NorCo Controller's Office Faces Tough Questions Concerning Gracedale Retention Bonus Audit

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.  

McClure Blasted By NorCo Council Members Over Unpaid Retention Bonuses They Authorized

Yesterday, I published NorCo Controller Tara Zrinski's audit of $5 million in federal pandemic funds approved by County Council in 2022 for retention bonuses at Gracedale over a period of five years.  Her review was the result of a request from Council after several members received complaints from career service (nonunion) employees that they had been told there would be no more bonuses. Those employees were right. Zrinski's financial inspection revealed that less than half ($2.36 million) had been paid to staff. The rest of the money was commingled with other funds and used for Gracedale expenses. 

Last night, Executive Lamont McClure tried to explain what happened. He called everything political. He blamed Gracedale workers for excessive overtime, which amounted to $8 million in 2022 and 2023. He threw former administrator Jennifer Stewart under the bus for allowing it. He blamed media coverage of Gracedale and Council oversight for poor morale.  He talked about having fired people. He talked about shortfalls in an annual intergovernmental grant. He said Gracedale is owed $5.5 million from Medicaid residents, who take 325 days to receive approval. He even tried to claim, somewhat disingenuously, that he had told Council that retention bonuses were exhausted during a Human Services Committee last year, although that was only with respect to a county union that received higher pay. At no time did he actually acknowledge that his administration had defied a Council appropriation of $5 million for retention bonuses. He claimed he was unaware of what was happening at Gracedale until last year, but he's the Executive. Frankly, this was his mistake, and he should have apologized. 

Council member John Goffredo immediately asked, "Is it not your responsibility to make sure the money is spent the way the resolution [approving $5 million in Gracedale retention bonuses] stated?"

McClure: "It is our responsibility to do our level best to do that, but they [Gracedale] spent that money down, unbeknownst to me. My permission was never sought, nor was I told they were spending that money down, and I assumed incorrectly that the money had had separate line items."

He admitted, as Council members John Brown and Goffredo had asserted in previous meetings, that Gracedale was "wasting money" in 2024, and that when he learned of it, "we immediately went into action." 

Goffredo was suspicious of McClure's explanation. "There's not too many things that go on in this building that get by you." He also wondered what McClure intends to do about career service workers who were "cheated" out of retention bonuses. "We didn't cheat them out of anything," responded McClure. "That money was spent on overtime." 

Although Goffredo was tough on McClure, Brown was even rougher. In his usual monotone, he called McClure's explanation a "nice fairy tale". "If you tell me that you didn't know what was going on and that the Director of Finance didn't know what was going on, then that really points to incompetence. ... I don't believe a thing you just said. I believe it's a cover-up."

At this point, McClure said Brown was "desperate" to sell the nursing home. "You ran it nearly into the ground when you were county executive." McClure said Gracedale is now a four-star home with a census over 500 and its financial position is improving. He also accused Brown of seeking the audit for political reasons. "We've been working on this for a year. It wasn't just since your politically motivated audit." 

Goffredo then asked McClure why he only is sharing these problems at Gracedale now. "Why would you do this all in secrecy? ... You've never done a very good job of including us, Democrats and Republicans alike, aside from the three that you funded and gave campaign contributions to sit on this Council."

McClure explained that there were two reasons. First, a lot of what was going on involved personnel matters, which are confidential. He acknowledged that he could have asked for an executive session to discuss the matter. Second, he blamed the "constant picking at Gracedale" makes it more difficult to recruit and retain and lowers morale. 

This "constant picking" is called oversight and is a Council obligation. It is nonexistent at private homes, but that's just one of many prices paid for a public nursing facility. 

Goffredo then got rougher than Brown and said that a "cult of personality" surrounds McClure, and if you don't go his way, "you get shocked."

McClure: "Who got shocked because they didn't follow McClure's way? Name a name."

Goffredo: "Dertinger got shocked when he had the election issue. ... Who got shocked at Gracedale recently? Do you want to answer that question or do we have to go into executive session?" 

Council member Kelly Keegan defended McClure, stated that she had listened three times to McClure's statement, made nearly a year ago at a Council committee, that retention bonuses were finished. At that time, a union contract was being discussed, and it is my understanding that McClure was referring to that bargaining unit and perhaps one other. His statement was by no means "clear," as Keegan asserted. She apparently was unaware that career service is not part of any bargaining unit, and Goffredo noted they were "screwed." 

Keegan also accused Brown and Goffredo of seeking the audit before the primary in order to make either Zrinski, McClure or both look bad. "You were throwing anything up against the wall to see what would stick."  

Council member Jeff Warren said that he wanted to see an audit, but that the 20-day time frame sought by Brown was politically motivated, 

Council President Lori Vargo Heffner wrapped things up. She said the audit was motivated by employees reaching out to say they did not receive retention bonuses that Council had approved. Vargo Heffner also explained that she and Zrinski had agreed on a date for her appearance before Council to discuss her audit, so it was inappropriate to slam the Controller, as Goffredo and Brown did. 

She then noted Council voted to approve those retention bonuses. "Moving that money without coming back to Council, not being transparent with Council over all these years, and just shifting federal money without discussing it, I'm very concerned about the status of this county. ... I don't believe you. ... This is a body that needs to do its job and it needs to be respected."

"You should stop using your gavel to undermine Gracedale," snarked McClure.  

He misses the point. It is his administration's actions that has undermined the home. In the end, this is about an Executive branch in all levels of government, from local to national levels, that has simply grown too powerful. Northampton County Council must be a check on Executive overreach.  

I do believe McClure's explanation, but he handled himself poorly. He screwed up and needs to acknowledge that he screwed up. But his last remark to Vargo Heffner reveals he's willing to blame everyone else but should really be looking at where he went wrong. 

NorCo Controller Audit: About Half of $5 Million in Retention Bonuses Paid To Employees

Back in March, NorCo Council member John Brown wanted to know what happened to $5 million in retention bonuses, set aside by Council for Gracedale employees. By a 8-1 vote, Council tasked Controller Tara Zrinski with finding out how much money had been spent, and what was left. Brown was the sole dissenter, and that was because he wanted a report within 20 days. 

Council had the right to wonder what had happened. They, and not the Executive, control the purse strings. And it is they who directed that $5 million in federal pandemic funds be used to stop the bleeding of nursing home staff. They actually did so at the request of Executive Lamont McClure.

The $5 million in retention bonuses at Gracedale was part of a larger $15.5 million spending plan at Gracedale, passed in 2022 by County Council. The only Council member to vote against bonuses was John Brown. 

McClure had told Council that the administration would pay all employees at Gracedale an annual $2,500 bonus over a period of four years to bring in 54-60 additional nursing staff and enable the nursing home to provide the required nursing care needed at the facility.

"If you're a CNA [certified nurse's aid] within the sound of my voice, it would be a really good time to come to Gracedale," he said at the time, and repeated it several times. 

That was then. 

Early this year, on January 16, career service workers at Gracedale received an email from nursing home administrators informing them these bonuses were "temporary," were being stopped and that "the remainder has been used for caring for our residents." 

So what happened? 

At the time, I believed I had a partial answer. I speculated that retention bonuses set aside for some bargaining units may have been negotiated away in exchange for higher salaries. At that time, in response to a direct question from Council member Tom Giovanni, McClure said that the bonuses had ended, but that was only with respect to one of several bargaining units. I had no explanation for career service workers. We now know because Controller Tara Zrinski has finished her audit of this money. You can see her news release as well as the actual audit below. 

Zrinski's audit concludes that, of the $5 million approved for retention bonuses, only $2.36 million was actually paid to employees. The rest was used for operating expenses at the nursing home. Three bargaining units at Gracedale gave up the bonuses in exchange for higher pay. These agreements were unknowingly ratified by County Council. Had they known that the retention bonuses were ending. But there was no agreement with career service to end bonuses in exchange for higher pay. They just ended.

In her audit, Zrinski notes that since the money was commingled with other Gracedale funds, iit is impossible to state exactly how each dollar was spent. 

McClure told LV News that county council resolutions are generally mere suggestions, but he knows that it is Council, and not the Exec, that controls the purse strings. When bonuses ended for bargaining units, he could have been more clear. And he has provided no explanation for his decision to defy their will and prematurely terminate them for career service, who are nonunion.

He prides himself on transparency, but the way he handled this is a poor example.

Zrinski News Release

(Easton, PA) - The Northampton County Controller’s Office has released the results of its independent internal audit examining the use of American Rescue Plan Act (ARPA) funds for retention bonuses paid to employees at Gracedale, the county-owned nursing facility, as authorized by County Council Resolution #70-2022. The audit covered the period from 2022 through April 13, 2025, and focused on ensuring that the distribution of these funds complied with the resolution and relevant labor agreements.

 The audit found that a total of $2,360,891.18 in retention bonuses was paid out to all eligible union and Career Service employees at Gracedale during the review period. Specifically, $2,204,441.08 was disbursed from 2022 through 2024, and an additional $156,450.10 was paid in 2025.

 

“The audit found that, although $5 million was designated for retention bonuses in the County Council Resolution, only a portion of that money was paid out specifically to retention bonuses. The remainder of the ARPA funds, while allocated to Gracedale, could not be specifically tracked once transferred to Gracedale in 2023 and were commingled with other funds. The Controller’s Office could not determine the exact Gracedale expenses paid with those ARPA funds after they were combined with other Gracedale resources,” said Tara Zrinski, Northampton County Controller. “Because the management responsible for that decision is no longer in that position, we cannot determine why the money was not tracked in a more transparent manner.”

 

A sample of 40 employees was tested to verify the accuracy of retention bonus payments, and it was determined that each employee received the correct number and amount of retention bonus payments ($2,500 annually). Any variations were due to the timing of employment anniversaries or employment status changes. For example, some employees received part of their bonus in one year and the remainder in the next, depending on when they reached their employment anniversary. There was one instance where an employee received a $5,000 payment in 2024, which was a catch-up for a missed prior-year payment, not an overpayment.

 

The audit also confirmed that no retention bonuses were paid to per diem employees, the Gracedale Administrator, Director of Nursing, or Assistant Director of Nursing, in accordance with the County Council’s resolution. The payment of retention bonuses was governed by union contracts for the AFSCME and Steelworkers unions, which were amended to include or sunset retention bonus provisions. While there was no formal written policy for Career Service employees, the audit found that they received bonuses consistent with union terms.

 

“Our review confirmed that retention bonuses that were paid out were paid accurately and all eligible employee groups received payments according to the established rules, with only minor issues related to timing and administrative delays, which were quickly corrected. We also found that no ineligible personnel—such as per diem staff or senior administrators—received bonuses. Additionally, the County properly amended union contracts to reflect changes in the retention bonus program and affected career service employees were notified of the program’s end in a timely manner,” said Zrinski.

 

The retention bonus program ended at different times for different employee groups, depending on contract negotiations. Steelworkers’ bonuses ended on December 31, 2023, while AFSCME Residual Union employees remain eligible through December 31, 2025. AFSCME Gracedale Union employees hired in 2024 or earlier are eligible for 2025 payments. Career Service employees were notified in early 2025 that retention bonuses to them would cease due to the exhaustion of ARPA funds.

 

In summary, the audit determined that all ARPA funds designated for retention bonuses through the Council Resolution were transferred to the Gracedale fund by the end of 2023. These funds were not tracked separately from other county contributions once transferred and were fully expended on Gracedale operations. As a result, the Controller’s Office could not determine the exact Gracedale expenses paid with the ARPA funds after they were commingled with other resources.

 

“Without tracking of the balance of the $5,000,000 allocated to Gracedale retention bonuses by the County Council’s resolution, there is no way to specifically determine what that money was used for at Gracedale beside what was indicated by the previous management—operational expenses and the care of residents,” said Zrinski.

 

One final note, the audit found that for federal reporting purposes, the County was only required to report that ARPA funds were used to replace lost revenue, not required to track specific expenditures; thus, the decision not to track the retention bonus funds separately from other Gracedale resources was consistent with federal reporting requirements.

Final Report Gracedale $5 Million Retention Bonus by BernieOHare on Scribd

(UPDATED) Where Did $5 Million in Gracedale Retention Bonuses Go?

By an 8-1 vote, Northampton County Council last night adopted a resolution seeking an audit from Controller Tara Zrinski of all monies set aside and spent for $5 million worth of retention bonuses at Gracedale. Council wants to know exactly who received these bonuses and how the money was disbursed. It also wants to know how much is left.  The sole dissenter was Council member John Brown. He had argued that what basically amounts to three separate audits was needed in the next 20 days, and was the sole vote against an amendment to the resolution that would give Zrinski until the end of May to complete this project. 

Zrinski's top priority at this time of the year is completion of audit work needed by the external auditor for its annual analysis of county finances. At a committee meeting on Wednesday, she explained that her office spends 1,710 hours to complete this work. She said completing three Council-ordered audits within the next 20 days is unfeasible. In addition to that work, her office conducts numerous other audits of magistrate offices, hotel taxes, P-Card use and other county programs. That requires an additional 4,500 hours. She also interestingly pointed out that she is in the process of performing an audit of the DA's office. "I don't have any problem doing an audit for this Council but do think the time constraint of 20 days is not all feasible," she said. She also defended her staff when Council suggested that her staff of six or seven work overtime. They have personal lives. 

Zrinski was stating nothing unusual. Council has asked some of her predecessors to perform audits, and they (Steve Barron and John Schimmel) would insist on a reasonable amount of time, coupled with agreed upon procedures so that everyone is on the same page. 

Brown disagreed. "You have a schedule, but we also have a schedule." 

Council's request for these audits apparently arises from concerns noted by Brown and Council member John Goffredo that $5 million set aside for retention bonuses has been diverted. An email from Gracedale administrators to career service employees, dated January 16, advised career service workers that these bonuses were "temporary," and that "the remainder has been used for caring for our residents." 

This directly contravenes a 2022 County Council resolution directing the administration "to spend $5 million of the American Rescue Plan Act funds at Gracedale on Retention Bonuses to be given to all employees ... ."

County Council is rightly concerned about just what is going on.

It's true that a county council resolution is nonbinding and the Executive may view it as a mere suggestion. It's also true that County Council has since that time approved a budget for 2025 that authorizes the money to be spent elsewhere. But it obviously did so unknowingly. Perhaps the Executive wanted to redirect these retention bonuses for resident care. He may have needed the money to pay out-of-control overtime to career service workers, some of whom were earning $40k in overtime. In hindsight, he probably should have asked Council to approve another resolution authorizing this diversion or told them what he was doing.  

This is a problem with Executive branches in all levels of government, from local to national levels. The Executive branch is simply too powerful. For all of its flaws, and it has a few, Northampton County Council has done its best to be a check on Executive overreach.  

Last night's resolution seeks to learn whether this $5 million has, in fact, been diverted from retention bonuses for some other purpose. 

But that resolution also has a problem. Under the county's Home Rule Charter, any member of County Council has the power to introduce a resolution. But it has to come from an actual member. Brown refused to say that the resolution was introduced by him, even though it's pretty clear that it was. This could be from a laudable desire to protect confidential information provided by an employee. Or it could be that he's just too damn secretive. He should know that County Council is very much unlike this blog. People may comment here anonymously and make all kinds of suggestions. But there is no such thing as an anonymous County Council resolution.

Until last night. 

Though John Goffredo did not introduce the resolution, he did state last night that he would take ownership of it if it matters. It does. When a resolution is introduced, the Council member proposing it must be identified.  

Council member Jeff Warren suggested that the resolution smacks of "silly season." It definitely could impact both this year's county races and next year's Congressional race. But even he agreed that Council needs to know how $5 million in retention bonuses at Gracedale is being spent. 

The $5 million in retention bonuses at Gracedale is part of a $15.5 million spending plan at Gracedale, passed in 2022 by County Council. The only Council member to vote against bonuses was John Brown. 

McClure had told Council that the administration would pay all employees at Gracedale an annual $2,500 bonus over a period of four years. He also said that hiring and retention bonuses would bring in 54-60 additional nursing staff and enable the nursing home to provide the required nursing care needed at the facility.

"If you're a CNA [certified nurse's aid] within the sound of my voice, it would be a really good time to come to Gracedale," he said at the time, and repeated it several times.