Northampton County Controller Tara Zrinski formally presented her audit of Gracedale's retention bonuses to County Council yesterday. I previously posted her report (you can see it here), in which she determined that less than half of $5 million that Council authorized for employee retention bonuses was actually spent for that purpose. Council had requested the audit in March.
The $5 million in retention bonuses at Gracedale was part of a larger $15.5 million spending plan of federal pandemic funds at the nursing home, passed in 2022 by County Council. The only Council member to vote against bonuses was John Brown.
The audit makes no recommendations. Council member Ron Heckman asked if the Controller had any recommendation that future contributions like this be placed in a restricted account so that the funds can be tracked as spent. Zrinski and Lead Auditor Stacy Duke both stated that a controller makes no recommendations when it does an "agreed upon procedures" audit. It just presents its findings.
Council member John Goffredo, who like Heckman was participating by phone, was "very dissatisfied" because the audit fails to state specifically how these funds were spent after they were commingled with other funds. No matter how hard Zrinski and Duke tried to tell him that is impossible once funds are commingled, he kept insisting that the Controller could answer that question "with a little more work." Eventually, he was stopped by Finance Committee Chair John Brown, who said "we are going around in circles."
Stacy Duke later explained that the Gracedale general fund was exhausted the year in which the retention bonuses were poured into it, so all the funds were necessarily spent on Gracedale expenses. Gracedale was contacted to see if there were any tracking, spreadsheets, balance sheets or excel reports that would show expenditures being paid from money set aside for bonuses. There were none. "There was no tracking system. I'm not really sure how you can get a tracking system out of somebody who did not track it."
In response to questions from Council Prez Lori Vargo Heffner, Duke stated that the $5 million in retention bonuses was reported to the federal government as a "revenue loss." She indicated that Gracedale had $88 million revenue in 2023 but operating expenses of $116 million. So the $5 million was used for a "revenue loss."
Council member John Brown noted that retention bonuses were still being paid after 2023, even though the federal funds had already been exhausted. This means that the county would have been spending its own money for a portion of the $2.3 million paid out in retention bonuses. Duke agreed with his observation. He would like to know what county monies were moved over to Gracedale, but he acknowledged he would need to seek a new audit to get an answer. Given that county funds were used to pay retention bonuses after 2023, Brown questioned why they are not being used to pay career service employees now. He also wanted to know why Jennifer Stewart King, who was administrator for more than seven years, was never interviewed. "our audit staff does not have the power to compel somebody to give a statement," said Zrinski, who was battling a cold, allergies or both.
Brown concluded that the audit report was "misleading." He also expressed concern that the county moved money over to Gracedale in 2024 to cover a $8 million shortfall without a budget amendment or seeking Council's approval. "Someone's moving money without the authorization of this [Council]. ... This, along with the way monies are moved without being brought before this body is troublesome. They [the county administration] ignored or didn't honor the [council] resolution ... . There's a pattern of disregard for the checks and balances that are meant to be put in place."
Based on the points raised by Brown, there are still questions that need to be answered.