Oregon Lost Track Of $426 Million In Federal Pandemic Funds For Emergency Rental

The state of Oregon’s housing agency lost track of $426 million in federal pandemic-era funds for emergency rental assistance (ERA), according to a new state audit.

In the 43-page audit released Thursday, the Oregon Audits Division revealed that Oregon Housing and Community Services (OHCS) couldn’t definitively say where the millions designated to the Oregon Emergency Rental Assistance (ERA) Program ended up.

“The agency has no way of knowing how much of the $426 million went to eligible Oregon recipients and how much was sent to landlords, renters and non-eligible recipients in error,” read the audit.

OHCS also told auditors that it couldn’t quantify the amount of ERA funds distributed or the number of applicants who received funding. The number of total applicants paid shifted from just over 56,000 to over 67,000 in the auditors’ investigation.

The auditors also determined that Oregon’s ERA Program had deficient financial accounting controls, poor contact administrative practices, shifting oversight, inadequate program staffing, and “a rushed and reactive planning and response approach.” The OHCS “did little” to monitor its contractors to ensure compliance on fraud, eligibility, and financial controls. In fact, auditors found that the agency had no system in place to ensure the eligibility of recipients.

Based on testing of randomly selected payments to program recipients, auditors found a 30 percent error rate. Based on that review, the auditors estimated erroneous payouts to possibly total $11 million. They noted that an attempt to recover at least one incorrect payment caught by their sample review was unsuccessful. Several of the organizations handling payouts to renters didn’t provide requested documentation to the auditors.

Auditors discovered numerous inaccuracies and inconsistencies between the OHCS database, U.S. Treasury reports, and a contractor database.

The audit further noted that OHCS was unable to prove it met federal guidelines in spending the millions due to “limited oversight and controls.” Specifically, the department submitted inaccurate reports to the U.S. Treasury and failed to accurately track administrative costs, which were limited to 10 percent of ERA 1 dollars and 15 percent of ERA 2 dollars.

ERA funds came through two separate installments: “ERA 1” constituting $25 billion in Congress’ December 2020 COVID-19 relief package, and “ERA 2” constituting $21.5 billion in Congress’ March 2021 relief package.

An estimated 176,000 Oregon renter households were at risk for eviction in September 2020, despite an eviction moratorium imposed by then-Governor Kate Brown that was later extended by the state legislature.

Although OHCS neglected to ensure it met federal guidelines, it took extra steps to implement its desired equity-based system.

Applicants were scored based on their household size, number of months behind rent, 2020 wildfire impact, and whether they resided in a census tract with more low-income renters at risk of experiencing housing instability and homelessness due to COVID-19.

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The department coordinated with Oregon Human Development Corporation to identify and contact Latinos and farmworkers. The department also contracted with community-based organizations to identify and assist certain demographics: those with disabilities, substance abuse disorders, mental health issues; the homeless; and Latinos, African Americans, and Asian/Pacific Islanders.

Oregon’s ERA Program lasted from May 2021 to June 2023. With the ERA Program closed, OHCS was tasked with another emergency declared last year by Governor Tina Kotek: homelessness. Auditors indicated concern, noting that OHCS carried over at least one practice from the ERA Program to the homelessness-oriented program: the Oregon Eviction Diversion and Prevention Program.

In response to the audit, OHCS executive director Andrea Bell defended the department’s quality of work as justified by the pressures and demands of the pandemic. The director agreed to 14 of the 16 recommendations, denying two concerning the implementation of additional oversight: the creation of a permanent ombudsman and an evaluation of their policies and procedures for IT system oversight.