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Head Start funding is suspended
Posted: Thursday, Jul 24, 2008 - 08:33:12 am CDT
by Heidi Hood - Staff writer
Federal financial assistance for Community Council of Southwest Texas Early Head Start and Head Start programs has been suspended effective July 18 for a minimum of 30 days, according to Jorge Botello, executive director at Community Council of Southwest Texas.
“The Head Start Program has been placed on what is called summary suspension,” Botello explained in a statement. “This is not a termination.”
Currently, the suspension is for 30 days, however, in a letter written to Pilo Vasquez, current board chair of the Community Council outlining the suspension, the Department of Health and Human Services has a right to prolong the suspension if the conditions creating the summary suspension have not been fully corrected.
The letter from the Department of Health and Human Services addresses deficiencies found during an on-site review conducted by the agency after being informed of a $700,000 deficit that Community Council officials found in their budget in early June.
During a June interview with The Uvalde Leader-News, Botello explained that the money missing could not be accounted for at that time. However, now, it seems that CCSWT officials have tracked down the full amount, and the explanation has caused the Community Council to lose its Head Start funding.
The results of the review showed several areas of concern warranting the suspension, according to the Department of Health and Human Services.
The first concern was that the CCSWT failed to ensure that appropriate internal controls were established and implemented to safeguard Federal funds as required. Second concern was that the Community Council failed to maintain a financial management system capable of providing records that adequately identified the source and application of funds for HHS-sponsored activities.
In addition, the review found that the Community Council failed to maintain a financial management system capable pf providing effective control over and accountability for all funds, property and other assets, and that the Community Council failed to ensure only allowable costs resulting from obligations incurred during the funding period were charged to the grant award for that period.
Finally, the review found that the Community Council failed to immediately notify the Head Start awarding agency of developments that had a significant impact on Head Start-supported activities.
The way Botello explained the situation during an interview Tuesday morning, there are two main areas of concerns for the Community Council.
First, according to Botello, $481,17.78 of this year's grant money was used to pay last year's bills. Botello explained that this was due to shortage in revenue for expenditures incurred last year that the financial director, who has since resigned, was unable to reconcile.
Botello said he was not aware of problems at the time and also was not aware that this year's grant money was being used to pay last year's bills.
“I have a financial director to oversee those things,” he stated, but added that he is not laying blame on anyone and that the final blame should be on him because “I am the executive director.”
The second problem Botello pointed out was the incorrect disbursement of funds.
The USDA provides a grant that, as Botello explained, covers meals. The grant does not always cover the entire amount of meals and usually doesn't. To cover the remaining costs of meals, a Head Start grant can be applied.
What happened, Botello said, is that the USDA grant money was not used for meals but rather was moved into the general fund and disbursed throughout the Community Council, which, along with the Head Start program, also oversees the Gabrielle Tafolla Charter School and Southwest Transit.
With the USDA money going into the general fund and not into the meals, the Head Start grant was then $199,598.73 more than it should have been.
The combination of the two incidents resulted in $705,150.53 that the Community Council incorrectly used, resulting in the suspension of federal funding, but in addition, it is money that the Community Council thought they had and no longer do.
Botello said that they are addressing both issues.
“I feel confident that we will resolve the deficiencies identified and will move on once the state concerns are fully resolved,” he said.
Among some of the solutions Botello mentioned are three different emergency loans that, once approved, would equal $490,000. This loan amount will be combined with repayments from the charter school and general fund, where the money was mistakenly placed, along with laying employees off all in order to balance the budget.
“That was the hardest thing I've had to do,” he said. “It was unfortunate that we had to temporarily lay off staff immediately, but we did not want to continue to aggravate our cash situation.”
However, Botello said that it was a temporary lay off and the Community Council is going to re-hire them once the Head Start program contract is renewed in August. At that time, he said the Community Council would have a budget of $4 or $5 million with which to pay for salaries and other expenditures.
However, with the suspension, Community Council no longer has control over the Head Start program. According to Botello, CDI, a company out of Colorado, is running the program and those employees that were fired “most have been rehired by CDI.”
CDI will continue to run Head Start until, or if, the Community Council can reverse the suspension currently in place.
In addition to these concerns, the Department of Health and Human Services has also requested repayment of $493,300.98 of funding that they believe was incorrectly used.
Botello said that he will be traveling Friday in order to attend a hearing to have that decision overturned.
“In our review of billing statements and final expenditure reports to the Head Start office, we never billed for any unallowable expenses in regards to contract periods,” said Botello. “All expenses are allocated to the periods for which they were billed.”
In another words, Botello said, “we never billed for that money,” but rather just had “inter-fund transfers,” which would be, at a later date, returned to the budget.
All in all, in the next several weeks, Botello said that they will find out if they have to pay back the Department of Health and Human Services, and whether or not Community Council will regain control over the Head Start program.
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