First-class flights and resort booze. WA Commerce failed to oversee ed grant, audit finds

A state audit found the Washington Department of Commerce failed to properly oversee $10.7 million intended to bring broadband access, laptops, and training to people in underserved communities.

State auditors found that from July 2023 to June 2024, the state department advanced $8.4 million to the Equity in Education Center, its main contractor on the Digital Navigator Program, rather than reimbursing the contractor for documented expenses, as the grant required.

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The majority of the $10.7 million paid to the Equity in Education Center during that fiscal year did not have sufficient documentation to determine whether the grant expenditures were allowable, auditors found.

“We actually went out to this grantee, and tried to get that information from them, and we were not able to get a lot of it,” said Sadie Armijo, director of state audit and special investigations. “We really were only able to get support for about $2 million, and some of that was still pretty questionable,” Armijo said.

Other spending was clearly unallowable, Armijo said — like first-class flights and an open bar at a resort.

“I would say this is pretty rare in an event of not having adequate supporting documentation,” Armijo said. “This is not a normal event. This isn't how most of the grants in the state are run.”

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Auditors found that only one person at the Department of Commerce was responsible for approving and paying Digital Navigator Program invoices.

At the Department of Commerce, Director Joe Nguyen agreed with the auditors’ findings, and said he’s been working to overhaul training and oversight since he took over as head of the agency in January.

“There was a lack of infrastructure in terms of how it was being handled before. There were not very good internal controls," Nguyen said. "One person was in charge of basically the whole thing, and that's not quite how you should be doing it.”

Along with ensuring proper oversight at the agency level, Nguyen said, his department needs to ensure that community-based organizations are well equipped to handle large grants.

“There are things that we need to do to help our grantees be successful, because at the end of the day, the goal is for them to be successful in serving our communities, and then also making sure that on the back end, if something goes wrong, we have strong protocols in place to catch it and move forward,” Nguyen said.

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Sharonne Navas, executive director of the Equity in Education Center (EEC), said her organization takes responsibility for some of the issues cited in the audit.

“We affirm that the EEC had some learning curves and made mistakes,” Navas said in an emailed statement. “Those were addressed with each of our program managers from the Department of Commerce until July of 2024,” when Navas said the agency stopped providing guidance to her organization.

"The report confirms that Commerce did not understand minimum requirements and did not train their own internal program staff to understand the rules," Navas said. "Now community-based organizations are suffering from this chaos."

A related state audit, now underway, will examine how the state tracks the performance of its digital equity investments, including the Digital Navigator Program. That audit report is expected to be published in December, said a spokesperson for the State Auditor's Office.