Did the Colorado Department of Public Health and Environment violate a state constitutional amendment by using tobacco taxes intended for prevention programs on policy initiatives to pass local laws and ordinances banning smoking? That is the question that Colorado state auditor Dianne E. Ray, CPA, posed on Monday with the release of a state audit of the tobacco tax program. In addition, the auditor said the funds were given without sufficient consideration of applicants' past performance or the financial risk of the grant. Here are the details.
* According to the information supplied with the audit, during the fiscal years of 2010 and 2011, the Tobacco Prevention Program -- administered by the Colorado Department of Public Health and Environment -- awarded about $5.2 million in funding to a total of 140 grantees. The money given to these grantees was to fund local government laws and organizational policies related to tobacco use, Ray stated.
* In 2005, Amendment 35 increased the tax on cigarettes to 84 cents and placed a 40 percent tax on the manufacturer's retail price of all other tobacco products, the auditor reported.
* State law requires that 16 percent of the funds raised by this tax be spent on funding school, community-based and statewide tobacco education programs to reduce the use of tobacco by children and youth, promote cessation of tobacco use and reduce exposure to second-hand smoke. Another 16 percent is to be used for the prevention, early detection and treatment of disease such as cancer, cardiovascular disease and chronic pulmonary disease.
* In 2011, the state collected about $145 million in Amendment 35 taxes, Ray stated.
* The state auditor recommended in her report that the state Department of Public Health and Environment seek the attorney general's opinion as to whether the statute allows the funds raised for the Tobacco Prevention Program to be spent on policy initiatives.
* According to the auditor, the department disagreed with this recommendation. The Denver Post stated that Dr. Chris Urbina, executive director for the Department of Public Health and Environment, told lawmakers who heard the auditor's report on Monday that the department felt the practice was legal and doesn't need an outside opinion.
* The auditor also reported that is found that grants were awarded to grantees with questionable past performance with grants. An example was given of one approved grantee who had been issued an order to stop work on a previous grant due to performance problems.
* In addition, the Ray's report explained, there were problems discovered with the accuracy and completeness of contracts for nine out of 17 sampled grantees. Some of the errors that the state auditor's office found -- which resulted in an overpayment of about $8,400 -- were budgets for timeframes that exceeded the contract period, miscalculations and missing budget information. There were also about $69,500 of questionable grant reimbursements found.
* The audit also revealed that the department has not maintained an accurate database of grant information. "For 57 out of the 211 grants in Fiscal Years 2010 and 2011," the auditor wrote, "the information provided by the Department included errors such as incorrect entities that received grants, incorrect expenditure amounts, and incorrect grant award amounts."
* The auditor's office recommended that the department improve its processes for assessing the risk and capacity of applicants; implement controls to ensure that grant contracts are accurate, strengthen its procedures to ensure that grantees are receiving only allowable reimbursements and are complying with contracts; and improve data management. The department agreed with all of these recommendations and plans to implement them all by June 2013 or earlier.
