United Way Shortfall to Mean Layoffs, Cuts

Faced with a $3.7-million shortfall, the United Way Board of Directors in San Diego County voted Tuesday to reduce its operating budget and cut its contributions to local charities beginning in January.

The immediate impact will be staff layoffs, cuts in the operating budget and less money and services for dozens of agencies that rely on United Way contributions, said Scott McClendon, the United Way board chairman. A decision won’t be made for another month about where the cuts will be made, he said.

McClendon blamed the decline in charitable giving on the Southern California economy, although negative publicity about the United Way and bookkeeping errors also played a part, agency officials said.

“The current situation is the unfortunate result of a down economy in Southern California,” McClendon said. “Simply stated, we base our expenditures on anticipated revenue from the (fund-raising) campaign. Due to the economy, that revenue did not materialize. So, just as any other business, we must now reduce our expenditures to match our revenue.”

Problems for the organization began with the 1991 fund-raising campaign, when United Way officials expected $32 million and came up $1.2 million short, which included a $400,000 bookkeeping error.

Fund-raising this year is projected at $27.5 million, a $2.5 million drop from last year that, when added to last year’s deficit, makes a $3.7 million shortfall.

To make it up, “We thought we’d just take the hit, take it big and get it over with,” said John Liarakos, vice president/marketing of the United Way of San Diego County.

By Dec. 16, Liarakos said, the United Way’s board of directors will decide which of its 80 health and human service agencies will face funding cuts. Among those groups the United Way helps finance are the Boy Scouts of America, the YMCA of San Diego County, the San Diego Urban League and the Salvation Army.

Although the failing economy has hit all organizations hard, Liarakos conceded the $400,000 bookkeeping error by United Way personnel was particularly harmful. A recent audit revealed that the United Way, which manages federal fund-raising programs, had underpaid its clients by that amount.

Unfavorable publicity surrounding the $463,000 salary of former national United Way President William Aramony and questionable trips he took to Las Vegas also had a negative impact on fund-raising, Liarakos said.

Earlier this year, outside investigators found a “haphazard pattern of expenditures” by top United Way officials on the national level that permitted them to charge a number of questionable expenses to the charitable organization.

“To say that it hasn’t had an impact is silly but to gauge it is almost impossible,” Liarakos said. “We have tried to deal with that publicity forthrightly.”

McClendon called for renewed community support in the wake of the United Way’s fiscal woes and stressed that the services it provides “are critical to the health and well-being of our community.

“United Way board members take seriously their responsibility to be good stewards of the money entrusted to us by the donors,” he said. “Proper financial management requires that we make these reductions.”