Audit Reveals Oversight Failures In County Human Services Grants

A sweeping King County audit has uncovered troubling lapses in financial oversight at the Department of Community and Human Services (DCHS), revealing potential fraud, payments to unapproved subcontractors, and millions of dollars in taxpayer funds at risk.

The report, released Tuesday by the King County Auditor’s Office, examined four major youth programs between 2022 and 2025—Family Intervention and Restorative Services, Liberation and Healing from Systemic Racism, Restorative Community Pathways, and Stopping the School-to-Prison Pipeline—during a period when the department’s grant budget ballooned from $22 million in 2019–2020 to more than $1.5 billion in 2023–2024.

Auditors found that in its push to reduce barriers and award funds equitably, DCHS failed to maintain basic financial controls, leaving the county vulnerable to fraud and waste.

“The Department of Community and Human Services took on a lot of risk with public money without putting in a safety net,” said King County Auditor Kymber Waltmunson. “By implementing our recommendations—some as simple as anti-fraud training and contract monitoring checklists—DCHS will be better able to safeguard taxpayer funds and ensure vulnerable residents get the services they deserve.”

The audit found that nearly half (48%) of DCHS’s 359 grant recipients in 2024 were rated high risk, often because they lacked financial staff or experience with government contracts. Among the most serious issues uncovered were altered documents submitted by grantees to support questionable reimbursement requests, payments made to unapproved subcontractors including some outside the scope of awarded contracts, and expenses tied to cash withdrawals and prepaid debit cards distributed with little to no tracking. In other cases, corrective action was delayed when grantees fell short of financial standards, as the compliance team struggled with vacancies and high turnover between 2022 and 2024.

Auditors said the problems went beyond individual contracts. The department lacked clear policies for basic financial safeguards such as invoice validation, stipend payments, prepaid card logs, and contract amendments. At the same time, grantees were seldom required to take advantage of financial training or consulting programs that could have reduced risks.

DCHS acknowledged the gaps and said it has begun corrective steps. In 2024, it created a contract monitoring workgroup. In 2025, it added three compliance staff and rolled out new training on contract oversight. The department also plans to launch an orientation program for grantees this fall. Still, auditors warned that without a cultural shift toward financial stewardship, these measures may not be enough to protect more than a billion dollars in taxpayer-funded contracts.

The findings prompted King County Councilmember Reagan Dunn to introduce new legislation on Tuesday aimed at tightening oversight.

“This audit unfortunately confirms what I have been warning about for years,” Dunn said. “Inadequate oversight of community-based organizations’ contracts has left the door wide open for waste, fraud, and abuse. With affordability an urgent concern across King County, it is simply unacceptable to push such large amounts of taxpayer dollars out the door without proper oversight.”

The report stems from repeated requests by Councilmember Dunn for greater transparency in how DCHS manages its contracts, particularly as the department’s budget expanded dramatically in recent years.

Dunn’s bill would require DCHS to conduct annual risk assessments of all contractors and perform on-site visits of each agency at least once every three years, with priority given to suspected fraud cases. The measure also directs the department to adhere strictly to its own contract monitoring policies and report progress back to the council by March 31, 2026.

The audit described a department struggling to keep pace with explosive growth. DCHS’s budget has surged past $1.5 billion, yet its oversight systems have not scaled accordingly. Auditors

stressed that with more than a billion dollars at stake, the department’s challenge now is to match its ambition with the safeguards necessary to keep pace with its rapid growth.