Governor Wolf Announces Increased Accountability on Grant Programs

December 04, 2017

Harrisburg, PA – Today, Governor Tom Wolf announced plans to implement additional accountability requirements on grant programs following the results of a recently completed audit of the Democratic National Convention related to the spending of a $10 million state special event grant. The audit was requested by legislative leaders and the governor following reports of bonuses paid to staff. The governor has also called on the Commonwealth Financing Authority to undertake their own immediate review of the process for approving projects by the board at its next meeting.

“Earlier this year I worked with the Department of Community and Economic Development to implement more stringent funding requirements and stronger clawback provisions,” said Governor Tom Wolf. “This new proposal places greater accountability on grantees, not just business, that use state funding.”

Under the stringent funding and monitoring requirements, grants are awarded based on specific commitments which can be easily verified at regular intervals. Where a grantee fails to create the number of jobs, expend the amount of capital, or carry out a project to which they have committed, the Department of Community and Economic Development (DCED) has standard language in its contracts which allow for the clawback of funds, and a strong monitoring program.

There are certain grants for special events—such as the 2016 Host Committee award related to the Democratic National Convention— where due to the limited nature of the grant, the grantee’s obligations are less defined beyond holding the event itself.

Going forward “special event” grant funding will include specific contract language to:

  • Prohibit the payment of bonuses: New contract language will require awardees to attest that they will not pay bonuses in conjunction with a special event which was funded with state dollars. Payment of any bonuses will trigger repayment of the grant.
  • Require that the commonwealth is the payer of last resort: New contract language will require that funds provided by the commonwealth are to be utilized only after other sources of funding are exhausted
  • Require that any surplus grant funds are returned to the commonwealth: DCED will strengthen and clarify language in its agreements to require that grant funds that are not expended be returned to the commonwealth with interest. This requirement will be enforced vigorously at the time of the project close-out audit.
  • Require any surplus privately raised funds be used to pay back the commonwealth for grant funds up to the full amount of the grant: New contract language will require that if private funds remain after an event has concluded, these funds will be used to repay the commonwealth’s grant funding.
  • Ensure all major grants, subgrants, contracts, subcontracts, or other agreements for construction, production, machinery and equipment, services, etc., are competitively bid: DCED will require that all grantees must obtain three arms-length bids if they meet the following criteria: The subcontract is for construction, reconstruction, demolition, alteration and/or repair, acquisition of machinery and equipment, or the engagement of the services of a professional consultant, and either the amount of the contract exceeds $50,000, or the contract is at least $10,000 and funded at least 50 percent with state funds.
  • Enhance scrutiny as part of close-out audits: DCED will apply enhanced special scrutiny to the close-out audits of all special event grants moving forward.
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