Poverty Agency Fights Poor Image, Too : Social services: The county’s Community Development Council is having hard times trying to fight poverty. Claims of mismanagement and misuse of funds threaten its very future.

If there has been anything consistent about the Orange County Community Development Council since its formation 24 years ago, it is controversy: the anti-poverty agency has always been in the thick of it.

Executive directors have come and gone like office temps, sometimes under cloudy circumstances. Financial audits have uncovered a host of accounting deficiencies. The state Department of Economic Opportunity, which provides the agency with much of its money, has intervened on more than one occasion when programs have gone awry.

This year is proving no different. When a self-appointed watchdog recently charged that the agency was badly mismanaged and was using taxpayer funds improperly and inefficiently, Board of Supervisors Chairman Thomas F. Riley hastily convened a committee of staff aides to look into the allegations.

A private, nonprofit agency with a budget of about $5 million and more than 60 paid staff positions, the CDC pays energy bills for the poor and elderly on fixed incomes, offers counseling and emergency help for battered women, supplies food to dozens of community food banks and gives lodging vouchers to the homeless among its other housing programs.

Its designation by the Board of Supervisors as the county’s official anti-poverty agency makes it eligible to receive federal block grant funds, and also gives the supervisors some responsibility for seeing that it is run efficiently.

A negative recommendation from the supervisors could severely harm the CDC’s ability to obtain funding for its programs, executive director Clarence W. (Buddy) Ray said.

The supervisors’ aides met earlier this month with both Ray and Ruth Harmon, the North Tustin resident who made the initial allegations at a Board of Supervisors’ meeting. The aides said this week, however, that the allegations of improprieties appeared unfounded.

Even so, some of the CDC’s own board members, along with others in the nonprofit, social services community, maintain that the agency is far from healthy.

“All is not OK,” wrote CDC board member Joseph Singh in a memo last May. “The status of CDC accounting is such that the directors are not capable of managing and the very low-income folks of Orange County continue to lose services.”

CDC staff and board members say that the agency has made a strong recovery after a particularly troublesome few years. Still, even they concede that a number of problems remain:

- A mobile medical clinic that used to take doctors to poor neighborhoods almost daily now provides only basic medical screening services and AIDS testing one day a week.

- About half of the agency’s quarter-million dollars in annual rent payments goes for 10,000 square feet of vacant office space.

- The agency was operating almost $100,000 in the red at one point this year, and is currently running a deficit of about $60,000.

- The state Department of Economic Opportunity found fault with a number of the agency’s record-keeping procedures and internal financial controls in an audit conducted last summer.

“The CDC is sick,” wrote Allen P. Baldwin, executive director of a nonprofit, low-income housing agency, to the Orange County Board of Supervisors this month. Baldwin is not affiliated with the CDC, but many of his agency’s clients use CDC services. “It needs new leadership on the board. It needs a new accounting system. . . . It needs more austere and accessible offices.”

Baldwin claims the CDC’s “sickness” is robbing the poor of services they should be getting.

“There is grievous malfeasance by the board of directors,” said Baldwin. “It should bother them and wake them up in the middle of the night to think that someone may die, someone may not get out of the poverty cycle because it’s (the agency) not running right.”

But Ray, who took over as CDC executive director in 1987 when embattled director John Flores was dismissed by the board, says none of the problems facing the agency at the moment are fatal, or even close to it. And some of its current shortcomings, Ray said, are not necessarily the agency’s fault.

For example, he said, UCI Medical Center canceled its contract with the agency to provide doctors for the mobile health clinic last year, in part because university officials feared that continued affiliation with the clinic would have brought the medical center too many destitute patients.

The CDC has been unable to find contract physicians willing to replace the UCI doctors. Currently, the van makes one trip a week to a poor neighborhood, where aides and County Health Care Agency staff check blood pressure, check for signs of disease and provide referrals, Ray said.

“I’d like to see the clinic better utilized,” Ray said. “Is it our fault that it’s not? I suppose it is in that we haven’t been able to find anyone. . . . We have to have an affiliation with either a doctor or a licensed clinic.”

But Harmon contends that the CDC’s inability to make better use of its medical van since the medical center contract was canceled is just another example of the agency leadership’s incompetence.

“There is not $5 million worth of services being provided to the poor,” said Harmon, a retired registered nurse and former member of the Orange County Grand Jury. “If it was any other kind of agency, people would be outraged.”

Ray concedes that the CDC’s offices on MacArthur Boulevard in Costa Mesa should be better utilized. The top floor of the two-story building is largely empty, except for a few staff offices. When the agency moved from Santa Ana to larger offices in Costa Mesa in 1987, it had planned to use the extra space to establish a 24-hour telephone referral network for social services countywide. But funding for the program never developed, and the space sits unused.

“We have a Cadillac, when what we need is a Hyundai,” said one board member who asked not to be named.

The agency will pay about $266,000 in rent next year. But if it could find a suitable tenant, the CDC could probably sublet half its space, and thereby reduce its costs, Ray said.

But a number of problems are complicating the agency’s search, he said. Under terms of the CDC’s five-year lease, it can rent space only to another nonprofit agency. And the building’s lack of an elevator would make the second floor useless for most social service agencies, which by law must be accessible to the handicapped.

When the agency was established in 1965 as the Community Action Committee as part of President Lyndon B. Johnson’s “War on Poverty,” its mission was nothing less than to eliminate poverty in Orange County.

Today, about to enter its 25th year, there remains disagreement about how best to try to achieve that goal. With an annual budget of about $5 million, some see the agency’s proper role as being the county’s foremost provider of services for the poor--food and clothing, shelter, medicine and employment. Others think it should be a facilitator and catalyst for smaller, community-based agencies and programs.

“There is still discussion at the board level about just exactly what approach (we) should take,” said CDC Director Ray. “There are a million different ways to approach it.”

No Clear-Cut Strategy

With no clear-cut strategy for fighting poverty and a 15-member board that includes five appointees of the county supervisors and five representatives of the poor, there are bound to be major disagreements, say agency supporters. They add that the CDC will always come in for criticism from those who disagree with its course.

“By its nature, the CDC is always going to be controversial,” said Russ Barrios, Supervisor Don R. Roth’s appointee to the board. “Should we be a direct provider or an administrative think-tank?”

Ray, for his part, says the agency should strike a balance between provider and facilitator, and avoid duplicating services provided elsewhere.

“We don’t want to be a welfare agency,” he said. “We want to remove barriers for clients . . . and give them economic control of (their) own lives.”

Thus, the agency concentrates its efforts on helping poor people reduce their utility bills by installing energy-saving devices in their homes. It sells bags of food worth about $15 to community organizations for $6. Instead of operating a homeless shelter, the agency has run programs that help people with rental deposits to get them into apartments.

“If you can stabilize a housing situation for an individual, then they can stabilize the rest of their life,” said Ray.

But some of the CDC’s housing assistance programs have been less than successful.

The city of Santa Ana did not renew its funding this year for a CDC program that helped tenants displaced by the city’s code enforcement officers. “They believed that it wasn’t effective,” Ray said.

Another experimental program in which the agency loaned money from a revolving fund--of about $100,000--to the working poor to help get them into apartments has been frozen because clients were not paying the money back.

“The program had an extremely high default rate,” Ray said, adding that it was “highly questionable” whether much of the money could be recovered.

One of the CDC’s largest programs is known as “weatherization.” Under separate contracts with both the state and Southern California Gas Co., the CDC pays subcontractors--and is reimbursed with a small profit--to improve the energy efficiency of low-income households, thus reducing their energy bills.

Last year, the agency did not locate enough low-income households for weatherization to satisfy the state Department of Economic Opportunity, which threatened to cancel its CDC contract if the agency did not improve its performance during the first half of 1989.

The agency subsequently met the state’s goals and has had its contract extended through the end of 1990, Ray said. “We had to demonstrate that we had cleaned up our act,” Ray said. “We did that.”

But in the course of working overtime to meet the state’s demands, the CDC’s other weatherization program with the gas company has suffered, said Julius Cartwright, chief financial officer for the agency.

That program traditionally has been a moneymaker for the agency, but this year, the decline contributed to an operating deficit that reached $97,689 in August, prompting Cartwright to issue an alarming memo to board members warning of impending cost-cutting measures.

By the end of October, the deficit had been reduced to $58,000, Cartwright said, adding that by the end of the year, the agency should be about even, or have a slight surplus.

“We’ll be in pretty good shape,” he said.

As for the agency’s accounting practices, the source of complaints and investigations in past years, Cartwright said they have improved. “When I got here, there were no internal controls in writing,” he said. “There was no accounting manual.”

Still, even with the improvements, the state made 18 recommendations following a routine audit last summer.

Department of Economic Opportunity spokesman Gregg Wardrip characterized the deficiencies--most of which pertain to bookkeeping methods and internal financial controls--as “moderate administrative” problems that would not jeopardize the agency’s contracts with the state.

“These aren’t make-or-break type deficiencies,” Wardrip said, adding that such shortcomings are common among other anti-poverty agencies, given the multitude of regulations and guidelines they must follow when receiving state and federal money.

“Our audit people are picky. I’ve seen a lot worse. . . . The department has not identified any misuse of funds, or major violation of law or of the contract.”

But, Wardrip said, the state “is concerned that the Orange County agency . . . acts on any recommendations that the department makes.”

CDC director Ray said that while the agency has not responded in writing, it is working to implement the recommendations. “We are responding to it,” he said.

Others say there really is nothing wrong with the agency’s accounting system.

“People who don’t understand it criticize it,” said Herb Schwartz, a retired certified public accountant and Supervisor Riley’s appointee to the CDC board. The state’s recommendations represent a “tightening up” of what is essentially a sound system, he said.

A former chairman of the CDC board--who is eyeing the chairmanship again next year--Schwartz said he believes the agency’s darkest days are behind it.

“Since the last change (when former director Flores was fired), there’s been a tremendous turnabout,” he said. “There was a downturn in morale, but I think we bottomed out and have now turned up dramatically . . . This is a good agency, and it’s going to make it.”

COMMUNITY DEVELOPMENT COUNCIL BUDGET Below is the Orange County Community Development Council Budget breakdown for the year 1990 Energy (55% of budget) * Weatherization $1,976,194 * Emergency Energy (payment of utility bills for the poor) $1,040,429 Human Services (28% of budget) * Food Services $902,750 * Health Services $172,240 * Homeless and Housing Assistants $190,334 * Safety net Services (crises intervention for domestic violence victims) $123,898 * Community information Services $87,648 * Information and Referral Services $68,953 Administration (8.5% of budget) * $467,056 Technical Services (8% of budget) * Training and Technical Assistance $179,328 * Community Development Services (job training and job creation) $260,709 Total $5,469,539