The city of Charleston will hire a financial consulting firm to oversee the accounting of its nearly $37 million in American Rescue Plan funding, city council members voted Monday.
With 17 yeses and eight noes, city council members approved a resolution allowing the city to contract with BDO USA LLC to perform accounting services related to the administration of the federal coronavirus funds.
The contract with BDO will be on an hourly basis, not to exceed $500,000. City manager Jonathan Storage is required to notify the city council finance committee each time the total expenditures under the contract exceed $100,000, according to the resolution.
Storage said Tuesday the accounting services are needed to help the city and the agencies to which it will grant funding meet federal reporting requirements for the funding.
At $37 million, the money represents about 37% of the city’s normal yearly budget of approximately $100 million, he said.
The city has a finance team to handle its day-to-day business, which is complicated enough without the addition federal funding with finite deadlines on when the money must be obligated and spent, Storage said.
“You throw in rules and regulations from the U.S. Treasury Department that requires quarterly aggregated expense reporting, and require that the money be allocated to programs or purposes that are specifically authorized ... there’s a lot of procedural and auditing and accounting and obligation hoops that have to be administered and followed through on at the city level and at the sub recipient level,” Storage said. “It just is more than what the city staff has in terms of expertise and time, because we’re administering the rest of the city’s regular operating regular operations at the same time.”
Council rejected a motion by Councilman Courtney Persinger that the contract be referred to the city’s advisory committee on American Rescue Plan funding. Eleven members voted for referring it to the committee and 14 members opposed it.
The city’s finance committee signed off on the contract earlier Monday night.
Councilwoman Shannon Snodgrass, Persinger and other council members opposed spending up to $500,000 on the contract, arguing the state Auditor’s office could provide the city the same services.
“We in effect have a free service, because we are a city in West Virginia that is offered to us by the Auditor’s office,” Persinger said. “All we have to do is sign up.”
At the Dec. 6 meeting, Persinger introduced a resolution that the city “adopt free Transparency tools and public website access to financial information provisioned by the West Virginia State Auditor’s Office in response to the ARP Funding Allocation.” The resolution was referred to the ARPA advisory committee, which has not met since then.
Storage said Tuesday the state Auditor’s office would offer the city different services than what BDO will provide the city.
Storage said the Auditor’s office software would allows the public to see how much the city spent on particular services and particular vendors with the goal of transparency, Storage said.
BDO was chosen from 12 local, national and international accounting firms who submitted proposals after a months-long search, he said.
“BDO came out on top because they have extensive experience, administering the CARES Act for state and local governments, specifically, State of West Virginia,” Storage said. “BDO was hired by the Office of the Governor to help administer the CARES Act.”
Storage said the city has advertised to hire a staff member to oversee the funding distribution in-house. He said the job has been posted three times and the city has offered it to two people, but neither accepted.
Hiring an additional staff person would not preclude the city from using BDO, but it would reduce the amount of work the city needed from the firm, he said.
Storage said the administration intends to have state Auditor present to city council about the benefits of its services at a council meeting in late January or early February.
Anthony Woods, deputy state Auditor, declined to comment on the city’s contract with BDO, saying he didn’t know the full scope of services offered by the firm.
Woods said the Auditor’s office assists city governments with ARP guidance and helps them find solutions to problems. The Auditor’s office isn’t permitted to give its opinion on whether potential projects are able to be funded with ARP money, but they have helped refer local governments to different sections in the federal guidance, he said.
“A lot of our smaller local governments don’t have, like Charleston, $500,000 to hire a consultant, so we’ve been offering that service to them at no charge, and just kind of helping them look at this stuff and, and pass along things from Treasury that have come out that can assist local governments,” Woods said.
The Auditor’s office confirmed that, despite the city’s contract with BDO, the office is in talks with the city to implement its program.