OFFICE OF THE CITY AUDITOR
Roland E. Smith
City Auditor

August 22, 2001

TO: HONORABLE IGNACIO DE LA FUENTE, PRESIDENT
AND MEMBERS OF THE OAKLAND CITY COUNCIL

Attn: Life Enrichment Committee, Finance & Management Committee

RE: REVIEW OF THE BUSHROD PARK BALLFIELDS GRANT

We have reviewed the Bushrod Park Ballfields Grant which the City of Oakland received from the State of California. The primary objective of our review was to determine the handling of the $114,000 grant payment check received from the State. Other objectives were to determine if this grant was obtained, administered and used in compliance with applicable City and State grant policies. The period of our review covered the grant application through the grant closeout periods.

The City Auditor is elected by the citizens of Oakland to serve as an officer in charge of an independent department auditing city government activities. The independence of the City Auditor is established by the City Charter.

In our opinion, the Bushrod Park Ballfields Grant was obtained and used in compliance with applicable policies. However, we found deficiencies in the fiscal administration of this grant as disclosed in the attached report.

Prepared by:

Lester Dun, CPA
Deputy Auditor City Auditor

Issued by:

Roland E. Smith, CPA
Deputy Auditor City Auditor

Report date: July 13, 2001

Distribution:

Dr. George Musgrove, Life Enrichment Agency
Dr. Harry Edwards, Office of Parks and Recreation

BACKGROUND

The City of Oakland received a State of California Per Capita Grant under the California Wildlife Coastal and Park Land Conservation Bond Act of 1988. This grant provided funding for acquisition, development, rehabilitation, and historic preservation projects to various City parks and recreation facilities. One of the projects funded was the Bushrod Park Ball Fields. The primary grant administrator for this project was the Life Enrichment Agency - Facilities, Planning and Development unit.

The Bushrod Park Ball Fields (BPBF) project improved two baseball fields and was funded primarily by a $114,000 grant. The improvements included constructing or replacing fencing, backstops, dugouts, bat racks, helmet racks, signs, playing fields, foul poles and a batting cage. The physical improvements started in May 1998 and completed in August 1998.

OBJECTIVES AND SCOPE

The primary objective of our review was to determine the handling of the $114,000 grant payment check received from the State. Other objectives were to determine if the grant was obtained, administered and used properly.

SUMMARY

Our review found that this grant was obtained and used properly in accordance with applicable City and State grant policies. The required City and State approvals were obtained as the project progressed. However, we found deficiencies in the fiscal administration of this grant. We also noted that City Administrative Instructions for grant administration are not current.

FINDINGS AND RECOMMENDATIONS

1. Fiscal Administration - Payment of Grant Funds

The Procedural Guide for the Per Capita Grant Program includes a Payments of Grant Funds provision which provides for grant payments that can be requested as the project progresses. The City did not take advantage of this progress payment provision. The City could have requested 10% of the grant amount, or $11,400, after the State authorized the project to proceed in November 1996. Also, the City could have requested 100% of the actual development cost, or $23,200, after the construction contract was awarded in April 1998. Instead, the City issued a reimbursement payment request for $114,000 to the State in May 1999.

Recommendation

The City should take advantage of advance or progress payment provisions specified in grants, contracts and agreements instead of using a cost reimbursement basis. This would improve the City's cash flow.

2. Fiscal Administration - Check Handling

As stated above, the City issued a reimbursement payment request for $114,000 to the State in May 1999. The State issued a payment check for $114,000 dated July 9, 1999 with a remittance advice addressed to the City of Oakland - Public Work. It appears that the check was received by the City on July 16, 1999. In early June 2000, the City received a call from the State to inquire of the $114,000 check which had not yet cleared the bank. The uncashed check was found in the desk of an employee who was on maternity leave. This desk was also used by other employees. There is no documentation nor information available to indicate the handling of this check from July 16, 1999 to May 2000. The check was eventually deposited by City Treasury on June 5, 2000. About eleven months had lapsed between the check date and the deposit date.

The above situation has various noncompliance issues with the City's Administrative Instruction (AI) Number 1022 on Revenue Handling. Specifically, there was noncompliance with the AI provisions for:

a. Promptly placing the check in a secure locked box or drawer,
b. Completing a bank deposit form, and
c. Submitting the deposit form and check to the Treasury Cashiering Office on the day the check was received.

Recommendation

The City should comply with Administrative Instruction Number 1022 on Revenue Handling to ensure that revenues are handled securely and deposited promptly.

3. Administrative Instructions for Grant Administration

The Administrative Instructions (AI) numbered 1050, 1051, 1052 and 1054 related to grant administration have been effective since 1977 and 1985. These AI are not current and accurate. The Financial Services Agency and Office of Fund Development and Government Relations have drafted a comprehensive AI on grants management to delineate the City's policies, procedures, responsibilities, and accountability regarding the establishment and management of grant funds and projects. This AI is being reviewed by the City Manager's office prior to distribution.

Recommendation

The City should continue its ongoing efforts to implement controls and procedures to improve grants management, to have meetings with departmental personnel to discuss grant monitoring and draw down procedures, and to train and recruit personnel.