The City Council voted Tuesday to stop funding the financially troubled Cudahy Social Service Agency and to hire two other nonprofit agencies to take over the agency's job of distributing food and clothing to the needy.
The council authorized city staff members to negotiate with Human Services Assn. of Bell Gardens and the Welfare Action, Steelworkers Oldtimers Foundation in Bell, which have said they could provide the services for a total of $22,000, said Jack Joseph, assistant city manager. The council placed a limit of $22,000 on the contract with the two agencies.
City Manager Gerald Caton last month decided to withhold funding from the Social Service Agency after auditors hired by the city said the agency did not have an "adequate financial control system." The city had earmarked $50,000 in Community Development Block Grant funds for the agency in the current fiscal year. The council, in effect, ratified Caton's decision, and authorized an independent audit of the agency, which, according to city officials, has received more than $130,000 in government money since fiscal 1986-87.
Agency to Be Evicted From Building
The council, also acting as the city's Redevelopment Agency, approved legal steps to remove the Social Service Agency from a building owned by the Redevelopment Agency if the nonprofit agency fails to pay $9,000 in back rent.
The council majority voted with little comment as supporters of the agency crowded into the limited council chamber space and occasionally shouted their displeasure.
The council voted 3 to 2 to stop funding. Councilmen John Robertson, Joe Graffio and Gabe Zippi formed the majority vote. A frail Zippi, 71, who is suffering from bone cancer, appeared for the vote, then departed. Mayor Bill Colon and Councilman Thomas Thurman opposed the funding cutoff.
Robertson also asked the council to request a grand jury investigation of the agency, but the proposal failed when the council deadlocked 2 to 2.
James Graham, the agency's executive director, said in an interview that he would try to keep operating. "We still have the facility. If we can find the money we'll keep going," he said. Graham said the agency had at least a 3-month supply of food to distribute. He said he would try to raise money through private donations.
Graham also filed a $11.5-million libel suit Friday against Councilman Robertson in Los Angeles County Superior Court. Graham said Robertson distributed a letter accusing Graham of dishonesty and corruption. The letter was published Sept. 23 in a local newspaper, the Southeast Cities Review, and was distributed to some local businessmen, the suit said.
In the letter, Robertson stated that "an audit of the agency shows that there has been little or no control on expenditures of money."
Robertson, who was a member of the Cudahy agency's board of directors until recently, characterized the suit as "a form of intimidation."
Resigned Post Last Month
Robertson resigned Sept. 19 as vice chairman of the agency board after being told by the city attorney that it would be a conflict to vote on agency matters involving the city. Colon, a staunch supporter of the agency and its board chairman, also resigned Tuesday from the board so that he could vote on agency matters being considered by the council.
Colon became angry when Thurman, who had opposed the funding cutoff, suggested an independent audit of the agency. Slamming his hand on the council podium, Colon said it was the city administration's responsibility to monitor how the Social Service Agency spent government funds. The administration should have informed the agency of proper accounting procedures, Colon said.
Previously, a cursory audit by Diehl Evans & Co. of Santa Ana concluded that the agency did not have "underlying documentation to support the cash receipts" and there seemed to be "no control or review process" for monitoring spending. The Diehl report was delivered to the city Aug. 31.
Referring to the Diehl audit during the council meeting Tuesday, Colon pointedly asked Assistant City Manager Joseph, "Was any money missing?" Joseph replied that "there was no judgment made."
Colon asked if the audit had indicated whether there had been any fraud. Joseph said there had been no such indication, triggering applause from the audience.
Besides operating a food and clothing distribution program, the Cudahy agency provides free space for other social service agencies. Graham said the agency has provided free food to about 950 families and clothes to about 350 families monthly, as well as drug counseling and job-placement information. The agency operates in a building at Elizabeth Street and Otis Avenue.