The Denver Police Department and Department of Public Safety failed to spend nearly $400,000 that was awarded to the city to fund the co-responder police program.

An audit released Thursday found $383,000 of grant funds from the Caring for Denver Foundation unused, granted to the city to pay for its co-responder program, which sends licensed mental health clinicians with police officers to respond to emergency calls involving individuals with mental health needs. With interest gained, the funds now total $438,000.

In 2018, Denver voters approved a 0.25% sales tax increase to fund behavioral health services, with funds disbursed through grants by the Caring for Denver Foundation. In 2020, the Denver Police Department received a grant to fund the co-responder program through July 2021.

“We found the city is leaving money on the table that could be used for the co-responder program or other programs to support mental health as voters required,” said Denver Auditor Timothy O’Brien. “The people of Denver lost the opportunity in that funding year to receive even more services from this innovative new co-responder program.”

O’Brien said grant funds cannot be treated like regular city budgets that roll over from year to year. Since Denver failed to use the funds, the city must repay the $438,000 to the Caring for Denver Foundation.

According to the audit, city officials said they assumed unspent funds would be carried over to a future co-responder grant award.

The police department could have used the funds for the co-responder program or returned them to the Caring for Denver Foundation to go towards other initiatives laid out in ordinance, including alternative-to-jail facilities or mental health training for first responders, the audit said. 

The audit also found that the Denver Police Department used grant funds on unallowable costs and isn’t paying its service provider on time for co-responder services.

The police department used grant funds to pay for expenses from the wrong year, travel expenses and excessive indirect costs, including general business expenses, such as rent and utility bills, over direct costs such as co-responder wages, uniforms and benefits. The grant only allowed for a 10% indirect cost rate, while the police department reimbursed indirect costs at a rate of 30% of the overall expenses.

The audit said the city also paid its service provider, a nonprofit called WellPower, late and did not pay penalties for the delays. Some payments were as much as seven and a half months late, earning an additional $32,000 in late penalties. The city said those fees were waived.

“This isn’t the only contractor I’ve heard complain about late payments from the city,” O’Brien said. “When it comes to nonprofits or small businesses, cash flow problems can be devastating to their operations. It’s the city’s responsibility to set these organizations up for success when doing business with taxpayer dollars.”

The police department and public safety declined the audit’s recommendation that they work with WellPower to recalculate and pay overdue fees. O’Brien said WellPower agreed to waive the penalties, but only at the request of finance managers from public safety – and after the city failed to pay them after following up on multiple late payments.

The audit made 24 other recommendations that the police department and public safety agreed to implement, including reimbursing the Caring for Denver Foundation, identifying other sources of funding for unallowable costs and appointing and training designated individuals in the departments to monitor grant compliance.