The city of Sacramento is still owed more than $400,000 from the regional sports foundation that put on last year's World Masters Athletics Championships, a city audit has found.

What's more, it's unclear whether the Sacramento Region Sports Education Foundation, or SRSEF, spent $400,000 in loans from the city earmarked for the WMA on the event itself, according to the audit. The foundation was granted the loan by the City Council in March 2010.

The loan – plus interest – was supposed to be paid back to the city's parking fund by Oct. 1, 2011. But the sports foundation has been unable to repay the loan after revenue for the WMA event fell more than $250,000 short of expenses.

The audit – which also said the foundation's annual spending has exceeded revenue for several years and describes a financial system lacking adequate controls – will be presented to the City Council on Tuesday.

"They have some issues and they need to get some controls in place," said Councilman Darrell Fong, a member of the City Council's audit committee. "They're going to have to be accountable on how they spend their money and they need a plan to pay that money back."

John McCasey, the executive director of the Sacramento Sports Commission, which oversees the foundation, said the organization has a plan to pay the loan back over time, but that the plan is not ready to be unveiled to the council on Tuesday. Asked if the foundation has the capability to pay the city back, he said, "We will if our plan is approved."

McCasey said the loan has not been repaid in part because revenue projections provided by WMA event organizers fell short. "People just did not spend the money we were led to believe they would spend," McCasey said.

The World Masters Athletics Championship was held at Sacramento State's Hornet Stadium and other venues in July 2011. It attracted more than 4,800 athletes from 93 countries.

McCasey acknowledged that the foundation did not properly segregate the city's loan into an account that would have made it clear the money was spent on the masters' event. According to the city's audit, the sports foundation spent $376,621 on other events during the months it was also preparing to host the World Masters event.

"We made a mistake," he said. "But the money was not spent on anything inappropriate."

The audit also found that the foundation's budgeting process lacks "formal approval and complete information" and "lacked strong internal controls."

McCasey said those issues are being addressed.

"We are in agreement with the audit," he said. "And we think we know how we can fix the financial controls with a financial business manager."

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