Children’s Home Society Tightens Its Expense Rules : Social services: State’s oldest private youth organization also voices support for its top executives in wake of criticism over agency-paid spending.
The Children’s Home Society of California, under fire for the spending practices of its top executives, said that tighter spending controls have been instituted and that the nonprofit agency’s board has renewed a vote of confidence in its president.
In a Dec. 15 letter to supporters, the agency’s directors said they unanimously back James T. Spradley Jr., who has been criticized for his $183,000-a-year salary and agency-paid expenditures.
The board said Spradley’s financial compensation, which doubled over the last four years, was fair in view of his performance and job responsibilities as president and chief executive officer. The Children’s Home Society, the state’s oldest private child welfare agency, said the sharp increase was justified because Spradley had been underpaid in the early years of his seven-year tenure.
“By nonprofit standards, Mr. Spradley is well compensated for his services,” the board said, “but his compensation does not begin to approach that of executives in the private sector.”
Meanwhile, at least half a dozen of the 147 agency auxiliaries said they want Spradley’s resignation or plan to withhold money or suspend fund-raising events for the Los Angeles-based agency.
Betsy Keegan, first vice president of the Los Leonis Auxiliary in the San Fernando Valley, said Friday that her group plans to withhold donations. “If (Spradley) really cares for the agency and the children, then he should step down so we can get on with our job for the children of CHS.”
Attorney Richard J. Simmons said the agency “is not aware of any auxiliaries that have withheld monies that were raised on behalf of CHS and obviously believes it would be inappropriate for an auxiliary to do so.” And he said the society and Spradley received “an outpouring of positive support that is heartening to the agency.”
The letter also said auditors and agency directors had determined that a review of fiscal records found “no improprieties or blameworthy acts have occurred” in the spending by Spradley or his aides.
According to a confidential audit, Spradley spent more than $155,000 from July 1, 1988, through March 31, 1992, for meals, entertainment, travel, lodging and other expenses after approving his own expense reports. Spradley and his top three aides spent a total of $303,000 for such expenses during the period.
The audit, disclosed recently by The Times, also reported that the four executives spent $80,000 on meals and entertainment--mostly for other staff members rather than prospective donors. Auditors concluded that it was “difficult to determine the necessity or business purpose of these staff meal and entertainment expenses.”
Interviews with current and former employees, along with credit card summaries, showed that some of those expenditures involved staff meals at pricey restaurants. The audit said Spradley spent at least $100 for staff meals on more than 100 occasions.
In its letter, the agency said Spradley had reimbursed $727 for charging personal items to the agency. The letter also noted that Spradley and three of his top aides donated $25,000 to Children’s Home Society during the 1988-1992 fiscal years.
The board defended the spending on meals and entertainment. “When staff members are required to give up their personal time--i.e., their lunch hours or after work hours--in order to participate in mandatory business meetings, it is CHS practice . . . to assume the cost of food served at such meetings,” said the letter, adding that the practice began before Spradley took office.
The board said that the organization had “put into place several procedures to improve reporting and oversight of expenses. Board officers now approve the monthly expense accounts” of top officials.
The disclosure about expenditures has disturbed some of the 16,000 volunteers who solicit donations through state auxiliaries.
In a Dec. 10 letter to board Chairman John F. Branton, the president of the Santa Barbara auxiliary warned that it would be “impossible for us to continue to solicit funds” until the allegations against Spradley and his top two aides are proved false or the officials are replaced.
“It is the propriety, not the legality, of these expenditures that is at issue,” Diane White wrote.
White told The Times that her members still support the agency and its programs. “We all believe in this organization. We just want the funds to go to the kids,” she said.
In all, auxiliaries contribute more than $1.5 million a year to the agency. And although officials say some auxiliaries are supporting Spradley, others have voted to postpone fund-raising events--or to hold their events and bank the money for now.
“We’re still going ahead with our activities, but we’re going to hold back turning over our donations until we are convinced the allegations are untrue,” said Fran Smith, president of the Newport Harbor auxiliary and head of the Council of Orange County auxiliaries. Smith said she had not yet received the letter from the agency.
Her Newport-Harbor auxiliary is one of the agency’s largest and most prestigious. It holds an annual debutante ball that raises $50,000. Last week, Smith and other volunteers joined employees in entertaining 350 underprivileged children, single parents and family members at a holiday Christmas party in Santa Ana.
Ann Scanlin, two-time past president of the Ojai auxiliary, said Spradley “has lost his credibility, and the agency has lost its credibility. The only thing that will restore that credibility is if (Spradley) steps down.”
Scanlin said the letter was a “smoke screen” and does not answer the concerns of her auxiliary.
Heads of several other auxiliaries, speaking on condition of anonymity, said their members have voted to either postpone fund-raising events, withhold funds or call for Spradley’s resignation.
Officials of the United Way chapter in San Francisco, which contributed $159,000 last year, have also begun meetings with officials of the agency over the allegations.
In defending Spradley and his aides, the board said that under their leadership the agency has prospered and has “improved its financial and programmatic status” and bolstered financial reserves from $3.8 million to $13 million and reduced the debts from $2.4 million to none. They blamed the agency’s troubles on individuals “who have attempted to undermine this organization,” which provides services to 10,000 children.
The allegations against Spradley surfaced last spring in an anonymous letter to the board of directors. The letter accused the agency president of “fiscal improprieties and mistreatment of staff,” including the alleged sexual harassment of a female employee.
The letter from the agency said that no formal sexual harassment complaint or suit has ever been filed against Spradley but that the agency paid $6,500 to settle “a verbal complaint of unfair treatment” to avoid costly litigation.
The audit had described the complaint as “a sexual harassment charge.” Sources have told The Times that a female employee had alleged that Spradley made a series of unwanted advances.
Asked about the apparent discrepancy, attorney Simmons said it is not accurate to characterize the matter as a sexual harassment complaint, but he would not elaborate.
Children’s Home Society officials have refused to discuss specific allegations with The Times. But the letter provided details explaining some expenditures:
* A $483 dinner at the posh Fleur de Lys restaurant in San Francisco involved eight people and was a “special occasion recognizing staff for their successful efforts at the close of a fiscal year. . . .”
* A $700 hotel bill was for a suite used by Spradley for a reception for 30 people and meetings the next day.
* Spradley’s membership in the Los Angeles Athletic Club was canceled before The Times story appeared. Simmons said Spradley’s membership in the Oakland Athletic Club also was canceled.
The attorney gave The Times 20 letters, virtually all of them dated Friday, from employees, volunteers and other CHS supporters who praised Spradley and his executives while criticizing The Times. Spradley and his executive staff “are all hard-working, devoted and honest people,” said Sue Bubnack, a former auxiliary member and now the agency’s field director of development in San Diego.
