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County staff warn of ARPA subrecipient noncompliance that could trigger federal reporting
Summary
Klamath County grants staff reported persistent documentation gaps and what they described as possible false claims by an ARPA subrecipient, saying the county may be required to report noncompliance to the U.S. Department of the Treasury Office of Inspector General if issues are not resolved.
Don Beatty, a county staff member overseeing grants and ARPA monitoring, told the Klamath County Board of Commissioners on Aug. 26 that one ARPA subrecipient has repeatedly failed to provide required documentation for reimbursement and that the county may be obligated to report the matter to federal authorities.
Beatty said the county takes subrecipient monitoring seriously and described recurring problems with one subrecipientincluding invoices consisting of screenshots, unexplained hourly claims and billing for text messages without supporting payroll or invoice records. "This is super concerning because there was not a shred of documentation," Beatty said.
Beatty said the agreement governing reimbursements did not go into effect until June 2023, yet some billed activity dated back to March 2021. He also said the subrecipient billed a company that had been deemed ineligible for federal funding because it is foreign-owned. "This is clearly a false claim, and it's not backed up," he said.
Beatty explained the county's legal exposure under the American Rescue Plan Act (ARPA): as the primary recipient, Klamath County is effectively a guarantor for subrecipients and can be held accountable for their noncompliance. He said the county's options if noncompliance persists include reporting to the Department of the Treasury Office of Inspector General and potentially repaying funds or facing other sanctions. "If the county doesn't report this noncompliance, we now are at risk," Beatty said.
Staff said they have requested payroll records, invoices and other substantiating documentation, and that responses were met with pushback and, ultimately, no adequate documentation. Beatty said the county has performed in-person monitoring for most ARPA subrecipients and that this case is an outlier among otherwise compliant recipients.
County staff and one commissioner agreed to pursue a short, one-page mapping from the subrecipient that aligns originally proposed benchmarks and deliverables to what has actually been achieved. Beatty said he will work with grants staff and the board's liaison to secure the materials and close the documentation gap.
The presentation included several numeric details provided by staff: the county's final ARPA award landed at about $444,295; subrecipients have drawn approximately $44,000 in the referenced instance; and the ARPA grant period ends in December 2026. Beatty repeatedly urged the board to address the matter proactively rather than wait for a federal audit.
The commissioners did not take a formal vote on enforcement actions during the meeting; staff said they will attempt to obtain the requested documentation and report back if outstanding issues remain.
