Title
AN ORDINANCE relating to contract management and compliance monitoring protocols for the department of community and human services; and amending Ordinance 11955, Section 5, as amended, and K.C.C. 2.16.130.
Body
STATEMENT OF FACTS:
1. On August 26, 2025, the King County auditor's office produced an audit report titled Department of Community and Human Services Needs to Strengthen Financial Stewardship, outlining the department's contract management practices for youth programs from 2022 to 2025.
2. The department has awarded more than $1.8 billion in grant funding in 2023 and 2024 combined, up from $922 million in 2019 and 2020.
3. Amid rapid growth in grant funding, the department of community and human services took on greater financial risk as a strategy to reduce contracting barriers among organizations with limited government experience.
4. The auditor's office found that the department could do more to manage its financial risk of these programs by applying internal controls more consistently.
5. The audit report revealed gaps in several areas including enforcement of contract terms, validation of invoices, and communication of expectations to staff and grantees.
6. The report noted that the department runs its own procurement processes to award those moneys, resulting in contracts known as community grants. Unlike other contracts, community grants are outside the scope of King County's central procurement group, limiting independent oversight. In this environment, the department of community and human services faces a higher risk of fraud, waste, and abuse as it allocates public moneys.
7. Ten recommendations were mentioned in the county auditor's report that highlight where improvements can be made and how they should be addressed.
8. The King County council supports the department of community and human services in its mission to provide equitable opportunities for individuals to be healthy, happy, and connected to community. In alignment with the mission, the council affirms a guiding principle: restoring public trust and addressing the contracting crisis through financial accountability, transparency, and the responsible use of public moneys. The principle is essential to supporting nonprofit partners and the communities they serve, while upholding rigorous standards of accountability.
9. The King County council is dedicated to supporting the department of community and human services's commitment to safeguarding public resources, by creating legislation that will provide more tangible measures to strengthen that work.
10. The council intends to make additional investments in the county's auditing and oversight functions in the 2026-2027 biennial budget, appropriating at least two full-time equivalent positions to support an internal audit function. The council will explore whether these additional investments can be achieved through reprioritization of existing budgetary resources.
11. The council acknowledges that additional opportunities exist to improve contracting practices across all county agencies and will explore ways to effectively implement improvements countywide. Special attention will be paid to implementing structural, organizational improvements to enhance accountability, including separation of program design and advocacy from grant administration and oversight.
BE IT ORDAINED BY THE COUNCIL OF KING COUNTY:
SECTION 1. Ordinance 11955, Section 5, as amended, and K.C.C. 2.16.130 are each hereby amended to read as follows:
A.1. The department of community and human services is responsible to manage and be fiscally accountable for the children, youth, and young adults division, the behavioral health and recovery division, the developmental disabilities and early childhood supports division, the adult services division, and the housing and community development division.
2.a. As part of its fiscal stewardship responsibility, the department shall develop, document, implement, and adhere to best practices regarding contract management and compliance monitoring, including, but not limited to, the department's current contract compliance monitoring policy, to ensure that publicly-administered moneys are being used in a manner consistent with contract terms and conditions, while concurrently engaging in supportive contracting practices and partnerships with its contract agencies.
b. The department shall establish protocols and procedures for monitoring multiyear contract agencies' time spent on contract compliance activities and evaluating the effectiveness and efficiency of contract processes and requirements.
c. The department shall at least annually perform a risk assessment of its multiyear contract agencies receiving county-administered moneys and, in addition to general contract management and compliance monitoring activities, perform an in-person site visit of each multiyear contract agency at least once every three years. Site visits conducted in response to a complaint of suspected fraud, waste, or abuse of public moneys shall be prioritized by the department for scheduling and initiated as soon as possible. For the purposes of this section, "multiyear contract agency" means an agency whose contract with the department spans more than one calendar year in duration.
d. Beginning July 1, 2026, the department shall require multiyear contract agencies receiving more than fifty thousand dollars in county-administered moneys during a single biennium to complete a financial management and best practices training developed by the department. The training must be completed by December 31, 2026, or within one hundred eighty calendar days of the effective date of any new contract entered into by the department after July 1, 2026. This training requirement may be waived at the discretion of the department director, or designee, in any one or more of the following circumstances:
(1) the multiyear contract agency has completed the department-designated financial management and best practices training within the three years before the effective date of the contract;
(2) the multiyear contract agency provides to the department a copy of audited financial statements that were prepared by an independent certified public accountant for the two most recent fiscal years and include an unqualified opinion on the statements and no indication of material weakness in the agency's internal controls;
(3) the multiyear contract agency provides to the department a copy of two single audits, also referred to as an A-133 audit, that were prepared by an independent certified public accountant and completed within the two most recent fiscal years and that do not contain an indication of material weakness in the agency's internal controls;
(4) the multiyear contract agency has been identified as a low-risk grantee through the risk assessment required by subsection A.2.c. of this section;
(5) the multiyear contract agency received an in-person site visit from the department during the prior calendar year with no negative findings; or
(6) any other criteria that may be established and documented in written policy in the future by the department.
B. The duties of the children, youth, and young adults division shall include the following:
1. Working in partnership with communities and other funders to develop, support, and provide human services that emphasize prevention, early intervention, and community education, and that strengthen children, youth, young adults, families, and communities in King County; and
2. Managing programs that promote healthy childhood development, enhance youth resiliency, reduce justice system involvement, strengthen families and communities, and ensure all children, youth, and young adults have the opportunity to achieve their full potentials. The division shall also provide staff to support the King County children and youth advisory board.
C. The duties of the behavioral health and recovery division shall, subject to available resources and to its exercise of discretionary prioritization, include the following:
1. Managing and operating a comprehensive continuum of behavioral health services including prevention, mental health, substance use disorder, and co-occurring disorder treatment services for children, youth, and adults who meet eligibility criteria;
2. Managing and operating a twenty-four-hour crisis response system, including civil commitment as a last resort;
3. Selecting appropriate agencies for the provision of behavioral health services and developing, implementing, and monitoring the provision and outcomes of contracted services;
4. Being responsible for resource management of a comprehensive behavioral health system including provision of staff support to appropriate advisory boards, and serving as liaison to federal, state, and other governments and relevant organizations in carrying out planning and allocation processes;
5. Facilitating the continuing availability of appropriate treatment services for eligible individuals with a diagnosis of a mental illness, substance use, or co-occurring disorder; and
6. Developing and maintaining a continuum of appropriate treatment services for eligible individuals.
D. The duties of the developmental disabilities and early childhood supports division shall include the following:
1. Managing and operating a system of services for infant mental health, early childhood development screening, and a system of services for persons with developmental disabilities in accordance with relevant state statutes and county policies and to provide staff support to the King County board for developmental disabilities; and
2. Negotiating, implementing, and monitoring contracts with community agencies for the provision of developmental disabilities and early childhood support services.
E. The duties of the adult services division shall include the following:
1. Working in partnership with communities to develop, support, and provide human services and programs that emphasize health and safety, self-sufficiency, and healthy aging. The programs are to include, but not be limited to, providing employment and training for adults to achieve self-sufficiency, providing supports to survivors of abuse and trauma, and providing health, socialization, and wellness services to promote healthy aging in place;
2. Providing assistance to indigent veterans and their families as authorized by chapter 73.08 RCW; and
3. Providing staff support for the women's advisory board as specified in K.C.C. 2.30.040 and for the veterans, seniors, and human services levy advisory board and its committees consistent with state and county requirements.
F. The duties of the housing and community development division shall include the following:
1. Managing programs that address housing and community development needs, and helping implement improvements identified in subarea and neighborhood plans for low-and-moderate income communities;
2. Administering the county's federal housing, homelessness, and community development moneys and other housing, homelessness, and community development moneys;
3. Developing housing, homelessness, and community development policies and programs to implement the growth management policies throughout King County to provide affordable housing to low-and moderate-income residents; and
4. Providing staff support for the renter's commission as specified in K.C.C. chapter 2.150.
SECTION 2. The department of community and human services shall offer, no later than March 31, 2026, to provide a briefing to the committee of the whole, or its successor, to update the committee on the status of the department's contract management and compliance monitoring activities, including, but not limited to, activities initiated consequent to any recommendations from the King County auditor's office, as well as a summary of previous recommendations from prior county audits that identified similar challenges with financial oversight of county-administered grants and a report of what has been learned and implemented from those recommendations, including why any recommended actions were not implemented.
SECTION 3. A. The department of community and human services shall provide, by no later than October 20, 2025, the following reports to the council:
1.a. A report analyzing the feasibility of establishing a services provider capacity and fiscal partnership program that makes available to all department multiyear contract agencies ongoing technical assistance and capacity building services. Examples of technical assistance and capacity building services may include, but not be limited to, contract compliance training, financial management services, or any other best practices financial advisory services.
b. The report should also identify an estimated implementation timeline, with a goal of program implementation beginning January 1, 2026, as well as any resources needed for enabling program implementation.
c. Additionally, the report should include a recommendation regarding whether a services provider capacity and fiscal partnership program would be more suitable for administration by the department, an external service provider, or both;
2. A report detailing the feasibility of implementing the auditor's recommendations and proposed amendment concepts. The report shall include, but not be limited to:
a. an evaluation of whether reforms can be achieved within existing resources;
b. a recommended timeline and implementation plan;
c. an assessment of associated costs; and
d. identification of structural changes required to ensure lasting oversight improvements; and
3. A report analyzing the feasibility of establishing an expanded public dashboard that provides information on departmental contract outcomes to demonstrate appropriate and effective use of contract award moneys. The report shall include, but not be limited to:
a. a list of recommended departmental contract outcomes, such as exits to housing, treatment completions, recidivism reductions, hospital emergency room and jail touchpoints, to include in the expanded public dashboard;
b. a recommended timeline and implementation plan; and
c. an assessment of associated costs.
B. The executive shall electronically file the reports required by subsection A. of this section with the clerk of the council, who shall retain an electronic copy and provide an electronic copy to all councilmembers.
SECTION 4. A. By November 30, 2025, the department of community and human services shall provide a status update letter to the council responding to the auditors' recommendations and any available plans for implementation of improvements to contract management and compliance monitoring activities.
B. The executive shall electronically file the letter with the clerk of the council, who shall retain an electronic copy and provide an electronic copy to all councilmembers.
SECTION 5. A.1. The department of community and human services shall provide an electronic notification letter to the council, which should also be made available in any department dashboard reporting, on or before March 31 of each year, beginning in 2026, that includes, but is not limited to, the following information:
a. the percentage of its multiyear contract agencies that received an in-person site visit from the department during the prior calendar year;
b. a status update on the department's contract management and compliance monitoring activities; and
c. a summary of data for the prior calendar year regarding monitoring of contract agencies' time spent on contract compliance activities and evaluating the effectiveness and efficiency of contract processes and requirements.
2. The executive shall electronically file the letter with the clerk of the council, who shall retain an electronic copy and provide an electronic copy to all councilmembers.
B. In addition to the annual notification letter required in subsection A. of this section, if the department identifies credible evidence of contractor agency fraud, waste, or abuse of county-administered moneys, the department shall provide an electronic notification letter to the clerk of the council that provides a summary of any substantiated findings within thirty calendar days of any substantiated findings. The clerk of the council shall retain an electronic copy of the electronic notification letter and provide an electronic copy to all councilmembers.
SECTION 6. A. To aid in supporting the department of community and human services's commitment to fiscal accountability and safeguarding public resources, the King County auditor's office, in collaboration with the King County ombuds, is requested to provide a written report to the council that includes, but is not limited to the following information:
1. Analysis on the feasibility of, and anticipated timeline, recommended structure and powers, and associated costs for, adding an inspector general position or positions within the auditor's office, or within a department outside of the department of community and human services, who would be responsible for auditing, investigating, and receiving public concerns and complaints of suspected contracting agency fraud, waste, or abuse of county-administered moneys;
2. Analysis of the feasibility of, and anticipated timeline and associated costs for, creating a qui tam program relating to department of community and human services-administered moneys that is administered within or external to the auditor's office; and
3. Analysis of the feasibility of, and anticipated timeline and associated costs for, creating an independent contract review process for department of community and human services-administered contracts that are administered within or external to the auditor's office.
B. Where warranted, analysis included in the report requested by subsection A. of this section may recommend that new functions, positions, programs and reviews not be limited in scope to the department of community and human services.
C. The report requested by subsection A. of this section should be electronically provided to the clerk of the King County council by June 1, 2026, with a status report
provided by March 1, 2026, who shall retain a copy and provide an electronic copy to all councilmembers.