York City's elected controller signed off on public funding for her own nonprofit: Investigation

At first glance, York City’s proposed contracts with The Program, It’s About Change — a nonprofit that assists former prison inmates with housing and reentry services — seemed routine.

So unremarkable, in fact, they were to be part of the City Council’s March 21 consent agenda — a package of measures typically approved by unanimous voice vote without any discussion.

Shortly before the meeting, however, the resolutions that would’ve funneled $317,470 to The Program were pulled from consideration by Mayor Michael Helfrich’s administration.

York City Controller AliceAnne Frost

“We were very surprised,” City Council President Sandie Walker said of the turn of events.

Closer inspection of the contracts revealed the source of the problem.

“If you see the contract,” Walker said, in a recent interview, “you see AliceAnne’s name on there twice.”

AliceAnne Frost is York’s elected controller, the city’s top financial watchdog, and she signed the contract in that capacity. She also signed it in her capacity as The Program’s chief executive officer.

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This situation, in which Frost has signed off on money being sent to the nonprofit she leads, raised concerns inside York City Hall of a conflict of interest. It’s not clear how many city officials knew, but the city’s lawyers did seek guidance from federal authorities as early as 2021.

On March 30, a week after The Program’s most recent contracts were pulled from City Council consideration, the nonprofit announced Frost’s resignation. Frost also has chosen not to run for reelection as city controller. According to Frost, she expects to begin a new job as executive of another nonprofit soon, with an announcement coming within the next few weeks.

AliceAnne Frost's name appears twice on several contracts, both in her roles as city controller and as CEO of The Program, It's About Change.

When asked about the alleged conflicts of interest, Frost said she’s been “very transparent and upfront” with everyone involved about her work leading The Program. Likewise, she said she didn’t have a direct role in setting the March agenda — or subsequently pulling the proposals from that agenda.

“I completely steer clear of that as city controller,” she said. “It’s not abnormal for the city to pull contracts.”

York City, meanwhile, deleted The Program contracts from its website. The York Dispatch recovered the documents by combing through the city website’s Google cache. Subsequently, the city provided additional documents via Right-to-Know Law requests.

Helfrich said the contracts were pulled in order for the board overseeing the city’s gun violence prevention program to review them again following Frost’s resignation from The Program. 

York City Mayor Michael Helfrich discusses recent gun violence during a press conference held at City Hall in York City, Monday, Dec. 19, 2022. Dawn J. Sagert photo

The mayor denied that there was any conflict of interest in Frost’s name appearing on both sides of the contract.

“We have new folks coming in, and we’re going to discuss these contracts with them and see how we proceed,” he said. “The entire purpose has remained the same.”

Frost’s ascent to city leadership

Frost’s rise as city controller and leader of a high-profile area nonprofit, all by the age of 32, was a unique one.

Frost worked as a nursing assistant during her mid-20s, according to an alumni publication of York College, her alma mater. The college’s write-up notes that in 2016 Frost started volunteering with The Program, an organization founded in 1979 that provides counseling and job training to individuals recently released from prison.

“When I was younger, my dad helped young people caught in the juvenile justice system get a start and stay on the right path,” she told the college. “He also worked with men and women coming home from the system. We knew those families; we housed those families.”

York City Controller candidate AliceAnne D. Frost, answers an interview question from York City Council President Michael Ray Helfrich, Wednesday, Jan. 25, 2017, at City Hall. Amanda J. Cain photo

Over the next year, Frost became the organization’s chief financial officer and then its CEO — although the specifics of how she transitioned from volunteer to the nonprofit’s leader weren’t clear. Messages left with the nonprofit were not returned.

The Program’s IRS form 990s show that Frost earned $1,250 in 2015 as CFO. 

After her promotion, she earned $33,000 as CEO in 2016. That grew to a $66,000 salary three years later. Since then, what she earned in 2020, 2021 or 2022 is unclear since the IRS is behind on processing such documents following the COVID-19 pandemic.

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In January 2017, York City Council appointed the then-32-year-old as city controller, filling a vacancy left by outgoing controller Robert Lambert. Frost told The Dispatch she responded to an announcement about the opening, was interviewed by the council and was unanimously selected over one other applicant.

She was elected to a full four-year term in 2019. Her position, a part-time role that earns about $20,000 per year, is up for grabs this year because she has chosen not to seek reelection.

The Program’s income, meanwhile, grew dramatically after Frost’s ascent.

From left, Controller candidates Stephen W. Busch shakes hands with AliceAnne D. Frost, after Frost was appointed Controller by the York City Council board Wednesday, Jan. 25, 2017, at City Hall. Amanda J. Cain photo

The IRS data shows The Program reported a net income of $44,177 for the 2016 tax year when Frost became CEO. Over the next two years, net income jumped to $263,404 and $226,184, respectively. However, the nonprofit had reported a net loss of $125,000 in 2019.

A recent announcement by The Program states the organization now has an annual operating budget of more than $1 million. Liliana Fisher, the nonprofit’s board president, did not respond to requests for comment.

What is a controller anyway?

City controller is a key elected position that holds the responsibility of reviewing and approving all expenditures and financial obligations, according to the York City website. That includes a duty to “protect the City of York tax dollars from waste, fraud and abuse.”

In practice, that included regular reviews and audits of city purchase orders, contracts and other financial agreements. In the past, the city controller’s office has made all city contracts available online. However, that practice appeared to end during the COVID-19 pandemic. The city’s contracts from 2021 and 2022 are not currently available on the city controller’s webpage.

York City’s conflict of interest laws state that no elected official nor employee can receive funds from a contract with the city, directly or indirectly. Other officials, such as council members, may be members of organizations that seek city funding. However, as a practice, they’re required to a recuse themselves from voting on matters related to those ties.

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When City Council members are faced with a vote on whether or not to grant city funds to an organization they lead or are a member of, they state their affiliation with the group and then recuse themselves from voting on the matter.

It’s not clear exactly how Frost handled these potential conflicts between her position as city controller and as The Program’s director. According to Frost, she disclosed her ties — even as she signed off on contracts.

Eugene DePasquale, the former Pennsylvania auditor general, indicated Frost is in a somewhat gray area because her role as controller is a part-time job. Such elected officials need to be able to make up for the lack of income, he said.

From his perspective, the key steps would involve disclosing the issue and ensuring the controller brings in someone else for oversight of the funds.

“That’s where Pennsylvania falls into this: Disclose, disclose, disclose, disclose,” DePasquale said.  “This is a specific grant for something for the nonprofit she works for. That is likely allowed. But she also can’t have anything to do with it as a city official.”

Pennsylvania Auditor General Eugene DePasquale speaks to media, Wednesday, Oct. 7, 2020, after he appeared at a Rotary Club of York program featuring the candidates for the 10th Congressional District at the Country Club of York. Congressman Scott Perry, his opponent, appeared in the program last month. Bill Kalina photo

Documented disclosure always helps in such situations, according to Mary Fox, executive director of the Pennsylvania Ethics Commission. 

When conflicts arise, she said, state law spells out how public officials have to abstain and recuse themselves from the issue. Those who vote on local matters have to announce their interest in the matter.

Fox wasn’t aware of a specific disclosure requirement for nonvoting officials.

However, she said, “I think I would advise someone to do that in such a situation.”

Scrutiny increases

City leaders signed two agreements in late January, totaling $317,470, that were intended to bring The Program into the Group Violence Intervention initiative as an outreach partner. Aside from supporting efforts to reduce gun violence, the contracts themselves don’t make clear what specifically The Program would do to achieve that goal.

Terms spelled out that The Program would employ four staff members for the initiative — one trauma responder, two newly created “credible messengers” and an assistant project manager. The agreements through York City Police — one for $225,000 and the other for $92,000 — sought to draw the funds from the city’s pool of COVID emergency funding via the federal American Rescue Plan Act.

Mayor Helfrich and Police Commissioner Michael Muldrow signed the agreements along with Fisher, The Program’s vice president at the time. Frost signed twice, first as The Program’s CEO and then as city controller, according to documents obtained by The York Dispatch.

Muldrow did not respond to requests for comment. Capt. Daniel Lentz referred all questions to Helfrich.

City, state and federal officials, as well as community members, prepare for the first Group Violence Intervention initiative "call-in" at Stillmeadow Church of the Nazarene's York City campus on Chestnut St., Tuesday, Feb. 21, 2017. John A. Pavoncello photo

City Council members, a month later, asked about the signed deals and the potential for a conflict of interest with Frost’s dual roles.

Frost told the council during a March 1 committee meeting that The Program received an official request for proposal and submitted a bid last year. The bid was accepted after an evaluation, she said.

She also referred to a somewhat similar conflict-of-interest issue involving her that played out in 2021 and 2022.

After hearing Frost’s assurances and Muldrow’s support, the council voted to add resolutions for the agreements to the agenda for the March 21 meeting.

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Resolutions for the deals were set to be bundled with a handful of other resolutions into a list for the council’s consent agenda — a term for grouping routine meeting agenda points into one item that can be voted on in a single swoop. Often, consent agendas are approved without discussion.

The resolutions on The Program were pulled before council members could take them up. 

Walker said the decision came from city administration. She believed legal staff had signed off on the agreements.

“When it came to looking into these particular services, it seems as though they were given the green light by the solicitor,” she said.

York City Council President Henry Nixon, right, looks on as Vice President Sandie Walker speaks during a York City Council town hall meeting at Logos Academy in York City, Wednesday, Oct. 3, 2018. Dawn J. Sagert photo

Documents from the city showed the ball on the GVI partnership actually started rolling in late 2022.

An agreement, signed in November, sought $45,000 in ARPA funds for The Program to oversee those assistant project manager and credible messenger positions for GVI for the final two months of the year.

Credible messengers posts would employ people who’d been in the criminal justice system and would intervene with juveniles to help them make choices that don’t lead to prison.

The city administration apparently approved the spending since the deal amount fell below the local threshold of about $60,000 that requires contracts to go before City Council for approval.

Federal officials weigh in

This contract was signed about five months after a different vote put a punctuation mark on conflict concerns over yet another city deal with The Program.

Council members, on June 7, 2022, approved a consent agenda that included two resolutions that authorized a $60,000 contract to The Program, paid through federal Community Development Block Grant funds.

The agreement called for the nonprofit to provide workforce reentry services to 25 people and housing services to 40 people over two years.

City leaders including Frost, twice again, signed the contract that June, according to documents obtained from the city.

But that moment was the culmination of a process by the city to get a pass on the conflict issue from the U.S. Housing and Urban Development Department, which administers the grant funds.

York City's attorneys sought advice from the U.S. Department of Housing and Urban Development on whether The Program could be precluded from receiving funds due to AliceAnne Frost's position as city controller.

The city solicitor’s office wrote to HUD in January 2021, seeking an exception from CDBG conflict-of-interest rules.

The letter argued the city’s Economic Development and Housing department, under the mayor’s administration, would be responsible for awarding the money. Frost’s office wouldn’t be involved since it’s separate from the administration.

The letter also noted The Program disclosed the potential conflict with Frost’s dual roles.

HUD wrote back that October, saying Frost as both city controller and CEO of The Program created a conflict under CDBG regulations. One line also noted that though solicitors argued she’d have no responsibility for the funds, the city’s website indicated she reviewed CDBG funding in the past.

The greater good, as HUD saw it, won out, however. The department granted an exception to conflict rules, arguing the city met its threshold for one and that the use of the grant money would “further the purpose of the Housing and Community Development Act.”

The exception came with conditions. HUD said Frost had to submit written assurances she would recuse herself as controller from any CDBG matters involving The Program. The department also wanted the city council to approve the deal for the sake of transparency, the letter shows.

Frost told the Dispatch she provided any documents that were requested. She also said former city council president Henry Nixon read the HUD letter during a meeting for disclosure purposes.

The agreement, however, is not available on the controller’s website since links to contracts from 2021 and 2022 are missing. A copy of the document had to be obtained through a Right-to-Know Law request. The site has all the other City of York contracts dating back to 2012 as well as those from this year.

A dispute over alleged conflicts

In between HUD granting the exception and the City Council passing the contract as part of that consent agenda vote eight months later, a dispute arose over money tied to last month’s issue.

Helfrich announced plans in late 2021 to spend at least $5 million on addressing violent crimes by partnering with local nonprofit groups. The money would come from the first round of the total $35 million the city received in federal ARPA COVID-19 relief.

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Local leaders and nonprofit executives, including Frost and council members Lou Rivera and Edquina Washington, were part of an advisory group that helped decide how to steer the chunk of ARPA funds.

Walker and Nixon were among those who questioned the plan. Council minutes from a November 2021 meeting show Walker expressing concerns about transparency and ethics.

In a recent interview, Walker said she’d felt too many people on the advisory committee had a stake in the ARPA money. The fact that the federal government hadn’t issued final regulations for how to distribute the funds also gave her pause during the dispute over the mayor’s spending plan.

Instead of relying on the administration’s assurances, Walker wanted an outside firm to help review the use of the ARPA funds.

“You need a third party just to take away any speculation of improper distribution of funds,” she said.

The city’s 2022 budget went down to the wire and ultimately passed with the council’s decision to strip out Helfrich’s plan to direct millions in ARPA funds to nonprofits.

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The city also eventually hired the firm Anser Advisory to consult on proposed ARPA allocations to make sure they meet federal requirements. A list of city contracts for this year includes a line for Anser to receive $776,600 as part of a three-year term.

When City Council members looked at the two contracts for The Program on March 1, Kim Robertson, acting business administrator, pointed out that Anser was reviewing the agreements to make sure they met ARPA requirements. Anser also had its own process for helping determine conflicts of interest, she said.

What happens next?

While Helfrich says the two most recent contracts with The Program are still under review, the resolutions in question have not returned to a City Council legislative or committee agenda — including this week's meeting.

The Program announced Frost’s resignation March 30 in a letter posted to its Facebook page. The organization, which has not responded to requests for comment, highlighted Frost’s career over the past six years but didn’t list a reason for the departure.

Frost said she’s taking an executive position with another nonprofit group, one she expects to take all of her focus. That new job, which she said hasn’t been formally announced yet, also necessitated her decision not to seek another term as controller.

“I’m extremely excited, and I’m extremely hopeful,” she said. “I’m being tasked with building that from the ground up.”

City Controller AliceAnne Frost speaks to the York City Council during a committee meeting March 1.

The future of York City’s pending contract with The Program remains uncertain. Similarly, it’s not clear if Frost’s potential conflict has been or will be reviewed by any authorities.

City Code states that no elected official nor employee should take a contract with the city in which they will receive funds — either directly or indirectly. The state conflict of interest laws say public officials and employees should not take a contract with their government agency unless the contract has been publicized with prior notice.

From Helfrich’s perspective, the city is in the clear because Frost disclosed the potential conflicts. If for some reason a conflict is found and the city no longer wants to go through with The Program contract, Helfrich said the city would need to find a new organization.

This, he said, would require starting the request for proposal process over again, drafting a new contract and presenting that new contract to the council.