Feds yank $12.2 million Head Start contract

By Timothy Pratt

Thursday, Jan. 13, 2005 | 11:13 a.m.

The federal government has decided to pull a $12.2 million early childhood program from the Economic Opportunity Board -- formerly the Las Vegas Valley's largest nonprofit organization -- because of problems with management and governance, according to a letter obtained by the Sun.

"We feel the facts establish that this is not an organization that should be administering a Head Start program," said Windy Hill, associate commissioner of the Head Start bureau. She sent the letter about the decision to EOB Board Chairman Claude Logan on Wednesday.

The Head Start and Early Head Start programs, which together serve about 1,800 low-income children from birth to 5 years old at 18 centers in the valley, suffered a negative review earlier this year and never corrected 13 of 16 deficiencies identified in that review, the letter from the bureau, part of the Department of Health and Human Services, noted.

The letter indicates federal officials are worried about what would happen with the funding if it remains with the EOB.

"A serious risk of substantial loss of Federal Head Start funds still exists," the letter says. A 20-page "Head Start Special Review Report" detailing the ongoing deficiencies accompanied the letter.

The Head Start bureau rarely terminates a nonprofit organization's contract to manage a Head Start program and only does so when the program is being poorly run. Only a handful of organizations out of about 1,670 nationwide had their funding terminated last year, Hill said.

The EOB can appeal the decision and that process can take from three to six months, Hill said.

A press release issued by the EOB this morning announced that the organization will appeal the decision, meaning that the program will remain under the EOB's control for the time being.

"The majority of the deficiencies ... have been addressed and corrected," Logan said in the press release.

If the decision to terminate funding is upheld by a federal board reviewing the appeal, an outside group would be brought in to run the program while bids are put out for another local group to take over. That process could take up to nine months, Hill said.

The letter refers to the bureau's negative April review of EOB's financial and program management as well as its governance. The bureau allowed a series of extensions for the organization to demonstrate that things had improved.

But the organization, founded in 1964 to fight poverty, "kept hiding a lot of stuff and they weren't being honest," according to Pamela Henry, until November chairwoman of the Head Start Policy Council, a group of parents and community members meant to work with the EOB board in governing the program.

"Now everything is over with and everybody is aware of what's been happening the last two, three years," Henry said.

The report sent with the letter -- based on a late-September follow-up visit -- notes in detail what federal reviews uncovered at the EOB.

Those findings include:

A bank reconciliation for July was not prepared until late August, revealing an account deficit of $1.1 million that was unknown to management beforehand.

Complete financial records, including expenditures, were unavailable for the 12-month period preceding the late-September review.

Checks were written without available funds.

$44,000 in unauthorized Head Start funds were used to pay a consultant.

Rates for office space were calculated on figures that were "possibly 10 years old."

Outside consultants hired as interim fiscal director and interim financial specialist are husband and wife.

Inaccurate fiscal reports were prepared in August and September of this year.

Vision and hearing screening records were missing from 12 of 15 children's files that were checked.

Head Start was the largest remaining program under the EOB's umbrella after three negative federal and state reviews earlier this year identified a series of problems with the organization. About $17 million that went to child care centers, a separate program, was pulled from the organization in December.

Wednesday's decision leaves the organization with less than half of what was once a nearly $60 million budget.

Late Wednesday afternoon Logan said he had not seen the letter nor had he been informed of its arrival by the EOB's administration, which currently consists of an outside team brought in under a contract to set the organization straight. The EOB's board hired Mid-Iowa Community Action Inc. to manage the organization in July 2004 under a five-month contract that was later extended to June 30, 2005.

Mary Twitty, interim director of the EOB as per that contract, did not return calls seeking comment late Wednesday afternoon.

The review report also noted that different parts of the organization did not work together to govern the program, meaning that the policy council was not always informed of developments in the program and had little input into its day-to-day management.

Henry said there was a four-month stretch last year when the council's 21 to 25 members did not meet with the board, which was reduced from 15 to six members as a result of the negative reviews.

"We said we were available, but it (a meeting) never happened," Henry said.

She said the lack of communication led to such developments as being asked to approve a 2005 budget on the day it was due.

Henry said she figures the decision means the organization has little chance of surviving.

"This is too deep and it's in the public eye now," she said. "Back in the day, they would say they'll get out of it, but what's in the dark comes out into the light."