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HomeMy WebLinkAboutNB 5 FEEDBACK FDATN 01-07-91,�GENDA7:91.." DATE: TO: FROM: SUBJECT: DECEMBER 31, 1990 WILLIAM A. HUSTON, CITY MANAGER ADMINISTRATIVE SERVICES DEPARTMENT NEW BUSINESS N0. 5 1-7-91 Inter - Cam FEEDBACK FOUNDATION REQUEST FOR FUNDING RECOMMENDATION: 1. That the City Council authorize the $5,000 partial payment as recommended by the Non -Profit Assistance Task Force; and 2. That the City Council authorize staff to write a letter for the Mayor's signature to both Feedback Foundation and the County Area Agency on Aging to make it clear that further payments will be considered when the requested audits are complete and the County becomes more aggressive in its oversight role regarding the financial health of the Foundation. BACKGROUND: As Council will recall, the Feedback Foundation requested "emergency" funding in June 1990 and the City Council granted $3,400 to the Feedback Foundation to get them through the fiscal year. The Council conditioned the donation on several actions: 1. An independent auditor be retained by the County to do a complete "all funds" audit of Feedback Foundation. 2. A management audit be conducted as well, to ensure that Feedback Foundation is operated efficiently and effectively. 3. The recommendations from both the financial and management audits be included as stipulations for renewal of the next contract between Feedback Foundation and the Area Agency on Aging. To staff's knowledge, none of these items have been accomplished to date. Outside auditors continue to work on the audit; however, results are not available at this time. Feedback Foundation, in partnership with the City of Tustin provides a hot lunch program at the Tustin Area Senior Center. The City provides program and dining space, custodial support, office space, utilities, and staff supervision at no cost to the Feedback Foundation. The City also provides $5,355 to the Consolidated 2 Transportation Services Agency for senior transportation. The Feedback Foundation contracts with the County of Orange to provide this program with federal funding through the Older Americans Act. In May 1990 the City Council received a letter from Shirley Cohen, Executive Director of the Feedback Foundation, stating that the Foundation had a "serious emergency" on its hands of a cash deficit of nearly $200,000. The Executive Director said that unless the host cities and the County granted emergency funds, that Feedback might be forced to close nutrition sites for the month of June. Ms. Cohen asserted that the cash deficit was due to a 1114 percent increase in raw food costs and a sharp decline in participant donations." She also cited a slow growth rate in an Anaheim Adult Day Care Center. After review, staff concluded Feedback's financial problems appeared to have two causes: 1. Older Americans Act funding has not kept pace with increased demands for service; Feedback Foundation continued the same level of service, at increased costs, without forecasting the outcome at the end of the fiscal year. 2. There appeared to be a lack of fiduciary responsibility on the part of the Feedback Foundation regarding its funds. A lower -level accountant was terminated. Questions regarding executive oversight and management remain. The California Department of Aging administers Older Americans Act funds. This is a federal source of funding which gets "filtered" several times. The appropriation comes from the federal Act itself, then to the State of California who administers contracts with each county; in Orange County it is the Area Agency on Aging, A.A.A., which then oversees a contract with the Feedback Foundation. The California Department of Aging has made a subjective decision that Orange County would receive no cost -of -living increases, because the per capita income in Orange County is higher than other counties with whom the State Department works. For example, Alameda County may have received a cost -of -living increase, while Orange County has received none for the past eight years. This is a national problem; Older Americans Act nutrition funds have not kept up with demand; the Feedback Foundation incurred increased costs in 1989/90 in order to uphold its contract with the County of Orange to provide a certain number of meals. Late in the fiscal 9 year the Feedback Foundation came up with a serious cash deficit about which it knew nothing a few months prior. This was a serious problem in June 1990, and the problem has continued into this fiscal year. Shirley Cohen has written another letter to Mayor Edgar, asking for more than $21,000 as a donation to keep the Tustin Feedback Foundation site solvent this year. In a conversation November 18, 1990, County staff member Jerry Bellsmith promised that the requested audits would be done "within thirty days." Thusfar to staff's knowledge, the County has attempted to do a check of the Feedback Foundation's internal financial controls over the telephone, rather than visiting and doing a proper audit, and the Feedback Foundation's outside auditors have not yet completed their work. While staff is completely supportive of the mission of the Feedback Foundation and staff has excellent relationships with Nick Ogden, site manager at the Tustin Area Senior Center and his staff, City staff is concerned regarding internal fiscal controls of the Feedback Foundation and its ability to carry on as a going concern. Finance Director Nault and Administrative Services Director White visited Feedback Foundation Financial Manager Ron Gray. Mr. Gray was very cooperative; however, without outside audits, it is difficult to make an objective evaluation. Staff understands that it is difficult for a small -staffed non-profit organization to do all its accounting according to the highest standards of generally - accepted accounting procedures; however, fiduciary responsibility is a serious matter. One of the serious issues was that Feedback was $98,000 in arrears paying payroll taxes; this is extremely serious, much more so than some of the other items listed regarding internal control. Mr. Gray has informed staff that this matter has been corrected. City staff feels that the County could be more aggressive in its oversight function regarding Feedback. The Feedback Foundation and the County of Orange assert that they have developed a "fair share funding formula" to maintain current service levels; hence, their request for more than $21,000 from the City of Tustin. It is staff's position that the "fair share" formula was not reached by a consensus of the involved cities; however, that is not a significant issue. Feedback has a contract with the City to provide meals at the Tustin Area Senior Center; there is no existing contract for home -delivered meals but they were part of the so-called "fair -share" formula. There are other inconsistencies; however, staff is confident that these can be negotiated successfully once the requested audits are complete. Shirley Cohen and Peggy Weatherspoon have both stated that the reason that the Feedback Foundation needs this additional money 4 from the City is that the demand has increased for meals, but federal funding has not. Staff certainly understands the dilemma of having insufficient funding to do all that one needs to do; however, there must be alternatives that have not been explored. It is difficult to imagine that the County is speaking of closing nutrition sites when the audits are not complete yet. Perhaps there are some adjustments to the "fair share" formula that can be made to reduce Tustin's donation; however, even if the City does give this $21,0001 what assurances does the City Council have that these particular problems will not continue? Staff would recommend that a small progress payment be made at this time and that the rest of the money be withheld until the important audits are complete. The Task Force on Non -Profit Assistance has recommended $5,000 from its $30,000 allocation for Feedback. Staff recommends that this $5,000 progress payment be forwarded to Feedback Foundation with the same conditions as the previous $3,,400 r 3,400. Roy ee` A. White, Director Community and Administrative Services RAW/Md RAW3:fbmembh Attachment A: Letter from Shirley Cohen Attachment B: Host City Actions j ORANGE COUNTY _ _—--------- -- ATT--AC14MENT-t1P ----- ---- Ince Feedback Foundatioaq 1200 N. KNOLLWOOD CIRCLE • ANAHEIM. CA 92801 • (714) 220-0224 November 11 1990 Ms. Susan M. Jones Recreation Superintendent City of Tustin 300 Centennial Way Tustin, Ca. 92680 Dear Ms. Jones, NOV - 8 1990 j _ _� In many communities of the United States, the news in the aging network is that nutrition programs for the elderly are closing, cutting back, and/or compiling waiting lists. In other communities, there are private/public partnerships and city/county support to help compensate for the lack of increase in federal/state funds. Feedback Foundation staff have been meeting for the past several months with County Area Agency on Aging staff and city or senior center staff and have formulated a fair share funding formula for each city. This InterAgency Task Force Group and our Board of Directors have approved the formula. It is now ready to be implemented. We submit the following: - That, in Orange County, we can take care of our elderly residents; - That the congregate nutrition program which gives your elderly residents a reason to get dressed and out every weekday is important to maintaining health, happiness and a productive life; I - That the home services program is important to providing nutritious home delivered meals and help with accessing community services for the frail elderly in your city; Ms. Susan B. Jones November 1, 1990 Page two of three - That, with these programs, the cities are promoting the opportunity for more meaningful lives and avoiding premature and more costly institutionalization; That, we recognize that in your city asin many cities, costs are high and budgets tight and these monies re not budgeted; but if each city comes up with a fair share amount, the burden on any city will be minimal; That the rewards in this partnership arrangement will wealthiest great. In Orange County, reportedly one of counties in the country, our elderly residents should not have to do without meals or choose between eating or buying their medicines or moving into less costly housing out of the county; - That, if any city cannot manage their fair share amount in this year's budget, they could contact p anies individuals for donations from the private sector or request that city employees consider designating their . There contribution to United Way for Feedback Foundation. is a form specifically developed by the United Way for this kind of designation and it will cost the employee no more. As determined by the InterAgency Task Force Group composed of representatives from your city, the cost of the nutrition program for the elderly in the City of Tustin is $149,833. We currently receive $128,628 from the federal grant, USDA, senior donations, so $21,205 additional is needed if we are to maintain services at their current level. ou hfundive ng formula fair share allocation lwhoattache. formuaatedithese numbers questions, please call Ron Gray, under the InterAgency Task Force Group's direction, or Ron and I will be pleased to meet with you. The Task Force has asked that we set a date of December 1, 1990, for a response from each city. If we have to close sites or reduce home meal service in your ity bto Of insufficient support money, we need ample time i be least disruptive to your elderly residents. Ms. Susan B. Jones November 11 1990 Page three of three The total entity audit for the fiscal year ended June 30, 1990 is now in process and the report should be available in three to four weeks. Enclosed for your information and review is the total entity budget for the 1990-91 fiscal year and the latest update on the turnaround & reorganization plan as adopted by the Board of Directors. Ron Gray, a C.P.A. and Feedback staff Finance Manager, has extensive figures on the current year. We also have some limited alternatives to cash that we can discuss with you. Feedback staff, Feedback Board Members, Area Agency on Aging staff and InterAgency Task Force Committee Members all are available to help you understand and expedite the fair share funding formula for your elderly residents. Please call. Sincerely, FEEDBACK FOUNDATION. INC. Shirley- Cohen Executive Director SAC/eis Enclosures cc: Peggy Weatherspoon, Director/Area Agency on Aging John Braithwaite, Chair/InterAgency Task Force Comm. Feedback Foundation Board of Directors Richard B. Edgar, Mayor - City of Tustin Melissa O'Neal, Manager/Tustin Senior Center ")ATE: January 2, 1991 ACHMENT "B" Inter - Com TO: ROYLEEN A. WHITE, DIRECTOR OF COMMUNITY AND ADMINISTRATIVE SERVICES FROM: MELISSA O'NEAL, SENIOR CENTER SUPERVISOR SUBJECT: STATUS OF OTHER CITY CONTRIBUTIONS TO FEEDBACK FOUNDATION As of 1/2/91, the following cities plan the below listed course of action with the Feedback Foundation request of funds: CITY/SENIOR CENTER STATUS Anaheim Steve Swaim met with Ron Gray. Currently have signed contract for $50,000. Are asking for additional $12,000. Steve doesn't agree with the "formula". Not sure where the 12K will come from. Inevitably will end up "robbing Peter to pay Paul". No formal action or recommendation yet. Brea Of the $8,000 requested, Brea Site Council to pay $2,000 ( same as Nicks $3,000). Brea to take over site manager salary en lieu of cash. Buena Park Will not contribute the $800 requested. Costa Mesa To give full $30,000. Fullerton To fund via CDBG... Not till 1/91. Huntington Beach No decision. La Habra orange Santa Ana Laguna Beach Melissa O'Neal Senior Center Supervisor MO/svr A:FeedCont.RAW To propose full amount. To give full amount (Council Action). Seeking funds through CDBG. Wants updated financial report prior to making any recommendations.