Pa. auditor general to audit DNC host committee grant

State Auditor General Eugene DePasquale announced Thursday that his office will be auditing the $10 million state grant given to the Philadelphia 2016 Host Committee to help organize last year’s Democratic National Convention.

The audit was requested by Gov. Wolf and state Republicans this week following reports by the Inquirer and Daily News that the host committee used surplus money to pay committee staffers nearly $1 million in bonuses.

Hours after DePasquale's announcement, state House Republicans sent a letter to former Gov. Ed Rendell, who served as chairman of the host committee, and Tom Perez, the Democratic National Committee chairman, asking for the state to be reimbursed for any money that was left over.

"Without the $10 million contribution by taxpayers, the surplus would not have existed. You prioritized bonuses . . . over the taxpayers of this Commonwealth. It is truly a slap in the face of every Pennsylvanian," the letter said. "Please return the money that rightly belongs to state taxpayers." 

DePasquale said he would look at whether the grant was appropriately authorized, expenditures matched the grant agreement, and any of the state money was “co-mingled” with other private dollars.

"If the funds were co-mingled, we have ability to look at more of the funding," DePasquale said in a Thursday morning news conference. "If the funds were segregated, we only get to look at the $10 million."

Committee officials have said that the state money — the largest single donation to the effort that raised $86 million — was not mixed with any private dollars. The committee hired JT Goldstein, a local accounting firm, to audit the grant, per state rules. The 10-page audit said that the money was spent appropriately (on venue licensing and construction costs) within nine days of receipt.

Senate Republican leaders said Monday they were skeptical of the audit and wanted the auditor general to review the matter.

On Thursday, the host committee released the following statement:

"The Host Committee is ready and willing to help the auditor general in this review, and we will provide his office with whatever documentation it needs. . . .  We remain confident in our accounting and look forward to this additional review to clarify the matter."

DePasquale said Rendell "has agreed to fully cooperate” with the audit.

On Thursday, Rendell said the state got "exactly what the commonwealth asked for.... We fulfilled our contractual obligation."

Rendell said the state legislators who approved the grant could have included a clause in the agreement regarding what to do with surplus money. "They did not," he said. "That's because $10 million is absolutely zippo compared to the tax revenue and indirect benefits the state received and, of course, the publicity the Pennsylvania region got."

The host committee was charged with fund-raising and organizing the events surrounding the July 25 to 28 convention. It wasn't until September, when the committee filed its financial reports with the Federal Election Commission, that it reported exceeding its fund-raising goal. 

The committee used its surplus to pay the city more than $500,000 for municipal services incurred during the convention, make $1.2 million in grants to local nonprofits, and provide the nearly $1 million in bonuses.

The bonuses ranged from $13,357 for the office manager, who was paid $3,000 monthly, to $310,000 for executive director Kevin Washo, who was paid $13,000 monthly. Rendell has said that Washo's payout was part bonus and part back pay for work early in the process.) The amounts were listed in a year-end report filed with the Federal Election Commission on Jan. 31.

Rendell has defended the bonuses, saying that the committee worked long hours for what he saw as low pay. He has said no taxpayer money was used for the extra pay.

Even after the bonuses were paid, some committee staffers continued to receive regular monthly salaries through at least the end of March. One of those was Washo, who since November has been working as a government affairs specialist at the law firm Cozen O'Connor. 

DePasquale said that if he finds that provisions of the grant agreement were not followed, he could recommend that the state recoup that funding.

"But beyond that, I do believe things we can look at this process and help the state improve its grant awarding" process, DePasquale said. 

He said expects to complete the review of the grant money in July. He said that "depending" how the audit "progresses," he may ask the host committee to allow him to audit all $86 million it raised.

"I made the decision to start with the $10 million," he said. 

Staff writer Sarah Mearhoff contributed to this report. 

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