The City of Austin is not only collecting increasingly more of its citizens’ money, but a new audit shows they’re spending it without any oversight.
At the city’s Audit and Finance Committee meeting Wednesday morning, city auditors presented a concerning report about Austin’s Matched Savings Account Program.
The program works as follows: low-income residents can apply for a savings account and, if approved, deposit money that the city matches 8 to 1. If they deposit $500, they receive $4,000 courtesy of the taxpayer. It is intended to help residents save for education, home ownership, or invest in their small business. Since 2013, the program has given out around $300,000 of its available $600,000, though the rest is already committed to pending applicants.
The audit shows that a disaster occurred in the oversight of taxpayer money. Seventy-two percent of the account cases had problems, from missing documentation to violations of program guidelines. The report says, “Management routinely authorized use of program funds even though supporting documentation was missing from authorization packets.”
Yet it gets much worse. “Staff reported that it is not their job to consider whether or not a participant may be misstating or misrepresenting their financial situation when applying to the program,” according to the audit.
Auditors also “found evidence that the City’s credit card policy was violated, that oversight over credit card purchases was particularly lax, and that purchasing practices using the City’s credit card may increase the risk of fraud.”
“We determined that there is no oversight over some major problematic decisions, such as determining applicant eligibility or the legitimacy of purchases. In effect, decisions are made by a single employee, with no review.”
The audit addresses abject failures in due diligence, stewardship, and the lack of any follow-up on how the money was spent. Among many startling statistics is the fact that out of all the small businesses that applied for the program, only 34 percent had an active online presence. An additional 34 percent had no traceable online presence at all.
Committee members had a slew of questions in the hour-long discussion. In an exchange with the Auditor-in-Charge, District 8 Council Member Ellen Troxclair remarked:
“If the purpose is to transfer money to someone’s business account and 30 percent didn’t even have business accounts, and we don’t have follow-up documentation to know what the money was spent on… then we’re just giving people a check for $4,000 and transferring it to their personal bank account. There’s no way for us to know that there’s not outright fraud happening.”
“Exactly,” Mary Dory, the Auditor-in-Charge replied. “That’s one of the concerns particularly with the business program… All we can see is that we don’t know what happened to the funds necessarily, which raises a lot of red flags.”
District 10 Council Member Alison Alter noted this disturbing problem is also happening across other city programs:
“I think this also points to a broader issue, we have programs and we have no idea if they’re making a result and we’re just throwing money at a wall hoping that we hit some target that we’ve set,” she said. “This is happening over and over again in housing, in homelessness, in cultural arts, in workforce development—we have got to get a handle on this.”
Half of the Matched Savings Account program’s money came from the federal government, which is discontinuing its funding in March. Austin will soon have to decide whether to continue the program entirely at the city’s expense.
Austin families are struggling to afford living in the city, while the local government is taking more of their paycheck to carelessly throw away on ineffective programs.
The only way to change this trend is for residents to contact their council members or elect different representatives.