Performance Audit of Grants from the
City of Oakland to Saba Grocers Initiative
and its Fiscal Sponsor
Presentation to the Finance and Management Committee
October 22, 2024
Table of Contents
Audit Team
Background
Audit Objectives
Audit Findings & Recommendations
Questions
Audit Team
CITY AUDITOR
Michael C. Houston
ASSISTANT CITY AUDITOR
Eduardo Luna
WHISTLEBLOWER PROGRAM MANAGER
Orsolya Kovesdi
Background
● Between December 2021 and May 2023, we received anonymous complaints alleging that officials at Saba Grocers Initiative (Saba), did not distribute City-funded debit cards to community members.
● We found significant weaknesses with the City’s grant management and oversight of its agreements with Saba.
The City Has Funded Saba $675,000 (FY 2020-21)
Term or
Effective Date
Not-to-
Exceed
Amount
Scope of Services Funding Source
September 1,
2020 -
December 30,
2020
$500,000
Costs associated with debit
cards, debit cards, coupons,
store equipment, personal
protective equipment (PPE)
supplies, store owner training,
printing, staff and
administration fees, sub-
contracts, etc.
The City awarded the grant
from State of California CARES
Act funding to serve residents
living in neighborhoods with
high COVID-19 rates. City
Council adopted Resolution
No. 88274 C.M.S.
April 1, 2021-
June 1, 2022 $175,000
Costs associated with
personnel expenses, debit
cards, store equipment,
printing, etc.
The City’s Sugar Sweetened
Beverage (SSB) Community
Advisory Board voted to award
$175,000 to Saba and the City
Council adopted Resolution
No. 88528 C.M.S.
City Council Allocated a Total of $2.5 million to Saba Date Approved
By City Council
Not-to-Exceed
Amount Funding Source
April 19, 2022 $1,000,000
City Council adopted resolution No. 89122 C.M.S.,
allocating funding sourced from FY(s) 2021-22
and 2022-23 Sugar Sweetened Beverage Tax
Revenue.
June 26, 2023 $500,000
City Council adopted biennial budget, allocating
funding sourced from Sugar Sweetened
Beverage Tax Revenue from the FY(s) 2023-25.
June 30, 2023 $1,000,000
City Council adopted Resolution No. 89283
C.M.S., allocating funding sourced from the FY
2022-23 General Purpose Fund.
Audit Objectives
Assess the City’s
oversight of the
Saba grants.
Assess Saba’s
compliance with
contract (grant) terms.
Poor Management and Oversight
of City Grants to the Saba Grocers
Initiative Prevented the City from
Ensuring Taxpayer Money Was
Well Spent
FINDING 1
● The City’s grant agreements with Saba established monitoring requirements that were not followed.
● Grant monitoring activities were inconsistent across the two grant agreements.
● Grant management procedures operated under outdated
administrative instructions.
● For both Saba grants, the City provided insufficient review, verification, and approval of Saba payment requests.
● Saba grants bypassed the standard pre-award evaluation process. Poor Management & Oversight
Insufficient Review, Verification, and Approval of
Saba Payment Requests
● $40,000 for resident leader stipends to distribute debit cards ● $30,000 for expenses associated with printed coupons
● Receipt for $2,636 for "training," "produce delivery," "produce menu creation," and "invoicing support to store owners"
● Saba sought and received reimbursement from the City for employee recognition activities ($500)
Records Between April 2021 and December 2021
Revealed Insufficient Supporting Documentation
Related to the $175,000 Grant
● Saba could not provide support for $62,771 for refrigeration cases. ○ What type of equipment was purchased?
○ Which corner stores received the equipment?
● Saba received $25,000 from the City to distribute debit cards. ○ Saba reported a total of $17,410, which is $7,590 less than what was the allocated amount in the agreement.
○ We found supporting documentation for only $8,900.
Records Between April 2021 and December 2021
Revealed Insufficient Supporting Documentation
Related to the $175,000 Grant
Card Type Number of Cards Amount Loaded per
Card Total Amount
$200 7 $200 $1,400
$25 300 $25 $7,500
Unknown $8,510
Total 307 $17,410
Saba Debit Cards Were
Vulnerable to Misuse
FINDING 2
Distributor Number of Cards
Distributed
Number of Cards
Not Used
Utilization Rate
($ spent/card
value)
1 Sugar Freedom Project 392 25 89%
2 City of Oakland programs
(Parks & Rec, Head Start) 174 15 85%
3 Street Level Health
Project 107 6 87%
4 Trybe 72 15 71%
5 East Oakland Collective 69 13 74%
6 Saba employees or
partner stores 62 3 89%
7 Homies Empowerment 43 9 75%
8 Light House Mosque 23 0 91%
9 Madison School 19 4 74%
Total 961 90 85%
Saba Debit Cards Were Vulnerable to Misuse
● Saba did not develop, implement, or enforce eligibility standards for cardholders.
● Saba debit cards are vulnerable to use by people who are not card recipients.
● Contrary to program guidelines, the use of Saba debit cards are not limited to healthy foods.
● Complying with the prohibition on purchasing alcohol and tobacco products relies on the education, diligence, and ethics of individual store clerks and cardholders.
Saba Debit Cards Were Vulnerable to Misuse
● 90 debit cards (9 percent) were never used. This amount represents $22,500 in food assistance that the City funded but did not benefit Oaklanders. ● City of Oakland’s Head Start Program and the Oakland Parks, Recreation, & Youth Development Department set up 174 debit card accounts, of which 12 (7 percent) of cardholders were previous or current City employees and one cardholder was a relative of a City employee.
● Trybe, set up 72 debit card accounts, of which 15 (21 percent) were established in the names of current or past employees. Additionally, one cardholder was a relative of an employee, one person was listed as holding two cards, and 27 cards were registered to the organization’s current or former address.
Saba Debit Cards Were Vulnerable to Misuse
The City and Residents Appear to
Have Received Only Modest
Benefits from the City’s Grants to
Saba
FINDING 3
● Both contracts had significant indirect costs.
● Cardholder activity indicate a preference for full-service grocery stores. ● The effectiveness of using refrigeration cases at smaller stores to address “food deserts” remains unknown.
● The City has not evaluated Saba programming to meaningful performance measures.
● The City should focus on creating a robust grant management program.
The City and Residents Appear to Have Received
Only Modest Benefits from the City’s Grants to
Saba
Recommendations
The City Administrator’s Office should develop and implement a policy for overseeing grants for which it is a grantor. The policy should outline guidance for activities throughout the entire grant lifecycle – pre- award, active-award, and post-award phases – including:
a) considering and approving grant proposals,
b) setting guidelines for assessing, negotiating, and controlling indirect costs,
c) implementing and monitoring grant requirements,
d) reporting grant outcomes and results, and
e) setting clear expectations and responsibilities for staff involved in grant management and oversight.
Recommendation 1
To strengthen oversight and accountability around City grants, the Finance Department should develop procedures for reviewing grantees' requests for payments, and ensuring the City's payments to grantees are appropriate and in alignment with grant terms. The procedures should guide staff on:
a) ensuring grantees' requests for payments are reasonable, and b) assessing the sufficiency of invoices, receipts, and other supporting documentation submitted by grantees.
Recommendation 2
To strengthen oversight and accountability around City grants involving City-funded debit cards, the City Administrator’s Office should develop procedures that:
a) require eligibility requirements for cardholders,
b) adopt procedures for reviewing and scrutinizing the distribution and accounting of cards, and
c) consider requiring controls for ensuring cards are used only by intended recipients and for intended purposes.
Recommendation 3
Recommendation 4
The City Administrator’s Office should review existing
Administrative Instructions related to grant management procedures, and update them as needed.
Recommendation 5
The City Administrator’s Office should provide training and awareness sessions to familiarize staff with the new policies, procedures, and Administrative Instructions.
Recommendation 6
The City Administrator, in consultation with the City Attorney’s Office, should determine how to address instances of Saba’s misspending and non-compliance with City grant terms, identify whether Saba owes the City, and if so, pursue amounts owed.
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