A federal audit of the Indian River Lagoon Council has identified oversight gaps and close to $300,000 of grant funds the council spent, but did not properly account for.
In total, the report released this week by the Environmental Protection Agency Office of Inspector General highlights just over $293,000 in “questioned costs.” Although the federal grant funding wasn’t lost or misused, it wasn’t tracked properly and some was spent prematurely, before the money was actually in hand, according to the audit and IRL Council leadership.
Breaking down the basics
The IRL Council is an independent special district in Florida, established in 2015 to act as the funding agent for the Indian River Lagoon National Estuary Program. The 156-mile lagoon system is one of 28 “estuaries of national significance” designated by the program.
Often, when the council receives grant funds, it passes them along to subrecipients — like universities, nonprofits and governmental entities — which then use the money to execute approved lagoon restoration projects. The audit mentions a few different subrecipients, including the Brevard Zoo, the Marine Discovery Center in New Smyrna Beach and private marine construction company Sea and Shoreline.
In fiscal years 2022 and 2023, the IRL Council received $1.8 million from former President Joe Biden’s Infrastructure Investment and Jobs Act. The roughly $293,000 amount questioned in the EPA-OIG audit comes from that larger grant award, representing about 16% of the total.
What went wrong?
The roughly $293,000 at issue in the audit wasn’t lost or misused. All of it funded vetted, valuable projects to help the Indian River Lagoon, according to IRL Council Executive Director Duane De Freese.
But the money wasn’t properly accounted for, De Freese acknowledged. Most of it was cited by the audit as “unallowable costs for budget deviations.” That means subrecipients “deviated from their approved budgets” — something the Council didn’t track, so long as a project didn’t exceed the total budgeted cost.
Other funds were cited as “unallowable preaward costs,” meaning they were spent before the Council actually had the federal grant monies in hand — and without the EPA’s permission, in writing, to spend them early.
De Freese said the Council had received a “verbal” heads-up from the agency that the IIJA funds were on their way. “‘We've got this new money, it's coming from Congress as a supplemental for infrastructure. If you have projects, move quickly.’”
Moving quickly, “to basically accelerate project start and completion,” was De Freese’s goal. “I made a decision — because we've got multiple streams of revenue — to move some of our projects that were really well-aligned with this new federal funding …. into the work plan for EPA.”
Those projects, already approved and previously tied to other funding sources, were then moved over to the federal funding stream. But some spending activity had already taken place for some of those projects on earlier dates, before the council received its formal grant award letter.
“This was a failure on my part,” De Freese said. If faced with the same decision today, he said: “I would have made the same decision, but I would have had a lot more paperwork to justify the decision.”
What’s next?
Most of the issues identified by the EPA’s OIG have already been resolved, according to the full audit. The council has provided supporting documentation, and moving forward, it will require subrecipients to meet “much more stringent” protocols for accounting, documentation and compliance with federal policy, De Freese said.
The audit noted that, “despite the challenges, the IRL Council demonstrated progress implementing the goals stated in its IIJA work plans,” including establishing a network of seagrass nurseries and helping build several septic-to-sewer conversion projects.
De Freese doesn’t think the audit was politically motivated. Federal agency staff started working on it in 2024, while Biden was still in office.
Separate from the federal audit, the council already commissions an independent audit of itself each year. For De Freese, getting audited is a positive experience, he said: “You always learn something.”
“We're taking this audit not in a negative way, [but] in a positive way,” De Freese said. “We're a better, more transparent, more responsible program with the taxpayers' dollars, having had this audit on top of our normal, annual, independent audits.”
This November, Brevard County voters will decide whether to renew a decade-long, half-cent sales tax that funds projects benefitting the Indian River Lagoon.
