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Policy & Services committee recommends council accept FY24 grant management audit
Summary
City Auditor presented findings that Palo Alto lacks coordinated oversight and central tracking of grants; staff agreed to update policy, use the new grant analyst for coordinated oversight and consider a central repository and improved reporting.
The Policy and Services Committee on Feb. 11 recommended that the full City Council accept the Office of the City Auditor's FY24 grant management audit, which found inconsistent grant oversight, gaps in recordkeeping and limited assessment of grant pursuit return-on-investment.
The audit, presented by City Auditor Kate Murdoch and project manager Claire Veasey, tested 15 grants across 10 departments and found the city's grant policy had not been updated since February 2004 and did not cover the full grant lifecycle. Veasey said the audit showed a lack of coordinated oversight led to inconsistencies across departments and increased the potential for noncompliance.
"For this audit, the Office of the City Auditor obtained grant records from FY22 to '24 and tested a sample of grants to assess grant management activities and internal controls across 10 departments," Veasey said. She recommended updating the grant policy to require departmental tracking, monitoring and formal close-out activities, increasing training, and assigning coordinated oversight to the city's newly hired grant analyst.
Audit findings included: grant application authorization checklists not completed for 11 of 15 sampled grants; grant agreements not distributed to all sponsoring departments; incomplete central repository of active grants (federal grants only are validated for the single audit); and eight of 15 sampled grants lacked formalized internal tracking such as project plans and timelines. The report also found Townsend Public Affairs, the city's external grant consultant, had not delivered some contract-specified deliverables, complicating performance assessment.
Assistant Director Christine Pross and Assistant City Manager (name on record) told the committee some tracking already occurs (capital projects are tracked within capital accounting and grant revenue is categorized by federal/state/local), and that the grant analyst and continued work with Townsend will help close gaps. Michael Hagerty, introduced at the meeting as the new grants manager/analyst, said he looks forward to implementing the audit recommendations.
Committee members acknowledged the city's grant program is expanding since the pandemic and supported directing staff to follow the auditors' recommendations. The committee voted to recommend council acceptance of the audit; the item will appear on the full council consent agenda.
The audit report recommended updating the grant policy, creating a central repository and accounts for easier tracking (SAP cost centers were suggested), formalizing reporting and performance measures, clarifying Townsend's deliverables, and assessing staff time spent on grant pursuits to measure return on investment. Administrative Services Department (ASD) agreed with the recommendations and said it will use the grant analyst to coordinate improvements.
The committee recorded no public comment on the audit. The matter now proceeds to the full City Council for final acceptance and any follow-up direction.
