King County Overhauls Grant System Amid Fraud Concerns and Audit Findings

King County’s Department of Community and Human Services (DCHS) is undertaking significant reforms to its grant administration processes, aiming to bolster accountability and prevent fraud and waste. These changes come in response to an investigation by the King County Office of the Ombuds, which followed up on an earlier audit of a subset of contracts managed by the department. The department oversees approximately $1.8 billion in annual grant funding.

The ombuds’ report, released in May, delves into a 2025 audit that examined a specific range of contracts within DCHS. While the King County Auditor’s Office has noted “significant progress” by DCHS in addressing audit recommendations, the ombuds’ findings are being referred to law enforcement and the Washington State Auditor’s Office due to indications of “possible fraud, forgery, or attempted theft of funds.” It is important to note that neither the original audit nor the ombuds’ report has definitively proven that fraud has occurred, though several vendors did fail to provide adequate documentation for their activities.

Background of the Audit

The initial audit focused on 36 contracts across four youth programs administered by DCHS, with three of these programs receiving funding from the Best Starts for Kids levy. These programs primarily serve Black and brown youth in underserved communities, often contracting with smaller, community-based organizations. Of the 36 contracts reviewed, 19 were initially flagged for potential issues. DCHS conducted its own investigations into these 19 contracts before referring the matter to the ombuds for an independent assessment.

A forensic accounting consultant, Clark Nuber, was engaged by the ombuds to assess compliance concerns and produce a report. Media reports from the Seattle Times highlighted a specific case where a DCHS program manager was terminated in January after it was discovered she had overseen grants totaling $800,000 paid to companies owned by five of her family members.

Weaknesses in Ethics and Oversight

The case involving the program manager underscored broader issues with the county’s ethics code and oversight mechanisms. The County’s ethics code was found to “lack clarity on appropriate conduct,” as stated in a joint report by the King County Auditor’s Office and the ombuds in March. In the aforementioned case, only one of the family members involved technically qualified as “immediate family” under the county’s definition, and disclosures were filed for this individual. The county’s Ethics Program, responsible for overseeing ethical conduct across more than 18,000 employees, currently operates with only one part-time employee.

The Seattle Times also reported on other contract-related issues, including missing or potentially altered documentation. While the Nuber report identified some instances of possible fund misuse, there is a discrepancy regarding the exact amount. The report cited $446,000, but DCHS requested a correction to $320,000, a figure the Ombuds-Director did not accept. A DCHS spokesperson clarified to The Urbanist that the majority of these payments require further documentation rather than being outright indicators of fraud. The $320,000 figure represents approximately 2.6% of the total expenditures reviewed in the audit.

Context of Rapid Expansion

The situation at DCHS is partly understood by considering the unprecedented challenges King County faced starting in 2020. The COVID-19 pandemic, the national reckoning on racial justice following the murder of George Floyd, and the escalating opioid crisis created immense pressure on public services. DCHS was central to the county’s response, leading initiatives for pandemic relief, including the emergency rental assistance program, and advancing racial justice agendas.

Susan McLaughlin, the new director of DCHS, explained that the department’s mission was to rapidly disburse funds to communities experiencing the greatest disparities and needs. She noted that many community-based organizations, while vital, lacked extensive experience with government contracting, including the stringent accountability and reporting requirements. This created a challenging environment where mistakes and oversights could easily occur amidst the urgent need to disburse funds.

The scale of DCHS’s operations has grown dramatically. In 2019 and 2020, the department awarded $922 million in grant funding. By 2023 and 2024, this figure had more than doubled to over $1.8 billion. McLaughlin stated that DCHS “more than doubled in size and in our budget with the pandemic, and then also some additional local levy resources that came in.” Crucially, this expansion in budget and responsibility was not matched by a proportional increase in staffing and infrastructure to manage the larger sums effectively.

Addressing Process Inefficiencies

The pressure to expedite fund disbursement continued even as pandemic-related emergency funds decreased. In late 2024, the King County Council included a directive in the 2025 budget requiring DCHS to develop a plan to improve processing times for grant awards and service payments. In a presentation to the council’s Health, Housing, and Human Services committee in April 2025, then-director Kelly Rider cautioned that simply speeding up payments was insufficient. Rider emphasized the need for timeliness, efficiency, and reliability in DCHS’s operations, indicating ongoing efforts to enhance these aspects.

Key facts
| Aspect | Detail |
| :——————— | :———————————————————————– |
| Department | King County Department of Community and Human Services (DCHS) |
| Annual Grant Funding | Approx. $1.8 billion |
| Trigger for Reforms | 2025 audit and subsequent ombuds report on contract irregularities |
| Identified Issues | Potential fraud, forgery, attempted theft, missing/altered documentation |
| Previous Audit Scope | 36 contracts from four youth programs |
| Funding Source Context | Best Starts for Kids levy, pandemic response, racial justice initiatives |

The reforms at DCHS are a critical step in ensuring that public funds are managed responsibly, particularly given the department’s expanded role and the sensitive nature of the services it supports. The focus now shifts to the implementation of new protocols and the ongoing scrutiny from oversight bodies to rebuild trust and ensure the effective delivery of services to vulnerable communities.

Source: The Urbanist – King County DCHS Seeks to Put Fraud Concerns to Bed with New Protocol (https://www.theurbanist.org/king-county-dchs-seeks-to-put-fraud-concerns-to-bed-with-new-protocol/)

Key facts