Good & bad news: Guam in FY2020 got a ton of federal money. Some of it may have been misspent

By Nancy I. Maanao

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Public Auditor Benjamin Cruz has released his audit of the federal funds granted to the government of Guam in Fiscal Year 2020. Half of FY 2020 encompassed the first six-and-a-half months of the public health emergency: March 16 through September 30, 2020.


The good news? Congressman Michael San Nicolas really really brought the bacon home. According to the audit, 14 federal cabinet agencies and two public corporations contributed more than $837.4 million to GovGuam. This included $384 million from the U.S. Department of Labor, which mostly encompasses unemployment payments in FY 2020.


The bad news? The Office of the Public Auditor is questioning millions in federal spending by the government, creating negative impressions on the annual single audit. Translation: A big 'no no' in the world of financial accountability and responsibility over taxpayer money.


There is a silver lining: Out of nearly $1 billion in federal funds, only $1.3 million in costs are questioned.


Among the questioned costs are $399,830 in "unallowed" costs resulting from money granted by the U.S. Treasury Department. The questioned costs were spent on payments to a bank or banks for credit card fees, and hotel quarantine.


"GovGuam did not have an analysis done on absorbing credit card fees and hotel reservations for unoccupied hotel rooms," a news release from the OPA states. "While these may have been necessary expenditures to stimulate payments of taxes and other fees to the government and help minimize the hotels’ costs during the pandemic, no analytics supported these charges. As a result, a $400K questioned cost remains."


"GovGuam should more closely monitor program costs for allowability in accordance with activities allowed or unallowed requirements," the audit recommends.


"The absorption of credit card fees by GovGuam was not primarily driven by expected collection enhancements, which would be susceptible to justification by metrics, although some acceleration of collections was noted," Department of Administration director Ed Birn wrote as the reason GovGuam paid the credit card fees. "The primary goal is to permit and encourage payments to GovGuam remotely by citizens especially using website access. This was designed to minimize contact between GovGuam workers and potential COVID positive Guamanians, especially when government offices were closed and movement outside homes discouraged. Even with infection rates under control, safe practices necessitate continuation of this benefit."


Kandit has asked the Governor's Office which bank(s) was or were paid these fees. Governor's director of communications Krystal Paco San Agustin has not responded as of the publication of this story.


As for the questioned costs of the hotel(s) used for quarantine:


"Procurement of quarantine and isolation facilities was necessarily done without the benefit of significant data on expected travelers and infections. Because of the health risk, potential bidders were hesitant to price services without a significant commitment to defray their fixed and variable costs. This translated into contacts containing room minimums. In the event, quarantine facility minimums were generally exceeded whereas isolation facilities are generally not full, due to the successful infection containment measures in place. Future commitments will take into consideration data gathered by the usage over the last few months." - Birn's response to audit