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Arlington Nonprofit Shuts Doors

County to take over community programs after audit found ACAP exceeded terms

The Arlington Community Action Program, a leading nonprofit organization that ran the county’s Head Start program and other services for the poor and disabled, has closed down after violating the terms of its federal grants.

ACAP’S BOARD of directors decided to dissolve the organization before the release of a federal audit last month, which found that the nonprofit withheld payroll taxes from the IRS, exceeded allowable travel expenses and “did not have effective control over and accountability for all funds.”

“More management and oversight systems should have been in place and were not,” said County Board member Barbara Favola, who also sat on ACAP’s Board of Directors. “When the board learned that the situation was not an example of good management, we reached the conclusion that the agency should no longer be responsible for administering these programs.”

For more than 40 years the organization has provided services to some of the county’s most vulnerable residents. Besides running the Head Start preschool program for low-income students, ACAP provided child care training, youth mentoring, employment assistance and senior transport services.

Community activists lamented the demise of such a prominent nonprofit. “It’s a big loss,” said Lora Rinker, executive director of the Arlington Street People’s Assistance Network, who resigned from the ACAP board in May. “A lot of people depended on them.”

A federal contractor has taken over the local Head Start program, and the Arlington County public school system is applying to be the permanent provider (see adjacent story.) The county government has assumed temporary responsibility for all of ACAP’s Community Development Block Grants, resulting in a similar arrangement to how Alexandria, Fairfax and Loudoun counties controls federal grants.

“We’ve worked for several months to make this a smooth transition without any interruptions in service,” said Susanne Eisner, the acting director of the county’s Department of Human Services.

County control over community grant programs will result in better oversight and fiscal management, officials said.

“We can ensure not only that the services are fiscally sound, but that they are better linked with existing resources to serve these populations,” Eisner added.

THE ORGANIZATION’S PROBLEMS date from a routine Head Start review in the spring of 2005. The review found the nonprofit was “deficient” in several areas of fiscal management, and the federal Administration for Children and Families classified it as a “high-risk” for failure.

The board of directors was shocked by the findings, several members said, and it triggered them to take a closer look at the fiscal health of the organization. The executive director, Cynthia Martin, was fired later that summer.

“The executive director is supposed to be the one providing oversight and management control, and that was not done,” said Ingrid Morroy, a board member and the county’s commissioner of revenue.

The initial findings triggered an audit by the Office of Inspector General to see whether any Head Start funds had been misused.

The audit, released last month, found no incidents of fraud but discovered that more than $340,000 in expenses were not allowable under the terms of the federal grants. Another $178,000 in purchase orders, payment vouchers and delivery receipts could not be accounted for with proper documentation.

Nearly $70,000 in wages were not acceptable under ACAP’s personnel policies, according to the audit, and the organization did not report $65,000 in taxes it withheld from employees.

More than $5,000 in travel expenses, including airplane tickets, hotel rooms and meals were not supported by the federal grants, the audit determined.

THE ORGANIZATION CEASED its operations at the end of June, and the county government immediately took over the administration of the community block grants.

The services funded for this fiscal year include an educational program for teen fathers; computer training at Arlington Mill Community Center and the Reed School; transportation services for disabled seniors; vocational and English language assistance via the Arlington Employment Center; and college preparatory programs for at-risk youth.

The county plans to pool these grants with other funding for low-income and disabled residents to increase efficiency, and then will hold public hearings next year to determine whether to continue controlling the services or spin them off to other nonprofits.

Rinker, the head of A-SPAN, said she hopes that problems at ACAP will not discourage the county from entrusting these community programs with another nonprofit organization next year.

In hindsight, letting ACAP run a complex child care offering like Head Start may have been a mistake, Favola said.

“Head Start was too big a program for a small nonprofit to take over,” she said. “It is very challenging for a small nonprofit to set up all of the management and financial processes necessary to meet the federal requirements.”