The allegations revolve around the City Council’s relatively new debit card, the use of which was suspended in September by the city treasurer because of questions about its use. The card was primarily being used by the council’s chief of staff, June Rose.
Rose, Council President Rachel Miller and Councilman Miguel Sanchez are planning to attend the DSA Fund’s “How We Win” conference in New Orleans Friday through Sunday. Rose paid for their conference registration back in August with the council debit card before it was suspended, and is being reimbursed for travel expenses on the trip. Miller and Sanchez are paying for their own travel, a spokesperson said.
The DSA Fund, a 501(c)3 nonprofit, describes itself as “the political education sister organization to the Democratic Socialists of America.”
The conference description says it brings together “over 250 democratic socialists in elected office across the country alongside an array of grassroots and policy allies to work on achieving legislative wins for working people — winning affordability, winning good housing and safe communities, winning healthcare and education, and winning governments that work for working people.”
As a tax-exempt 501(c)3, the organization is barred by the IRS from conducting partisan campaign activity.
Costa reviewed the debit card this fall at the request of Council Finance Chair Jo-Ann Ryan and said city staffers should pay back the funds spent on “partisan conferences,” and said the city solicitor should look into any potential “criminal or civil offense.”
The staffers “potentially misappropriated approximately $16,650 in payments for partisan events and salaries of employees to partisan conferences,” Costa wrote in the report. She said both the upcoming Democratic Socialists of America Fund event and a Local Progress Impact Lab conference in California in July, which three staffers attended, were inappropriate uses of city funds.
“The payments to these organizations, the work hours paid while attending these events, and all associated expenses including flights and lodging do not support the function of government, or the employee’s role in government,” Costa wrote.
She also included a letter from the DSA Fund’s lawyer, which said the fund was created for “the purpose of promoting understanding of democratic socialism.”
An email in May from Miller to Kat Kerwin, a former city councilor who worked at Local Progress at the time, said the council was aiming to pass “the most progressive housing legislation in the country,” and the three staffers hoped to learn more at the conference.
Miller told the Globe she disagreed with the allegations in the auditor’s report and asked the city’s municipal integrity officer, Rosa Arias-Perry, to weigh in on Wednesday.
Perry wrote in an ethics opinion that because the DSA Fund and Local Progress are 501(c)3 nonprofits, using city funds to pay for travel and attendance is allowed.
“I must respectfully disagree with the finding that such conduct creates a conflict of interest and should not be funded by the city,” Arias-Perry said.
Costa, a council appointee who was first named internal auditor in 2018, conducts reviews of city operations and departments, often flagging misspent or wasted funds. But it is rare for her to look into the council itself, since she is appointed by its members.
In her report, Costa said the city debit card is not even supposed to be used for travel; it is meant for emergencies or “limited purchases” that can’t go through the normal purchasing process, such as vendors that don’t accept checks.
Digital newspaper subscriptions to the Globe and the Providence Journal were among the charges on the card that Costa deemed valid, along with other digital subscriptions such as Canva.
Typically, the city either reimburses an employee for travel expenses, or the employee can book flights through a travel agency that is paid by the city.
John Marion, the executive director at good-government group Common Cause Rhode Island, said Costa’s report is “clear that employees in both the executive and legislative branches of city government did not follow the debit card procedures and those procedures and controls should be clarified and strengthened.” Marion agreed with Costa’s recommendation that yearly audits of the debit card spending should be implemented.
But he said said her report provides a “subjective opinion” that the conferences attended by council staffers were partisan in nature, and therefore not eligible for city funds.
“The auditor flippantly dismisses the IRS designation of the sponsoring organizations as non-partisan and substitutes her own opinion that these conferences partisan because they are ‘based on an ideology,’” Marion said. “The internal auditor should be relying on facts, not opinions, to guide the conclusions of the audit.”
Ryan, the Finance Committee chair, said she asked for the review of the debit card because there were receipts missing for some of the transactions.
“It’s clear that we need to beef up our internal controls” before the card is allowed to be used again, she said.
Miller called the allegations in the report “extreme” and said attending conferences for professional development is standard at all levels of government.
“There is a long tradition of people attending meetings that are content-based,” she said.
Rose declined to comment on the findings of the review.
Rose was hired by Miller nearly two years ago to be the council’s top staffer, and has faced controversy for their political activities. They have been arrested twice since being hired, once during a protest against Israeli Prime Minister Benjamin Netanyahu at the US Capitol last summer, and again when protesting at Trump Tower earlier this year.
Councilman Jim Taylor, who was ousted as Miller’s majority leader last year, called for Rose to resign after the second arrest, arguing they should be focused on local issues. But Miller defended Rose, and said they used vacation time to participate in political protests.
Kati Stevens, a spokesperson for the council, said the auditor’s report made “serous allegations of ethical and criminal conduct,” and pointed to Arias-Perry’s review that “concludes unequivocally that no violations” of city law occurred.”
Steph Machado can be reached at [email protected]. Follow her @StephMachado.
