Controller: $5 million ARPA allotment for Gracedale was transferred, commingled and expended; audit confirms $2.36 million in bonuses paid

The Northampton County controller’s office on June 17 released an agreed‑upon‑procedures audit examining how $5,000,000 in American Rescue Plan Act (ARPA) funds that County Council designated for retention bonuses at Gracedale were handled.

The audit found that $2,360,891.18 in retention bonuses was paid to eligible Gracedale employees between 2022 and April 13, 2025, and that no per‑diem staff or senior administrators received retention bonuses. Of that total, auditors reported $2,204,441.08 was disbursed in 2022–2024 and $156,450.10 was paid in 2025 as of the April 13 pay period. The audit said union memoranda of understanding (MOUs) and contract provisions governed the payments and that the county amended union contracts to reflect retention‑bonus terms.

Controller Zareczki said the office delivered a draft report on May 28 and emphasized the audit was limited to the agreed‑upon procedures agreed with council and staff. The auditors tested a sample of employees and reported the sampled payments matched the program rules; auditors noted minor timing and administrative irregularities, such as catch‑up payments made for prior years, but no overpayments to sampled employees.

The audit also found that, after the ARPA funds were transferred into Gracedale’s fund in 2023, those dollars were not tracked separately and were commingled with other county contributions and Gracedale operating funds. Because the ARPA funds were mixed into the general Gracedale account and that account was spent down, the controller’s office said it could not trace which specific operating expenses were paid with ARPA dollars. The audit report states: "There is no way to specifically determine what the money was used for at Gracedale besides what was indicated by the previous management," and that the funds were spent down by the end of 2023.

Auditors told the committee they were conducting an agreed‑upon‑procedures (AUP) engagement, not a performance or forensic audit. Senior lead auditor Stacy Duke told council members, "on an A.U.P. … we cannot make any recommendations," noting that AUP standards limit the office to reporting facts and findings defined in the engagement letter. Several council members asked whether the controller’s office would recommend governance changes; the auditors said those recommendations were outside the scope of the AUP and referred questions about ongoing accounting practice to Fiscal Affairs.

Council members pressed for additional information about how the ARPA funds were reported to federal grantors and how the county accounted for the transfer into Gracedale. Auditors said they validated the retention‑bonus calculations and reviewed balance sheets and payroll records, and that they had reviewed Brandon's spreadsheet used to show the ARPA allocation, but that verifying federal reporting or reconstructing a penny‑by‑penny trail of expenditures would require a different audit scope.

Council members asked whether the situation exposed a policy problem for future one‑time funding. Council member Ron Heckman said he wanted to “prevent something like this from happening again,” pressing for future controls if large, purpose‑restricted grants or emergency dollars are handed to operating entities. Auditors and staff recommended follow‑up with Fiscal Affairs and the administration on accounting controls and the possibility of separate restricted accounting for one‑time funds, but the AUP did not include prescriptive recommendations.

The audit listed the contract and labor documents that governed payments: union contracts (AFSCME and Steelworkers) amended for retention bonuses, and noted career‑service employees were paid in a manner consistent with the union terms where applicable. The audit documented that the Steelworkers' retention bonus provision sunset on Dec. 31, 2023, while AFSCME employees remained eligible through Dec. 31, 2025; career‑service employees were later notified that ARPA funding for bonuses had been exhausted.

No formal vote or formal corrective action was recorded during the finance committee meeting; council members asked Fiscal Affairs and the administration to provide more detailed budget and federal‑reporting information at a later session.

Why this matters: County Council in 2022 passed a resolution allocating federal ARPA dollars to Gracedale specifically for retention bonuses. The controller’s report confirms bonuses were paid but documents that most of the $5 million designated for the program was transferred into Gracedale’s general fund and could not be separately traced once commingled, reducing the financial transparency council sought when it passed the resolution.

What’s next: Auditors recommended follow‑up with Fiscal Affairs and the administration for accounting detail beyond the AUP scope; several council members urged the county to explore accounting or policy changes so future, purpose‑restricted funds can be tracked separately.