Large payments were delayed for days or weeks due to minor inaccuracies.

In one instance, Multnomah County received an invoice to pay $396,726 to Do Good Multnomah, a nonprofit that provides homeless services in Portland. County staff returned the invoice, prompting three extra days of work and review before any payment was made — all because of a 5-cent discrepancy.

In another, a $54,607 invoice from Volunteers of America, a health and human services nonprofit, was returned for more than a month of extra work before payment. The problem this time? A discrepancy of less than $5.

These are among the most glaring examples of Multnomah County’s beleaguered system for monitoring health and human services contracts, described in a new report from the county auditor’s office released Thursday.

But county auditors said the examples aren’t anomalies. Auditors found that county departments are beset by outdated policies for monitoring contracts, inconsistent practices and an inability to adequately evaluate if agencies are making timely payments.

In 2023, Multnomah County’s budget allocated $1.2 billion for contracts to providers — many of which are nonprofits — delivering a variety of services, including behavioral health care and housing assistance. The county helps form the contract’s terms and conditions and tracks progress.

The latest audit sheds light on Multnomah County’s struggles to provide funds and oversee organizations addressing issues like homelessness and addiction, including whether or not organizations are doing what they’ve received taxpayer money to do. What’s more, the delays can have major ramifications for organizations’ bottom line.

“We have serious issues that the county is grappling with,” said Multnomah County Auditor Jennifer McGuirk. “The situations we’re facing aren’t going to get better unless the county becomes a much better contract manager of these billions of dollars that are going out the door.”

Prior audits illustrated systemic issues in the county’s contracting system, from a lack of consistent monitoring to hundreds of thousands of dollars in wasted funds. The latest audit acknowledges the county is taking steps toward improvements, hiring a third-party consultant and creating a unit to improve the system.

With vast amounts of tax dollars spilling into county coffers from the regional supportive housing services fund, McGuirk said the latest report is critical to illustrate how county officials should be holding providers accountable. And it serves to show providers what they should expect from the county.

Findings

Auditors reviewed how four departments monitored health and human services contracts. Among the findings:

• The countywide policy for administering and monitoring contracts has not been updated since 2011, and “some program staff responsible for monitoring contracts were not aware of (the policy),” the audit said. Auditors said this is “likely” why there has been inconsistent practices among county staff. In two instances, county staff had not visited providers with county contracts since 2018, auditors found. “By not having an updated policy in place and enforced, staff are performing monitoring tasks at their own discretion,” the audit said. “This can lead to inconsistent monitoring of providers and risk of providers not delivering contracted services.”
• County contracts include timelines for payments, but staff “cannot fully and adequately evaluate if it is making timely payments,” the audit said. That’s because due dates in the county’s billing system are “likely to be inaccurate” due to a variety of problems in the system.
• Payments have been delayed, according to auditors’ review of 232 invoices. Of 150 invoices to the Joint Office of Homeless Services and Department of County Human Services, about two-thirds were paid on time. Roughly half of the 82 invoices to the county’s Health Department and Department of Community Justice were on time.
• Auditors reviewed 31 “very late payments” — delays that could amount to months — and found that 26% were due to issues on the provider’s side, such as getting federal approval to charge certain costs. The remainder, 74%, of those late payments, however, “were due to issues within the county’s control,” auditors found. The issues included a lack of a signed contract or annual budget, misfiled invoices, not having ample funds or needing a correction before payment.
• Sometimes, minor inaccuracies in invoices prompted payment delays that took up valuable time from the county and providers, the audit said. Officials were following a county policy that says an invoice needs to be accurate before payment, but auditors say some delays were of limited value if any. “We obviously want the county to be reviewing invoices, making sure they’re accurate,” McGuirk said. “But there should be other ways to correct those errors that don’t necessarily put a burden on providers to be going on without those payments.”
• County officials use risk assessments to understand a provider and how to support it, such as whether they need help invoicing and how to meet goals of a contract. But some county staff rely too heavily on the county’s Fiscal Compliance unit — which conducts risk assessments of providers that receive federal funds — to evaluate providers. That’s not the unit’s job, according to the audit.

Auditors recommended that the county’s chief operating officer work with staff to develop a countywide contract monitoring policy by June 30, 2025. They also recommended that the chief financial officer develop a mechanism to make sure departments are paying providers on-time and training tools to help staff consistently share information.

“Your audit recommendations reinforce our need to prioritize and address areas with gaps,” Multnomah County Chair Jessica Vega Pederson said in response to the review.

In a statement, Vega Pederson said the county is taking steps to add resources and bolster its processes for administering contracts. Earlier this year, she said, the county hired two staff dedicated to a project on the problem.