Audit: King County funneled $1.5B with weak oversight; potential fraud flagged

(The Center Square) – A new audit revealed that the King County Department of Community and Human Services' fiscal oversight failures have resulted in potential fraud.

The King County Auditor’s Office latest report identified technical invoicing challenges and a lack of understanding of what is being approved through the department's hybrid model. DCHS is responsible for granting and monitoring substantial public funds for the county, administering 90% of all county grants.

In 2023 and 2024 combined, the department distributed more than $1.5 billion. That is a 6,700% increase from $22 million in 2019 and 2020 combined.

The audit found that the department responded to the massive increase in fiscal responsibility by focusing on reducing barriers to county contracting for organizations without much government contracting experience. The department made these policy choices without installing a safety net to monitor whether the funds were being used appropriately.

Numerous instances were flagged in which improper payments, including potential fraud, were made across multiple DHS contracts and programs. According to the audit, two grantees likely altered or forged supporting documents, which may meet the definition of fraud under county policy. Three grantees’ spending deviated significantly from budgets without written approval and six grantees were paid without consistently submitting detailed expense reports.

DCHS is currently considering whether it needs to recover funds or take any corrective action.

“While I feel very positive about the direction that [DCHS] is moving, I was alarmed by the level of internal control failure that we encountered during this audit,” King County Auditor Kymber Waltmunson said during a Committee of the Whole meeting on Tuesday.

The department uses a hybrid payment model, which sets monthly payments based on contract budgets. In other words, if a contract had a 12-month budget of $120,000, DCHS pays $10,000 per month. This model accounted for more than $130 million in DCHS provider payments in 2024.

The King County Auditor’s Office found that payments in excess of expenses can build up over time. In one case, a grantee received $80,000 more than it had spent on youth services before the department paused payment.

The King County Auditor’s Office recommends the department ensure that staff are supported in their fiscal monitoring duties, identify risks of its hybrid payment model and develop clear processes for managing excess payments.

In a statement shared with The Center Square, King County Executive Shannon Braddock explained that during the COVID-19 pandemic, DCHS experienced a period of rapid growth alongside an increase in need for services. Staffing did not keep pace.

In 2022 and 2023, turnover within the DCHS compliance team contributed to significant underperformance, as the team had difficulty hiring and retaining employees. The department allocated three new positions to this team in 2025 and has scheduled more site visits as a result. However, according to Principal Auditor Megan Ko, the level is still well below standard.

“We know there is still more work to do, and we are committed to getting it right,” Braddock said. “I've directed additional outside consulting with experts to more fully understand the problem and implement additional internal controls.”

DCHS Director Kelly Rider said the department is working to build on the audit findings.

“Most of those recommendations we do believe we can achieve by the middle of next year, a couple in the very first quarter, as well as a few through the middle of next year,” Rider said.