Anti-Poverty Agency Lays Off Nearly Third of Its Staff : Finances: Head of CDC says action was needed to forestall a deficit. Aid programs will be affected.

The county’s anti-poverty agency Thursday laid off nearly one-third of its staff, citing financial setbacks that include unexpected costs of running some of its programs.

“The actions were absolutely necessary to ensure the long-term stability of the organization,” said Clarence W. Ray, executive director of the Community Development Council. “We have to reduce our expenditures so we don’t have an operating deficit.”

The layoffs of 17 people are certain to affect services provided by the agency. In recent years, the CDC has administered free lunch programs for thousands of young children in the county.

The agency also helps the poor or elderly on fixed incomes pay their energy bills, offers counseling and emergency care for battered women, supplies food to dozens of community food banks and gives lodging vouchers to the homeless.

Despite the cuts in staff, Ray said the agency will try to “maintain the service levels and programs to our clients to the best of our ability.”

He said the layoffs were necessary because the agency, which has a $6-million annual budget, was projecting “significant deficits” at the end of the year if nothing was done. He gave no details.

The CDC was established in 1965 as part of President Lyndon B. Johnson’s War on Poverty, with the noble mission of eliminating poverty in Orange County. Throughout its 27 years, however, the CDC has come under criticism for mismanagement, and executive directors have come and gone, serving only short stints.

The private, nonprofit agency has also undergone financial audits in its history that have uncovered a host of accounting deficiencies.

Ray, who has been with the agency for about six years, acknowledged that it “has taken its lumps in the past,” but denied that Thursday’s layoffs were caused by mismanagement or accounting errors. In fact, he said, audits over the last five years have revealed no problems.

“The past is the past,” he said. “It has nothing to do with now.”

What caused the problem, he said, was unforeseen costs. For example, Ray said, the agency underestimated the costs of storing and shipping the large quantity of food that it distributes to the poor.

“If there is anyone out there who can donate storage for the food, even for six months, it would be a great help,” he said.

Meanwhile, the Costa Mesa-based agency is actively looking for cheaper and larger offices and storage areas.

The agency has a total staff of 60 people, and those laid off ranged from managers to entry-level workers, Ray said. “We’re very concerned about the employees we had to lay off,” Ray said. But, he said, “we have to start addressing the future now. Especially in these times, as governments funds seem to dry up.”

None of the people laid off could be reached for comment.

Times staff writer Eric Young contributed to this story.