State wants EOB to account for its spending

Wednesday, April 5, 2006 | 7:19 a.m.

The state has given the Economic Opportunity Board until Friday to account for about $2.8 million spent during the last six months or risk losing a contract to run a child-care program for low-income families.

The notice follows a Feb. 17 breach-of-contract letter the state sent to the EOB after the nonprofit organization had failed to pay $31,518 in rent at the child-care program's Washington Avenue office.

The state then extended deadlines for the organization to show where money for the program was going. The organization, meanwhile, went through weeks of chaotic board meetings, the resignations of eight board members and the offering and subsequent withdrawal of $250,000 in Clark County funds.

The county funds were supposed to allow the organization to settle accounts with the state, even though it would have meant taking from one pile of taxpayer money to pay debts linked to the misuse of another.

Now, however, "the state is taking a serious stance," said Gary Stagliano, deputy administrator of program and field operations for the state welfare division.

"We don't want them to charade this, we want them to resolve it," Stagliano said.

Stagliano said he thinks the EOB may have a difficult time delivering six months' worth of detailed financial records - including proof that checks were written and deposited to pay for various services - by Friday's deadline.

He said there are questions about whether the organization has been taking state money meant for such expenses as payroll taxes and employee benefits, instead using the money to pay other bills.

"I don't know if they can deliver all the records and cure the breach," he said.

If the EOB doesn't comply, the state on April 30 will cut the contract that pays the EOB to handle applications from families seeking low-cost child care, Stagliano said. The program employees about 60 people.

A bid for proposals on the contract would then be issued to the community at large.

The loss of the program would be only the latest domino to fall for the EOB, which has had a series of negative federal reviews dating back several years that point to mismanagement and shoddy treatment of the poor.

It would be the largest program to slip through the EOB's hands after losing the Head Start program earlier this year. With 10 percent of the program's approximately $5.5 million yearly grant going to administrative costs, the loss could mean downsizing the organization's remaining staff.

EOB Executive Director Lester Murray did not return calls seeking comment.