Why Should Delaware Care?
New legislation aims to hold Wilmington city officials accountable for how they manage taxpayer funds. As Wilmington City Council has struggled with a history of financial controversies, recent audit findings reveal mismanagement, making the proposal essential to ensure public trust and transparency.
After an audit criticized the poor record-keeping and lax oversight of discretionary funds for individual Wilmington City Council members, new reforms have been proposed to tighten the program that doles out more than $425,000 in taxpayer funds each year.
In March, an audit of the city council’s grant program highlighted mismanagement of funds, prompting council to implement stricter measures that aim to prevent any future errors.
This week, Councilman Chris Johnson will also introduce Ordinance No. 468, which would strip city leaders of their allotted grant funds if they are found in violation of the program’s reporting requirements.
“We came up with this way to deal with it so that someone can’t violate the community’s trust, and then also use the community’s dollars,” he said.
In the current draft of the ordinance, if the mayor or city treasurer is in violation, the funds are returned to the general fund. If a council member is in violation, funds are transferred to the council president and if it’s the president, then the funds are given to the finance chair and city council will allot the funds.
Councilmembers Shané Darby and Zanthia Oliver also plan to co-sponsored the legislation.
“If you don’t do right, you don’t get your money. So when we talk about accountability, that is the piece of legislation I want to see,” Darby said.
The funding process
Each year, city council members can support local nonprofits through “Community Support Funds,” which are divided into four categories: college scholarship funds, council member discretionary funds, and council strategic grant funds of either more or less than $5,000.
Last fiscal year, each of the 13 council members had a little more than $33,000 in discretionary funds for nonprofit programs, parades and festivals – with $4,000 being allocated to scholarships for students.
Each council member has considerable leeway with his or her discretionary funds. Any grant that is less than $5,000 dollars does not require a grant application and does not need to be presented to council, allowing members to give out small chunks of taxpayer money whenever they want to whatever eligible cause they please.
“One thing I’ve tried to do since I’ve been on council is to publicize [the grants]. So I’ve sent out emails because people should know about it, it’s their tax dollars. They should know,” said Councilman James Spadola, the council’s lone Republican.
Potential grantees often send in requests to council members, but council is also allowed to suggest recipient organizations.
Last year, over 300 entities received money from council, most of which received small grants below the $5,000 threshold.
Some of the largest recipients in the last two years include the Wilmington Early Care & Education Council, the Wilmington Public Library and the Trinity Vicinity Neighborhood Association, with funds ranging between $10,000 and $15,000.
Most council members put their funds into community organizations for community outreach, community engagement, financial support, events and festivals and youth programs.
This fiscal year, CityFest received the largest grant thus far with $19,000 in funds to support the Millie Cannon Annual Summer Concert – $15,000 came from Oliver, who now has less than $5,000 to spend for the rest of the year.
In Fiscal Year 2023, city council received a one-time special fund for nonprofits that were affected by COVID and each member of council was given $100,000 in grant money.
The special fund allowed them to bypass the “$5,000 or more” regulation in the city code, meaning that members could grant any amount of their choosing to organizations without having to require approval from council by resolution. However, each grant required an application.
The large degree of discretionary latitude was meant to speed up assistance to organizations still hurting from the financial challenge of the COVID pandemic.
However, loose guidelines for small grants and lack of enforcement of the city code has also led to issues throughout the years.
Patterns of concern
Wilmington’s City Code states that “No city employee, elected official, appointed official or honorary official shall use his or her public office to secure unwarranted privileges, private advancement or gain.” Council and city employees are also not allowed to participate in any matters in which there is a “a personal or private interest.”
But in recent years, the council has struggled to keep a tight ship, with certain members drawing scrutiny for their actions.
In 2020, the City Ethics Commission found Oliver, the councilwoman for the third district, in violation of the city code when she voted to give funding to her brother’s nonprofit Our Youth. She was given a public reprimand last year, but no further action was taken.
Then in September 2023, another ethics complaint was filed against Oliver for depositing or endorsing checks intended for the Eastside Civic Association (ESCA), an organization with which she was affiliated but had not disclosed in her annual reports, into her own bank account. When notified of the conflicts, she repaid the city the funds.
Oliver says her strong connection to the community made her a reliable source for support for locals who had no one else. However, she acknowledges the mistakes she made by trying to speed up the process of getting money to grantees.
“I’ve learned my lesson,” she told Spotlight Delaware.
Oliver has implemented guidelines for herself since the audit, so now she will only take grant requests two months in advance of when they are needed. She says this will also help keep her out of trouble and refrain from trying to fulfill last-minute requests for community members.
But she isn’t the only one who’s had financial controversies.
In 2017, former Wilmington City Council President Theo Gregory directed $40,000 in city grant money to a nonprofit he founded, immediately after leaving office. He was indicted on profiteering and misconduct charges and in 2022 he was convicted of official misconduct, having to pay $12,000 in restitution.
Former Councilman Samuel Guy was censured in 2017 after accusing his peers of misappropriating the discretionary funds and discriminating against him. He ultimately sued the city over the episode, but a judge threw the case out.
And in 2001, while Oliver’s brother, Norman Oliver, served his 11 year term on city council, he assisted two close friends in receiving $130,000 in funding that was subsequently misused. Oliver and other officials were investigated on a federal level, however, no charges were found.
Oliver was also compelled to refund over $18,000 to the Delaware River & Bay Authority after using nonprofit funding to renovate his office building at the time.
March audit findings
This year’s audit was done in response to an annual risk assessment that highlighted high-risk areas in the council’s funding process, one of many included in the ethical violation that Oliver was charged with late last year.
The performance audit looked into grant funds between January 2020 to December 2023, and tested all 50 transactions by Oliver over that period.
Of the eight checks that were disbursed to the ESCA, half were signed by Oliver, despite the potential conflict of interest. This was a new finding that wasn’t in the prior ethics complaint, and city council says it will be submitted to the Ethics Commission for further review.
Last July, Darby proposed a resolution to censure Oliver, which was struck down in a 10-2 vote. A new proposal to censure the councilwoman will be on the agenda for this week’s meeting, as a result of the audit and her two ethics violations.
But Oliver’s conflict of interest wasn’t the council’s only problem.
The audit noted more widespread noncompliance issues, finding that less than 50% of confirmation letters mailed to grant recipients were returned completed, while three were undeliverable, four did not specify if the funds were used in the city and one entity even used funds in both Wilmington and New Castle.
Funds were also given to three organizations that did not identify as nonprofits.
The audit also revealed another pile of issues, including outdated or missing tax information for vendors, incomplete vendor applications and invalid fund requests.
Additionally, it uncovered inadequately completed financial disclosure forms from council members, a missing credit card form, overfunding of a grantee, questionable financial submissions, misuse of grant money, and a conflict of interest involving a council member endorsing funds to a closely connected entity.
“I think the audit and the recent decisions from the Ethics Commission should give council and the public great pause and concern,” Councilman Spadola said. “And I think council needs to do better, and as a body and individually, we need to hold each other accountable.”
Potential solutions
As a result of the findings, the auditor made recommendations to which the council responded with three management and action plans.
“The council has been diligently working to address the findings of the audit, and we are strengthening our internal controls,” City Council President Ernest “Trippi” Congo told Spotlight Delaware in a statement. “Transparency and accountability have been our guiding principles. Since the audit, we’ve been proactive in ensuring that all Council members are fully informed about the necessary action steps.”
Council members have agreed to explore strengthening ethics training for all employees and elected officials to ensure compliance, and to potentially add consequences for noncompliance. Additional copies of the city code’s ethical guidelines will also be distributed to reinforce awareness.
A checklist will also now be required to verify receipt of nonprofit status, W-9 forms, and 501c3 determination letters before disbursement of more than $5,000 in council grant funding.
Lastly, council members will now verify W-9s for payments under $5,000 and ensure staff attend training on procurement processes. Financial disclosure forms will be required to be notarized, and officials are encouraged to consult the Law Department for guidance.
Most of the new requirements are guidelines that council already has in place, but the stricter stance should help prevent officials from abusing their authority.
“I think one of the main things that’s lacking in our community is the support system. But I think the changes they’ve made are warranted. It warrants it so people don’t take advantage of the system,” Oliver said.
Make Your Voice Heard
City Council will reconvene at 6:30 p.m. Thursday, Aug. 22, when Johnson’s legislation, among others, will be on the agenda. The meeting will be available for public attendance via Zoom and in person at the Louis L. Redding City/County Building located at 800 N. French St. To see the agenda and more details, click here.
