Health director says audit fixes are in place as follow-up work continues

Anchorage Health Department Director Kimberly Rash told an Assembly committee Oct. 21 that the department had made the changes it promised after an internal audit faulted how it runs its federal Community Development Block Grant program. Under questioning, officials said follow-up work on several of the audit's findings is still underway.

"I am happy to say that all of our comments that are in the audit have been put into place," Rash told the Municipal Audit Committee. She listed competitive procurement under city rules, a documentation checklist, supervisor review and project tracking in Microsoft Planner, which she said the department started using in early 2025. Officials said the monitoring and enforcement procedures the department had promised by Aug. 1 were finalized by then.

The department asked for the audit itself, Rash said, because the program had not been internally audited in some time, staff had turned over and federal rules kept changing. The U.S. Department of Housing and Urban Development reviews the program every year, she said.

The June audit made nine findings. Four of six sampled grant agreements had been allowed to expire, one for more than a year before it was restarted. Because past selections were not documented, auditors could not determine whether four grant recipients chosen between 2021 and 2023 were picked without bias. The department did not notice or hold the first of four required public hearings on its 2024 annual action plan, which Rash called an oversight, and 95 of 101 subrecipient reporting requirements the auditors reviewed were not followed. Rash said none of the findings involved money going to ineligible projects.

The audit also found that a mobile home repair subrecipient repaired one home in 2025 against a goal of 20, and that work had been completed on 12 by March 31. Rash told the committee 25 repairs have been completed against a goal of 40, which includes the 2025 shortfall. Human Services Division Manager Darcie Montalvo said the audit made it "look like we had only done 1 or 12 of the homes, depending on how you look at it," but that the work involves several steps.

The repair agreement has not been formally amended to reflect the new goal. Rash said the department plans an amendment that would extend the work into 2027.

Auditors found the department had not withheld money from subrecipients that missed goals, as the agreements required. Asked whether any penalties or withholdings had been applied since June 15, officials said no. Montalvo said the department will withhold some administrative costs from the repair subrecipient for missed deadlines, and Rash said the department has sent "one or two" notices to cure.

Under questioning from committee chair William Falsey, officials said two property acquisition agreements still lack required five-year property-use language, and the department is still updating goals for subrecipients whose agreements were repeatedly amended and weighing whether to rebid them. Asked how many grantees are still out of compliance with procurement rules, an official said she believed it was three or four. Rash said she hopes to have all grantees in compliance by Jan. 1.

Rash said the four recipients whose selection auditors could not verify are not receiving money, which is being held while the department decides where to move it.

The city's internal auditors can check the nine findings again in six months, Rash said, if she asks. She called that "a great idea."