Inspector General report: City employees reaped nearly $300,000 in questionable bonuses

The city of Albuquerque’s Office of Inspector General has concluded that a group of city employees, including some top administrators in the city’s Family & Community Services Department, received more than $280,000 in improper bonuses using money intended to sustain child care providers during the COVID pandemic.

The OIG, acting on an anonymous tip, found the “questionable expenditure” of federal grant funds to 27 employees between 2021 and 2023, according to its report. More than 10 recipients, including top managers, received nearly $20,000 each.

The Family & Community Services Department now operates under the umbrella of the city’s Youth and Family Services and Health, Housing and Homelessness departments.

Youth and Family Services director Katarina Sandoval, who is Mayor Tim Keller’s former chief of staff, did not respond to a request for comment Thursday. Sandoval took over the department in 2023.

In response to the OIG report, the city contends it wasn’t intentionally misusing funds and did not have direction on where to appropriate the funds.

City Council President Dan Lewis told the Journal in a statement on Thursday, “My office is referring this investigation to the U.S. Attorney due to allegations of federal crimes involving the abuse, misuse, and theft of federal funds allocated to high-ranking members of the Keller administration.”

“These funds, approved by the Council, were intended exclusively for early childhood programs as outlined in the grant’s description. However, they appear to have been unlawfully redirected as cash bonuses for the Mayor’s staff,” Lewis continued.

A spokesperson for Keller called Lewis’ comments “a grossly inaccurate overreaction.”

The OIG’s oversight committee took the unusual action of voting not to approve the OIG report released Thursday. The Accountability in Government Oversight Committee, which is comprised of community members appointed by the mayor and City Council, met on Nov. 14 to review and consider the investigative report. But it found the OIG “lacked sufficient jurisdiction under the city’s Inspector General ordinance to investigate one or more of the allegations.” The report does not explicitly recommend disciplinary action.

Inspector General Melissa Santistevan did not respond to multiple requests for comment Thursday.

The committee voted 5-0 against approval, stating in a “cautionary statement” attached to the investigative report that “readers are advised to review this published report and its content with the understanding that the Committee did not approve this report.”

Meanwhile, Associate Chief Administrative Officer Carla Martinez, released the statement, “Once again the OIG is submitting subjective opinions that were unanimously rejected by her own oversight committee comprised of legal and accounting professionals. This grant provided necessary overtime funding for critical early childhood caregiver programs and management during the Covid crisis.”

Among its findings, the OIG reported bonuses, also called premium payments, of up to $22,498 that were paid to employees who earned $32,469 to $123,490 annually.

The grant money was supposed to assist in keeping child care providers’ doors open during the pandemic. But, according to the OIG, the money also went to higher-ranking city staff that included the division’s deputy director, fiscal manager and the child and family development division manager. Additionally, two fiscal officers, two payroll specialists and seven fiscal analysts received bonuses.

Twenty-three of the 27 employees received a July 2022 bonus of either $8,533 or $3,878, then in December of the same year, 14 employees received bonuses ranging from $5,400 to $13,000.

The highest bonus of $22,498 went to the Child and Family Development division manager. The position made $88,000 annually before “premium pay.”

“Twenty-three out of the 27 employees who received premium pay had annual salaries greater than Preschool staff. Five of those salaries were more than double the Preschool staff’s highest paid salary with one almost tripling the salary of the highest-paid Preschool staff,” the OIG report states.

In its recommendations, the OIG recommended the city should determine if the extra pay should be recouped or if the city’s general fund should be tapped to repay the amount improperly disbursed.

The money came via the the federal American Rescue Plan Act of 2021 signed on March 11, 2021, for child care stabilization grants to help give financial relief to child care providers and defray unexpected business costs associated with the pandemic and to help stabilize their operations “so that they may continue to provide care.” The federal funding was administered by the state of New Mexico.

But a city division director was quoted in the OIG report as saying that the understanding was that “all employees who conducted work on behalf of the division” would receive bonuses.

Julia Sclafani, spokesperson for the New Mexico Early Childhood Education and Care Department, who administered the funds did not respond to a request for comment.

During one interview, the OIG asked “if there were others in the management chain who approved the list of disbursements. In response, one top ranking department officials said a spreadsheet of proposed bonuses ultimately went to the 11th floor” of City Hall. The OIG noted that is the location for the city’s executive staff.

Asked if anyone considered “that maybe teachers and direct support staff for the centers should have received more than the other support staff, the unidentified division manager stated no, ‘it did not come up,’ and they wanted to be consistent across the board.”

The OIG learned in one interview that all payments went through top-ranking directors “and then got signed off by the CAO (chief administrative officer).” But the report didn’t identify the name of the CAO. The CAO position changed hands in 2022 from Sarita Nair to Lawrence Rael, who retired in 2023.

Another top administrator in the Family & Community Services department told the OIG that no one raised any red flags on who was to get the bonuses, and that official thought “it was a good opportunity to do something good” for the employees.

That administrator was quoted as saying that officials “thought they were protected with the guidance on allowable expenses and having key City Management overseeing and approving the disbursements.”