The Office of the Utah State Auditor today released its Limited Review of the use and oversight of grant funds appropriated for Utah’s Manufacturing Extension Partnership (MEP) program. The review concludes that between $1.8 and $2.8 million in public funds were misused over a three-year period by iMpact Utah, a nonprofit recipient of state and federal grant funding intended to support the MEP program. Insufficient oversight by various state agencies allowed the misuse to continue over this time period without detection.
The MEP program, created by the federal government in the late 1980s, is designed to enhance the competitiveness of U.S. manufacturers. In Utah, the program is administered jointly by the University of Utah (U of U) and Utah State University (USU), with funding appropriated by the state legislature and passed through the Governor’s Office of Economic Opportunity (GOEO). iMpact Utah has been the primary subrecipient of MEP funding in Utah, responsible for delivering training and other services to manufacturers.
“Lack of clear accountability and oversight in the distribution of public funds creates a serious vulnerability,” said Utah State Auditor Tina M. Cannon. “In this case, a nonprofit organization tasked with supporting Utah’s manufacturers misused taxpayer dollars, enabled by breakdowns in oversight across several layers of responsibility.”
Following the receipt of a State Auditor hotline complaint regarding iMpact Utah’s financial practices, OSA launched the review, which included a review of iMpact Utah’s financial transactions, interviews with current and former employees, and an assessment of the oversight responsibilities of involved state agencies. The review concluded that a lack of clearly defined oversight responsibilities and insufficient monitoring of grant expenditures created an environment where misuse of public funds occurred and remained undetected.
The Manufacturing Extension Partnership Limited Review report detailed three key findings:
Finding 1: Lack of Oversight for Manufacturing Extension Partnership (MEP) Funding
The Governor’s Office of Economic Opportunity (GOEO) and Utah State University (USU) did not provide adequate oversight of MEP Project funds. As a result, iMpact Utah was able to misuse both grant funds and program income over a period of several years without detection by either state entity.
Finding 2: Misuse of Public Funds (up to $2.8 million)
The President of iMpact Utah used organizational funds for personal benefit, including transferring funds to other companies and purposes unrelated to MEP program objectives, as well as paying personal expenses and receiving an excessive salary and bonus package. This misuse was enabled by the absence of a functioning board of directors to provide internal oversight and a lack of external oversight by the responsible state agencies.
Finding 3: Violation of Financial Audit and Reporting Requirements
iMpact Utah failed to comply with financial reporting requirements under Utah Code §51-2a-201.5. Once iMpact Utah exceeded the public funding threshold of $25,000, GOEO or USU were required to notify the Office of the State Auditor, but no such notification was made. This breakdown in reporting and enforcement further hindered transparency and accountability.
“State agencies and partner institutions are entrusted with the responsibility to manage public funds with care and accountability,” added Auditor Cannon. “This case underscores the urgent need to fulfill statutory duties and implement effective oversight controls to prevent the misuse of taxpayer dollars.”
The Office of the State Auditor has issued recommendations to GOEO, USU, the U of U and other stakeholders to improve the clarity of responsibilities, enhance oversight of legislative grant fund subrecipients, and enforce compliance with financial reporting requirements. Additionally, recommendations have been made to determine if recovery of funds is available and to refer this matter to appropriate law enforcement entities.
