The Regional Arts and Culture Council (RACC) is badly in need of oversight, a recent city audit shows. The audit, which Commissioner Nick Fish requested last year, found that the nonprofit organization lacks a strategic plan, hasn't assessed the value of city-owned statues and murals, and poorly represents Portlanders on it's regional board.

RACC is a nonprofit that receives funding from the City of Portland, Multnomah, Clackamas and Washington counties, and Metro. Portland provides 70 percent of RACC's funding and receives the majority of the benefits from the council. RACC provides grants, maintains public art, and promotes art education for the area. With an annual budget now topping $11 million, the audit found that about a third of funding went to internal costs, not grants and outside projects.

At a Portland City Council work session on the audit this morning, Mayor Ted Wheeler said this number seemed a little too high.

RACC Interim Executive Director Jeff Hawthorne told the Mercury that this calculation is a little misleading. He says a recent RACC audit shows that management and overhead make up 13 percent of the budget, while fundraising makes up 1.5 percent.

Another concerning discovery: the insurance rates for city-owned art are based on the purchasing price, not a current assessed value. The Portlandia statue, for instance, was purchased in 1985 at the price of $348,000, but may now be worth $4 to $5 million, according to the audit.

The city auditors recommended that the city develop a strategic plan with RACC, something that Hawthorne says is "overdue.” The audit also advises the city clarify some confusing language in RACC's original contract with the city.

Auditors also found that the city is underrepresented on the RACC board. A 1999 amended intergovernmental agreement mandated that the city have 11 directors on the 27-person board. The most recent bylaws dropped that number to six.

At the work session, Commissioner Fish asked if it may be worth considering "removing the R" from "RACC" and making it a city-only program. RACC is primarily funded by Multnomah County and Portland, with Washington County, Clackamas County, and Metro providing a combined $237,750 out of an $11.9 million budget in 2017.

“It does look stark when the city of Portland is putting in more money… and representation on the board is falling,” said City Auditor Mary Hull Caballero. The audit notes, however, that Portland has not seen any negative outcomes from the decrease in board representation. Hawthorne said he was open to a discussion on RACC's future makeup.

Fish says the audit will be integral to contract negotiations in the next year, which will begin in earnest once the new executive director of RACC is chosen—the previous director, Eloise Damrosch, retired last year after 13 years in the position.

“The timing is right with the transition of leadership at RACC,” Fish says.“This gives us a chance to get it right."