The Sacramento City Council isn't ready to shelve its sports commission.

But council members certainly are not pleased with the organization.

Council members were highly critical of the commission's leadership and financial controls Tuesday night, following a report by the city auditor that showed the Sacramento Region Sports Education Foundation, or SRSEF, still owes the city more than $400,000 from loans it accepted last year.

The loans – taken out to help fund the World Masters Athletics Championships – were due last October.

The audit also found that because of inadequate record keeping, it's unclear whether the city loan was spent on the World Masters Athletics Championships or other sports foundation events. Revenue for the event fell more than $250,000 short of expenses, the audit found.

"That is a very serious situation when you talk about public funds and how they're being used," said Councilman Steve Cohn.

According to the audit, SRSEF – a nonprofit arm of the Sacramento Sports Commission – did not segregate the loan funds into an account earmarked specifically for the masters' event. The foundation spent roughly $376,000 on other events while it was funding the World Masters Athletics Championships.

"There is no way to ensure the loan was spent only on the WMA event," said City Auditor Jorge Oseguera.

Sports commission officials have said they are confident the money was spent properly and are coming up with a plan to repay the loan. That plan, however, has not been finalized.

"Nothing here surprises us. We concur with every aspect of this audit," said John Nunan, chairman of the SRSEF board. "Obviously, we intend to repay the loan."

But some council members wanted to hear Tuesday how the foundation intends to make that repayment.

"If they have something they want to share, they should share it as soon as possible," said Councilwoman Sandy Sheedy, adding, "I just would have a really hard time giving any more money to this organization."

City Manager John Shirey said his office and Sacramento County officials are working on recommendations on how to manage the sports commission in the future. The county loaned the sports foundation $150,000 for the masters' event.

Councilman Rob Fong said "the lack of financial controls (exposed by the audit) is unacceptable," but urged caution for those who might seek to dismantle the sports commission. He said the commission has attracted sports events that have "put Sacramento on the map."

"It's very easy for us to only think negative things," he said. "But if we reflect on this holistically, for my money it's a function that needs to continue for this city and this region."

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