County departments and a former county administrator say there should and still will be accountability for county grant funds as the council is poised to pass a bill today that would provide up to 25 percent or more of grant funds to recipients upfront.

Bill 74, which amends the Maui County Grants Program, is slated for second and final reading today during the council’s meeting, which begins at 9 a.m. The bill passed unanimously during first reading June 5.

Council Vice-Chairwoman Keani Rawlins-Fernandez, who authored the bill, has said on the council floor and in the bill that the change will allow small organizations with limited resources and staffing to receive funding expeditiously.

Depending on the grants, certain processes may be difficult for some organizations to complete upfront with minimum staff, or in some cases the organizations may not have capital to begin with and therefore cannot front the money to be reimbursed by the county later, Rawlins-Fernandez explained.

Following the initial disbursement, all remaining grant funds must be paid through the departments’ reimbursement process, according to the bill.

To ensure there is compliance with county rules, the bill would allow the council to prohibit a grantee found in noncompliance from applying for any other county grant for five years and must pay back all funds or real property, according to Rawlins-Fernandez.

She added that there is still an application process, which includes budgeting documents and other accountability measures that organizations need to submit in order to initially qualify for a grant. Council Chairwoman Alice Lee said at the June 5 council meeting that she envisions those that will benefit from the new process will be smaller organizations, which would likely not seek larger county grant funds.

Teena Rasmussen, former director of the County’s Office of Economic Development under Mayor Alan Arakawa, said the 25 percent advance is “pretty standard in the grant world and it will make it much easier for the organizations to get the work started.”

But if 100 percent was given upfront, even with smaller grants — a possibility that was floated in committee discussion — she said she wouldn’t favor the bill as the county would have no leverage to get reports and receipts to make sure funds are spent properly.

Rasmussen said in an email Thursday that she is “not fond” of the fact that the bill offers 25 percent “or more” because it does open up the possibility that the whole grant could be advanced and political pressure could make it happen for certain grantees.

“I think giving the granting departments flexibility is helpful since grantees have varying capacity levels within their organizations,” Rasmussen said. “But accountability to taxpayers is equally important, which requires reporting and verification of where the funds went.”

When Rasmussen was head of OED in 2018, her office terminated part of a $100,000 grant awarded to an organization headed by Brian Bardellini, an executive assistant of then-Council Member Alika Atay, after vendors who participated in a 250th birthday celebration for Queen Ka’ahumanu did not get paid. The office instead took over the task of reimbursing vendors.

Debbie Cabebe, CEO of Maui Economic Opportunity Inc. and a past president of the Maui Nonprofit Directors Association, said the bill would help those small organizations that may need funding for an event or special project and would help them “tremendously” as most of these grants are on a reimbursement basis.

“It would be ideal if the initial 25 percent could be released quickly, but there are often paperwork and document challenges that prevent this from happening,” Cabebe said in an email Thursday afternoon. “That is not a criticism, just a fact. There must be checks and balances in place to ensure that we are all good stewards of our taxpayer dollars.”

As for MEO, one of the larger county grantees, Cabebe said there are other challenges with grant disbursement.

Most of the organization’s grants allow for a 25 percent initial allotment and then further release of partial funds throughout the quarters of the year, with final reports and reconciled expenditures due 30 days after the grant ends.

But cash flow issues arise when grantees like MEO are awaiting the fourth quarter reimbursement and the first allotment for the new grant year.

“While it is understandable that there has to be accountability and internal controls, it makes grant management difficult for all,” Cabebe said. “This is a complex problem and many have tried to address the matter, however, the challenge remains.”

Maui County spokesman Chris Sugidono said departments such as Housing and Human Concerns and the Office of Economic Development have quarterly checks on grantees, including reports and monitoring.

Both departments said that there shouldn’t be any problems with fronting at least 25 percent of grants. The housing department already allows a grantee to invoice the county for 25 percent of the grant award during the first quarter.

On average, the housing department doles out $167,098 per grant. It gives out about 101 grants a year with total funding of about $16.6 million. Currently staff are working on preparing more than 100 grant agreements for funding that comes through the department. After a grant agreement is worked out, signed, processed and executed, agencies can then request the first quarter payment.

By the time this occurs, the department will have the fiscal year 2020-21 funding (the fiscal year begins July 1) and the funding will be reserved to be able to pay the grantee, Sugidono said.

As for OED, funds for the next fiscal year also will be available July 1, the same day grant applications are due.

After the applications are reviewed and awarded, the funding is set aside for disbursement, Sugidono said.

For this fiscal year, OED issued 121 grants with an average of $100,000. OED grants range from $5,000 up to $3 million, Sugidono said.

* Melissa Tanji can be reached at mtanji@mauinews.com.