By Jim Schutze
By Rachel Watts
By Lauren Drewes Daniels
By Anna Merlan
By Lee Escobedo
By Eric Nicholson
The latest move by a Dallas anti-poverty agency in its fight with state regulators has come to nothing.
Attempting to sideline state investigators, the Dallas County Community Action Committee this spring asked the federal government to cut the Texas Department of Housing and Community Affairs out of its business altogether.
Citing nepotism, mismanagement, and poor record-keeping, the state housing department gave DCCAC notice of its intent to terminate its $1.7 million community block grant contract in January. (DCCAC's problems were detailed in two articles in the Dallas Observer: "Family First," July 31, and "Poor Relations," August 14.)
At that time, the state demanded repayment of nearly $67,000 the agency had misspent in two federal grant programs over the past year--programs that provide emergency housing and utility assistance, job counseling, free bus tickets, and other services in some of the county's poorest neighborhoods.
It also began to distribute grant money to the agency only after receiving detailed documentation of expenses. Previously, advance payments were made and the agency justified its expenses afterward.
Instead of changing management or finding other ways to resolve the crisis, the agency went to Washington and asked the Department of Health and Human Services to fund it directly.
In April, the feds turned DCCAC down, and the little anti-poverty agency decided to sue HHS Secretary Donna Shalala. It asked a federal judge to issue an injunction forcing the department to directly fund it.
Earlier this month, U.S. District Judge Thomas Hogan turned DCCAC down flat.
The judge concluded that financial mismanagement at DCCAC appears to be a "substantial factor" in its financial plight. The judge cited the agency's habit of taking out bank loans, the $67,000 in disallowed expenses owed the state, the fact that the agency ran a deficit last year, and--this has never been heard before--the fact that it "owes a substantial sum to the Internal Revenue Service."
Anthony Bond, the agency's recently installed board president, says the agency will have another chance to petition the feds for direct funding after the state's review runs its course.
"No one has been more open than myself in saying overall management of DCCAC should be better," Bonds says. "That is a function of both the board and the administrative staff."
DCCAC board member Khaleef Hasan criticized the effort to sidestep the state. "I knew that wasn't going to work," says Hasan, who has opposed embattled Executive Director Cleo Sims. "It isn't rational to bypass the state. It defeats the whole purpose of the system."
The state housing department oversees the federal community service block grant program and monitors 51 local agencies, including DCCAC.
"There are some negotiations going on now that could put an end to this," says Hasan, declining to be more specific. "Maybe this whole thing will be cleared up and we can get back to fulfilling our mission. It's a shame it's so dysfunctional now."
Bond says the state has sent a list of "settlement points," which he declined to detail. He said DCCAC's board would consider them this week.
Hasan said he opposed DCCAC's move to close five of its nine service centers. The centers in West Dallas, Pleasant Grove, South and Northeast Dallas, and Grand Prairie provided after-school meals to low-income children, GED classes, and job training.
Although the state has given notice of its intent to cancel the agency's contract, it has continued to fund the agency until a final hearing is held before a state administrative judge. The hearing had been scheduled for May 15, but DCCAC requested that it be postponed. No new date has been set.
Brian Montgomery, a spokesman for the Texas Department of Housing and Community Affairs, says the postponement of the May hearing "only prolongs resolution of this matter."
Because of the continued state funding, Montgomery says his agency is perplexed by DCCAC's decision to close the centers--which serve about 7,000 of the agency's 11,000 clients.
"We're reimbursing them for their expenses, and over the first three months of this year they paid more in salaries than last year. We don't understand why they are closing down centers alleging they do not have the funds to pay the staff," Montgomery says.
In 1996, he explained, DCCAC spent $807,000 of its budget on salaries. In 1997, that increased to $881,000. In the first three months of this year, DCCAC spent $250,000 on salaries--which would put it on pace to spend more than $1 million on staff for the year.
Beyond that, he says, the agency spent nothing on emergency assistance to the poor--food, transportation, clothing, and utility payments--for the first three months of the year. It spent nearly $22,000 to provide those services in 1997.
"We have to wonder why they're spending 12 percent more in salaries than the previous year and cutting services," Montgomery says.
Bond says that changing the agency's reimbursement has amounted to a huge funding cut. "Compare what we received last year as of May 26th to what we received this year. It's about half," he says.
Last year DCCAC spent $55,000 of its $1.7 million budget on lawyers--and with it suing both the state and the federal government, those numbers are apt to mount this year.
DCCAC had 33 paid employees in March. Director Sims has said closing the five centers would result in the layoff of 17 employees.
With the cuts, the agency appears to have been trying to strengthen its legal argument that the state's new reimbursement method was akin to cutting its funding altogether. That's what it argued when it went to federal court.
In that light, the shuttering of the centers may have been akin to the closing of the Washington Monument when the federal budget runs low--a showy move meant to augment the appearance of a crisis.
But with the federal judge stuffing their latest maneuver, Sims and company are likely to have even a harder time making the state out to be the enemy of the poor, when the real problems are within.