Report 97115 Summary - May 1998

Los Angeles County

:

The Office of AIDS Programs and Policy Can Improve Its Management of Grant Funds

Results in Brief

When allocating and spending funds for programs that address the needs of citizens living with Acquired Immune Deficiency Syndrome (AIDS), the Office of AIDS Programs and Policy (OAPP) for Los Angeles (L.A.) County generally follows the service priorities established by the local AIDS commission. However, the OAPP cannot ensure that it spends grant funds as the funding sources intend because it lacks an accurate time-reporting and cost-allocation system to properly charge its personnel costs to the appropriate federal or state grants. Further, the OAPP cannot be certain that its contractors spend AIDS funds as specified by federal and state grant programs.

Established in L.A. County in 1985 to administer AIDS services, the OAPP uses its grant funds to foster partnerships with the community in order to change the course of the epidemic and make certain that people living with AIDS receive needed services. These services range from child care and mental health services to outpatient medical care and transportation. Our audit focused on the OAPP's ability to allocate its available resources correctly and ensure that AIDS funds are spent appropriately.

In assessing whether the OAPP itself spends funds as the grant sources intend, we noted the following weaknesses in its use of funds for personnel costs:

• The OAPP spent nearly $547,000 of federal and state funds on employees who did not provide AIDS services. Five of the 40 employees we reviewed worked in other departments within L.A. County's Department of Health Services; however, the OAPP used AIDS funds to pay the salaries of these five employees.
  
  
• The OAPP did not charge salaries for 12 additional employees to the correct grants. Instead, the OAPP charged all 12 salaries to just one AIDS program, but the employees provided services benefiting multiple AIDS programs. The OAPP inappropriately charged these costs because it does not have a proper time-reporting and cost-allocation system.
  
  
• To maximize its grant funds, the OAPP inappropriately shifted personnel costs among various state and federal AIDS grants.
  
  
• The OAPP did not meet some commitments it had made in federal applications to use funds to pay salaries for specific staff working on AIDS projects related to the respective federal programs. Because these employees performed duties not specified in the application, the employees' work may not fulfill program objectives.

Further, in evaluating the OAPP's monitoring of service contractors, we found that it cannot ensure contractors spend AIDS funds as the funding sources intended. Specifically, we noted the following shortcomings in the monitoring system:

• The OAPP does not monitor its contracts regularly. During fiscal year 1996-97, it conducted program reviews covering only 5 percent of its contracts, and these contracts represent just $14 million of the $74 million awarded to contractors. The lack of oversight occurs because staff have many duties besides monitoring contracts, staff have insufficient training, and many positions are vacant.
  
  
• In the handful of contract reviews completed by contract monitors, OAPP findings revealed significant flaws in services rendered to individuals living with AIDS. These findings highlight the need for regular monitoring of all contracts so that the OAPP can detect and also prevent problems. For five of the six contract reviews we examined, OAPP monitors noted problems with the quality or medical appropriateness of the services contractors provided.
  
  
• Although the OAPP has identified certain contracts as high-risk, it has not monitored these high-risk contracts. Typically, the OAPP identifies contractors for medical outpatient services as the first priority for review because these contractors place the county and persons with AIDS at the highest risk. For fiscal year 1996-97, the OAPP did not review any of its 58 high-risk contracts. These contracts accounted for $16.4 million, or 22 percent, of all funds that the OAPP contracted to AIDS service providers.

Recommendations

To ensure that it properly charges personnel costs to federal and state programs and that it uses funds only for AIDS services, the OAPP should do the following:

• Cease using AIDS funds to pay for services unrelated to AIDS programs, review the activities of all AIDS employees, and obtain reimbursement for funds used improperly to pay for county administrative services.
  
  
• Develop a detailed time-reporting system for employees to properly report time spent on various programs. The OAPP could employ a time study to determine what percentage of time each employee spends on various programs and use this data to develop a cost-allocation plan that could be submitted to the federal government for approval. Further, the OAPP could use the cost-allocation and grant systems currently available through the county's automated reporting system.
  
  
• Discontinue improperly shifting employees between funding sources when the employees' duties do not change. Further, charge employees' time to the appropriate grants and honor all personnel commitments made in federal grant applications.

To increase its monitoring of contracts and to make sure its contractors provide appropriate AIDS services to eligible clients, the OAPP should consider implementing the following changes:

• Restructure duties to allow staff more time and verify that staff receive proper training to monitor contracts. Further, the OAPP should accelerate efforts to fill vacant management and contract monitor positions.
  
  
• Adhere to its contract monitoring plan, which identifies high-risk contracts as having the highest priority for review. Further, the OAPP should emphasize to its employees that contract monitoring is a key priority.

Agency Comments

The Office of AIDS Programs and Policy concurs with all of our findings and recommendations. Further, the office is taking steps to implement our recommendations.

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• Agencies/Departments Related to This Report:
  • Los Angeles County