Denver Does a Good Job Managing Coronavirus Relief Funds

Published on July 15, 2021


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DENVER – The City of Denver did a good job managing a portion of the COVID-19 pandemic-relief funds it received from the federal government in 2020, according to a new audit from Denver Auditor Timothy M. O’Brien, CPA.

“I am confident the city is ready for the next round of relief funds,” Auditor O’Brien said. “Denver is on the road to economic recovery, and the city’s leaders are well prepared to handle the extensive process still ahead of us.”

Our audit looked at how well the city managed $126.9 million Denver received from the federal Coronavirus Relief Fund, which Congress created through the Coronavirus Aid, Relief, and Economic Security, or CARES, Act. In total, the City and County of Denver was awarded more than $604 million in coronavirus-related funding from various sources, as of April 2021.

We found the Department of Finance successfully created a committee and implemented a phased spending plan to ensure the Coronavirus Relief Fund money was spent on time and in accordance with federal guidelines and requirements. Finance was transparent about the use of the money, and its continued monitoring aligns with best practices.

City officials needed to respond quickly to the challenges of the COVID-19 pandemic. The fast response meant federal guidelines and regulations changed even as local communities were already spending the money. That’s why Auditor O’Brien immediately called for an audit.

“With the huge dollar amounts coming into the city and going out so quickly, it was essential to have my team ensure the Department of Finance was managing the money right away,” O’Brien said. “I wanted to make sure there was no room for someone to take advantage of the chaos and that Finance’s process was sound for managing these and future relief dollars.”

Federal aid in 2020 helped Denver pay for a wide array of unexpected costs related to its pandemic response. The money from the Coronavirus Relief Fund could not be used to cover revenue shortfalls, but it was used to support food assistance, public health efforts, economic support, and individual support, with the largest amount planned to pay for shelter and housing.

According to the CARES Act, the relief funds could be used only for necessary expenditures incurred because of the pandemic, expenditures not already accounted for in a budget approved before March 27, 2020, and expenditures made within a set time frame — which was eventually extended to include all of 2021.

Phase one of planned spending in 2020 was emergency deployment — about $20 million dollars for food assistance, public health, shelter and housing, and economic support. However, in phase two, the Department of Finance worked with a committee that included representatives from many city agencies to consider proposals with a focus on equity, how quickly the ideas could be implemented, what could help prevent a potential resurgence of infection rates, and what could aid long-term recovery.

Phase three of the planned spending would have used the remaining dollars from the Coronavirus Relief Fund, but Congress extended the deadline to allow the city to use the money through 2021.

“The overall effectiveness and community impact of the city’s relief dollars won’t be clear for a long time, but so far, the city appears to be doing its best to manage the money efficiently and effectively,” Auditor O’Brien said.

We also found Finance was transparent about how the city spent its coronavirus relief funds by issuing news releases and updating City Council members. In February 2021, Finance created an interactive public dashboard on the city’s website to show how the dollars are used.

Projects funded with coronavirus relief funds included emergency sheltering for individuals experiencing homelessness, public health projects, aid to small businesses, and temporary rental and utility assistance.

“No response could have been perfect, and there were likely individuals left behind despite the city’s best efforts,” Auditor O’Brien said. “In the future, city leaders must continue to be good stewards of relief funds and search for innovative ways to reach our most vulnerable populations.”

We did find Finance failed to properly track and review interest earned for coronavirus relief funds. City staff didn’t post interest earned on the $126.9 million for several months. As a result, about $1.8 million in interest earnings was not available during planning for pandemic-related projects. That error was eventually corrected, but it could have kept additional relief dollars out of city projects through 2020.

“There could have been more money available for COVID-19 relief last year if Finance knew the interest earnings were present,” Auditor O’Brien said. “While $1.8 million is small in comparison to the overall budget, that money could feed a lot of people who need it.”

The audit team also found a small number of COVID-19-related expenses that should have been tagged in the financial system of record, but were not. But overall, the city did a good job of identifying and labeling transactions related to the pandemic so that the city could later seek reimbursement for the costs.

Agencies could also be more meticulous with supporting documentation to explain how expenses related to the pandemic response. However, we did not identify widespread eligibility concerns. We recommended better guidance for agencies about what documentation is acceptable.

Denver will also receive $308 million from the American Rescue Plan to be spent by Dec. 31, 2024. That federal aid was not part of this audit.

Read the audit report

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