accounts for the FY2009 Animal Services Division budget. They are:
1. Dolly's Fund for veterinary medical expenses.
2. Adoption Outreach Fund to increase pet adoptions.
3. Shelter Dreams Fund to collect funds for capital improvements to the existing shelter and/or funds for a new shelter.
4. Spay/Neuter Fund to supplement spay/neuter surgeries for pet owners in financial need.
In 2015, the board adopted Resolution No. 2015-024. The resolution included the following statement:
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 provides some clarity 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 is provided on the Animal Services’ website. When a donor gives to a specific fund, they are giving for that fund’s described purpose (unless otherwise stipulated by the donor). Additionally, based on county resolution, any donation that is made to Animal Services that does not have a specific designation is to be to evenly split between Dolly’s Fund and the Adoption Outreach Fund.
Since at least June 1998, the board has set aside revenue generated from pet licensing to cover the cost of the county's public educational, spaying and neutering programs in the amount of $25,000 each year. These funds have been allocated to the Spay/Neuter Fund restricted-use account.
Investigation
Allegation
Through the Good Government Hotline, the County Auditor’s Office received a report regarding Multnomah County Animal Services. The report included general allegations about decreases in services available to the public and care for animals over the past several years. Based on the report, we reviewed whether Animal Services was using its restricted-use accounts to provide services to animals in its care and in the community.
Scope
We reviewed donations and spending with regard to the Adoption Outreach Fund, Dolly’s Fund, and the Spay/Neuter Fund, since July 1, 2018. There is also a Kitten Triage Fund (which is a sub-program of Dolly’s Fund), which we evaluated collectively as part of Dolly’s Fund. We looked in a cursory manner at the Shelter Dreams Capital Fund. Because it is an account set up for capital projects, we wouldn’t necessarily expect to see ongoing spending. It is worth noting, however, that funds in this account can be used not only for a future shelter, but for improvements to the current shelter, as well.
We reviewed Workday data regarding donations to the restricted-use accounts, and the overall spending from the accounts. (Workday is the county’s enterprise resource planning system, and tracks county revenues and expenditures.) We did not test expenditures for allowability. We spoke with Animal Services and Department of Community Services finance management to clarify information about the accounts.
Analysis
We found that Animal Services did not have clear policies and procedures in place for managing expenditures from the restricted-use accounts, nor did it have clear plans for how to use donations and board allocations. As a result, donations from thousands of individuals as well as annual board allocations that were intended for the benefit of animals in the community and in Animal Services’ care were left unused year over year.
Animal Services did not have clear policies and procedures in place for spending restricted-use funds
Governments have a responsibility for effectively managing public money. Particularly in the case of managing donated money, there is a fiduciary duty to manage funds with care. Clear policies and procedures benefit not only county administration, but community interests, as well. In this case, the county has the duty to consider the interests of the thousands of people who donated to one of the three restricted use-donation accounts.
While board allocations do not carry the same obligations as donations since the board can just as easily unallocate funds, there is an assumption that these funds will be used as outlined in the board resolutions.
Aside from Resolution 2015-024 and some guidance on accounting and coding for the receipt of donations, Animal Services policies and procedures do not describe how the restricted-use donation accounts should be spent. Though it would be reasonable for Animal Services to hold some funds in reserve, and large donations to a certain extent are unpredictable, clear policies and procedures would have provided Animal Services with a pathway to spending the donations and the board’s allocated funds.
Donations and board allocations have gone unused as a result of Animal Services’ lack of clear policies and procedures
We found that donations along with board allocations have outpaced spending in most years for each of the restricted-use accounts, leaving each restricted-use account with growing unspent balances over the last nearly five years. The significance of this is not the large balances themselves, but what these balances indicate: lost opportunities to use these funds to provide important and necessary services to animals and the community. The stated purpose of the Spay/Neuter fund, for example, is to support spay/neuter surgeries for low-income families; yet Animal Services spent just over $42,000 of this fund over the last nearly five years, and the fund had a balance of over $315,000 as of mid-May 2023.
From July 1, 2018 through mid-May 2023, Animal Services received over $2,077,000 to the three restricted-use accounts we reviewed. Across those nearly five years, Animal Services recorded just over $627,500 (30%) in expenditures against these accounts. As of mid-May 2023, the total current unspent balances combined across the three accounts we reviewed was about $2,066,000.
Animal Services has spent about 30% of the donations and board allocated funds it has received since July 1, 2018
From July 1, 2018 through mid-May 2023, Animal Services received some significant monetary-value donations. These donations included:
• In FY2019, MCAS received a $490,000 donation, split between the Adoption Outreach and Dolly’s Fund, from an estate settlement.
• In FY2021, MCAS received a $396,000 donation, split between the Adoption Outreach and Dolly’s Fund, from an estate settlement.
• In FY2022, MCAS received a $142,000 donation, split between the Adoption Outreach fund and Dolly’s Fund, from an estate settlement.
• In FY2023, MCAS received a $43,000 and $50,000 donation, both split between Adoption Outreach and Dolly’s Fund, from estate settlements.
The county’s fiscal year (FY) runs from July 1st to June 30th. FY2023 is currently in process.
Adoption Outreach Fund
Donations to the Adoption Outreach Fund have far outpaced spending over the last five years, and the account currently has an unspent balance of almost $995,000
The expenditures from the Adoption Outreach Fund appear very minimal compared to donations. From July 1, 2018 through mid-May of 2023, total expenditures were just 10% of total donations.
In general, donations significantly outpaced expenditures over the nearly five years we reviewed. This fund’s balance at the end of FY2022 was about $885,000, and was almost $995,000 as of mid-May 2023.
Dolly’s Fund
Dolly’s Fund received thousands of donations, totaling over $1 million over the last five years
It appears that Dolly’s Fund was more actively used than the other donation accounts. But as with the Adoption Outreach Fund, donations to Dolly’s Fund have far outpaced expenditures over the last five years.
In the FY2022 budget, Animal Services developed a one-time-only budget request to make use of some Dolly’s Fund money. This resulted in the greatest yearly expenditure from any of the accounts – about $256,000, mostly for personnel costs – and appears to be an example of how deliberate attention to the accounts can help with efficient and effective spending.
Nonetheless, the fund’s balance at the end of FY2022 was about $600,000, and was around $755,000 as of mid-May 2023.
Spay/Neuter Fund
Annual board allocations go unspent in most years for the Spay/Neuter fund, creating an unspent balance of over $315,000 as of mid-May 2023
While the Spay/Neuter fund receives $25,000 annually from board allocations, it receives far less money in donations compared to the Adoption Outreach and Dolly’s funds. Over the course of the past five years through mid-May 2023, the Spay/Neuter fund received $125,000 from board allocations plus about $18,000 in donations. Total expenses over that same period were about $42,000. The unspent balance of the account is over $315,000 as of mid-May 2023. 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.
Conclusion
Animal Services didn’t adequately manage or oversee the donations and board allocations to restricted-use accounts, resulting in inefficiency. Animal Services received thousands of individual donations over the nearly five-year period we reviewed, including some very large donations.
Additionally, the board allocated $125,000 over this same period to one of the restricted-use funds to cover the cost of the county's public educational, spaying and neutering programs. We found that Animal Services did not effectively use the donations and board allocations to provide services to the community as it relates to the animals in Animal Services care, spending only about 30% of funds received from July 1, 2018 through mid-May FY2023.
Animal Services and Department of Community Services Finance management told us that there were a number of factors at play that impacted Animal Services’ ability to spend the restricted-use funds. Management cited the impact of the COVID-19 shutdown, limited staff capacity, challenges in staffing shortages, gaps and changes in shelter leadership, and a lack of clear policies and procedures.
We accept that the impact of COVID-19 shutdown had an impact on Animal Services. In particular, the shelter was mostly closed to the public for almost three years. However, many of the services that could have been provided using donation funds did not require public access to the shelter: adoption outreach events and advertising, emergency surgeries and veterinary care, and spay/neuter surgeries on behalf of low-income community members. In our opinion, the failure to use donation account funds appears to be largely based on lack of clear policies, procedures, and planning.
It is worth noting that the current Animal Services Director and the Department of Community Services Finance Manager are new to their positions, and for the majority of the time period under our review were not responsible for the oversight of the restricted-use accounts. Current management expressed interest and willingness to adopt policies and procedures to spend the restricted-use accounts more efficiently and effectively.
Recommendations
1. Animal Services, within three months, should implement policies and procedures to ensure that the restricted-use accounts receive regular management and oversight, to ensure that donations and county board allocations to Animal Services are used timely for the benefit of animals and community members.
2. Animal Services should pause soliciting for donations from the public until it develops a plan for using the funds, and has processes and procedures for spending funds from the restricted- use accounts. This will help ensure donations are used as expected and in a timely manner.
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 are to deliver our findings to the Board of County Commissioners.
