MuskogeePhoenix.com, Muskogee, OK

May 5, 2013

County, state auditors to discuss oversight duties

Questions arise over federal block grants

By D.E. Smoot
Phoenix Staff Writer

— Muskogee County commissioners authorized a request for the release of federal funds targeted for a port expansion project as questions arose about their oversight duties.

District 1 Commissioner Gene Wallace said conversations with Oklahoma State Auditor and Inspector’s Office employees muddled the answers. The ensuing confusion sparked a debate about auditors’ motives and the future of community block development block grant funded projects.

“It’s obvious they don’t understand our role in this, or we don’t understand the process,” Wallace said Monday, noting a pattern he believes is designed to discourage the receipt and use of federal funds for state and local projects. “Before this becomes an issue, somebody needs to sit down with the auditors to have this explained.”

Information received by commissioners indicates they have a duty to oversee and document work completed on projects funded by community development block grants. He said that level of oversight is “outside the framework of what we’ve done in the past” and exceeds the manpower they have available.

Questions about commissioners’ oversight duties came up as state auditors combed through county records during their annual audit. State officials said documentation for two earlier projects funded by community development block grants fell short of the county’s contractual obligations.

Trey Davis, public information for the state auditor’s office, said commissioners’ oversight duties are spelled out in the contract they have with the Oklahoma Department of Commerce. Davis said the state agency, as the “first sub-recipient” of those federal funds, contracts with counties to ensure compliance with federal requirements when grants are awarded for various projects.

County commissioners, Davis said, then have a duty to oversee the 14 compliance requirements of community development block grants are met. Davis said commissioners’ oversight duties increase when the county has no contract with a grant recipient or when the amount of a grant exceeds $500,000.

Davis, who said these contractual obligations have “been in place since the 1990s,” dispelled Wallace’s concerns about on-site monitoring of grant projects. He said the problem seen has more to do with documenting expenses.

“They are not out there inspecting the bolts and nuts and concrete, but they have to have enough documentation from the sub-recipient to show how these funds have been expended,” Davis said. “The oversight of the county is to make sure they have documentation — make sure the project is completed and make sure, or be able, to demonstrate how they ensured compliance by obtaining the appropriate documentation.”

Davis said what auditors are encountering at the county level is the presence of the initial documentation needed before the release of community development block grant funds. What has been missing in several counties across the state is the documentation of expenditures.

“The critical thing is we don’t want any of these funds to be in jeopardy because their was a failure to comply with any of these requirements,” Davis said. “This could result with the feds asking for those funds to be returned.”

Proceeds from the community development block grant discussed Monday will be used to expand the Port of Muskogee’s rail services. The expansion will include the installation of 2,700 linear feet of railroad tracks at its marshaling yard.

The project is being spurred by V&M TCA’s expansion project at the Port of Muskogee, which is expected to add “25 new, high-quality jobs.” V&M TCA, touted as the nation’s leading producer of seamless tubular products, plans to invest $11.8 million investment in its operations at the port.

Port officials estimate the expansion project will cost $505,000, with 75 percent to be funded by the grant or special financing. The port will be responsible for the remaining 25 percent of the expansion costs.

Commission Chairman Stephen Wright, District 2, appointed a committee to meet with state auditors to discuss oversight duties and compliance commitments.

Reach D.E. Smoot at (918) 684-2901 or dsmoot@muskogeephoenix.com.