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Audit: California could have to repay feds millions in misused pandemic aid

A new audit rips California's prison oversight board for funneling federal relief money to the corrections department instead of struggling counties and cities.

SACRAMENTO, Calif. (CN) — A California agency loosely doled out pandemic relief and the state could be forced to return millions of misused funds to the federal government, according to an audit released Thursday.

Overseeing federal aid available to cash-strapped local governments, a new report claims a state agency mismanaged a nearly $60 million stipend by dishing out funds to the California Department of Corrections and Rehabilitation (CDCR) without justification. Auditors say the questionable awards came at the expense of counties and cities that were buckling financially under the weight of the pandemic.

“The Board of State and Community Corrections failed to require CDCR to justify the need for the additional funds or gain assurance that CDCR was effectively or fully spending its initial allocation,” the audit states. “As a result of this failure, community corrections risks one or more actions related to the funds, including the possibility that it may have to return unspent or misused funds to the federal government.”

At issue is California’s share of $850 million in federal funding distributed by the U.S. Department of Justice as part of the overarching 2020 CARES Act.

To qualify for the funding, community corrections told the feds it would distribute a total of $59 million in aid to state, county, city and tribal agencies based on a predetermined formula. In addition, the agency stated recipients would have to first explicitly explain how the pandemic relief would be used.

But according to State Auditor Elaine Howle, the agency’s promised stewardship vanished shortly after the federal funds arrived when it offered CDCR an unsolicited $15 million grant. Board members ultimately approved the award during an emergency meeting in July 2020, stating it would help CDCR’s charge to reduce prison populations. It followed up with another $7 million award just eight months later, again without requiring CDR to justify its need for the aid.  

After giving out the awards, Howle says the agency didn’t even bother to monitor CDCR’s use of the massive sum until her auditors came knocking in June 2021. Investigators found CDCR hadn’t fully spent the initial award when it was given the additional $7 million.

While the pandemic funding was apparently fastracked to CDCR, local governments were required to wade through an “overly burdensome” application process, the audit states.

Howle says aid didn’t reach counties until April 2021 and by that point, many were so turned off by the bureaucratic red tape they didn’t even apply. She ripped the agency for catering to CDCR and picking favorites among the state’s 58 counties.

“It awarded funds to some counties that did not meet the requirements,” the audit continues. “As a result, community corrections provided these counties an unfair advantage over counties that did not apply because they believed they could not meet the requirements.”

Created in 2012, the independent agency is charged with advising the state’s adult and juvenile criminal justice systems and conducting relevant inspections of corrections facilities. The 13-member board is appointed by the governor and Legislature and administers a range of public safety-related grants.

In response to the audit, the agency says it had broad discretion over the funds and that the $22 million was justified due to Governor Gavin Newsom’s order to release inmates and stem the spread of Covid-19 within the prison system.

“Addressing the housing and other reentry needs of 8,000 people being released from prison was an urgent and compelling need,” the agency’s executive director Kathleen Howard wrote in a response letter.

Howard also pushed back on the notion the agency negatively affected counties’ response to the pandemic, noting the $59 million represents less than 1% of the $9.5 billion awarded to the state by Congress. She also claimed the federal government has not raised any concerns about how the agency used the funds.

“The auditor’s concerns are misplaced,” said Howard.

Unsatisfied, Howle called the agency’s response to the audit “misleading and deficient.”

“Although the amount of coronavirus emergency supplemental funding in comparison to other funding sources may have been smaller, it does not alleviate community corrections from the responsibility to disburse funds to counties in an urgent manner,” Howle countered.

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