Report: Connecticut Social Equity Agency Used ‘Questionable Business Practices’

The Connecticut Social Equity Council (SEC) utilized “questionable business practices and procedures that were troubling, subjective and ambiguous,” according to a recent Office of the State Comptroller audit that was requested by Gov. Ned Lamont (D) earlier this year.

While the audit did not show the SEC had broken state laws, state Comptroller Sean Scanlon recommended that the governor’s “pause” on funding distributed by the Council be extended until the concerns are properly addressed, the News-Times reported.

The SEC last year approved $6 million for six different nonprofits offering equity grants and processed non-payroll expenditures exceeding $2.5 million, but more than $33 million in funding for the agency remains.

The four-month investigation highlighted concerns about a lack of communication from the Council, unclear or contradicting guidance from Council staff, and criteria for the social equity plan being updated without sufficient notice. The report also investigated licensing delays and the lack of transparency in the evaluation process, which resulted in additional costs for applicants.

The audit details six recommendations for revising state law to address the concerns:

1. Eliminate subjectivity in the law and establish criteria for evaluating social equity applicants. This would include eliminating donation considerations from the application rubric and better defining eligibility requirements.
2. Strengthen the Social Equity Council’s internal controls in consultation with the Comptroller’s Office.
3. Establish an ethics code and require annual ethics training for Council members and staff.
4. Draft a strategic plan by July 1, 2025, covering goals for Council activity and develop benchmarks for the Council and regulatory agencies to evaluate program effectiveness.
5. Define explicitly how the Council will use the funds appropriated to it.
6. And establish a 60-day review timeframe for the Canna-business Revolving Loan Program.

Additionally, the report offered four suggestions for updating the SEC’s business process:

1. Increase transparency by formalizing its review processes and providing staff training and guidance to ensure uniformity across the Council’s processes.
2. Address the organization’s working environment by improving communication, setting clear expectations, and ensuring the core values and purpose of the Council are understood by staff and council members alike.
3. Start retaining all supporting documentation related to the contracting process to support compliance with state law.
4. Increase communication to reduce confusion and increase awareness about the Council’s services and benefits.