City finance department asks State Auditor to widen investigation of Black Brilliance research contract

PubliCola reported today that the city’s Finance and Administrative Services (FAS) department has sent a letter to the Office of the Washington State Auditor asking it to widen the set of issues it is investigating stemming from the $3 million contract that the City Council signed last fall for the Black Brilliance Research Project.

Crosscut first reported in January that the state Auditor was looking into the contract, after SCC Insight highlighted several issues related to it. The PubliCola article posted today is excellent and I encourage you to read it; it points out the uniquely political nature of the request, which is unusual coming from the typically apolitical FAS, and there is little doubt that the Mayor’s Office had a strong hand in it.


Two of the issues for potential investigation raised in the letter are of note. The first is one originally raised here: that within Seattle city government the Office of the City Auditor is housed within the legislative branch, setting up a conflict of interest that precludes it from investigating any of the City Council’s activities. The letter asks for the state Auditor’s thoughts on whether the city would be better served with a fully independent City Auditor. On one hand, the City Council is entrusted with oversight responsibilities over the Executive Branch, which encompasses the vast majority of city government; in that sense, it is not entirely unreasonable for the City Auditor to be a part of that machinery. On the other hand, to the extent that the City Council decides to appropriate money to itself for significant activities — with the $3 million Black Brilliance contract a perfect example — there is no independent oversight for those expenditures and activities. While the King County Auditor and State Auditor both have authority to investigate Seattle city government functions, as the State Auditor is now doing in this case, both of those offices have large responsibilities and limited resources. So there is a strong case to be made that in the interest of good governance the city would be better served by moving the City Auditor’s office out of the legislative branch.

The second issue of note is the question of earmarks. The Seattle City Charter, Article IV Section 18, prohibits budget earmarks: “The City Council shall make no appropriation in aid of any corporation, person or society, unless expressly authorized by this Charter or the laws of the state.” There is nuance here: it specifically prevents the City Council, but not the executive branch, from directing money to a specific person or organization. The executive branch may only do so for contracts under $55,000, with limited exceptions; all others must be bid out. Of course, the City Council all but ignores this restriction, frequently and blatantly naming target organizations in budget appropriations but doing so with using a carefully-worded “an organization such as…” construction to give itself plausible deniability. Some examples from the 2021 budget process: here, here, and here.

While the Council can’t force the executive branch to give the money to the “such as” organization, most of the time that’s where it goes.

But what the FAS letter argues is that in the case of the Black Brilliance contract, where the legislative branch is issuing and managing the contract, the legislative record made clear that the intended recipient for the $3 million when it was appropriated was King County Equity Now, and the Council then executed a pass-through “fiscal sponsor” contract that followed through on that intent. It suggests such an arrangement when entirely handled by the City Council may violate the City Charter’s prohibition on Council earmarks.

With several issues now potentially on the State Auditor’s investigative agenda, its report may ultimately shake up things in City Hall if it finds that changes are in order.  There is no timetable for the report to be completed. Stay tuned.

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  1. The “statutory exemption for non-profits” mentioned in item 2? The text goes on to say “The Charter does not have any exception for contracts with non-profits.” I guess that doesn’t preclude the existence of that statutory exemption somewhere else, but it seems to be a bit of a mystery.

    If there really is no such exemption, then the pass through arrangement is technically irrelevant? The council wasn’t supposed to award the contract without public bidding, even if the contract is to be executed entirely by a qualified non-profit. I believe it’s commonplace for organizations that have gone through hoops to get official non-profit status, to act as fiscal agents for ad hoc organizations who would find that process a significant burden, so it doesn’t look like an automatic red flag to me – but the circumstances I’m thinking of are tiny grants and such, that wouldn’t be subject to these bidding requirements.

    1. Yeah, it’s complicated. the Charter says that all contracts above $xxx, where $xxx is set by ordinance, must be bid out. It doesn’t say that the ordinance can’t specify a different $xxx for different kinds of contracts, or for contracts with different types of vendors. So the relevant ordinance can be interpreted as “Contracts above $55,000 with a for-profit organization must be bid out, but there is no such $ limit for contracts with non-profits.”

      I’m not a lawyer, and I’m not aware of any court precedents for interpreting whether that is a legal construction. But it’s the current one.

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