Head Start Problems Bring Tougher County Oversight

Los Angeles County, the nation’s second-largest administrator of Head Start funds, has dramatically stepped up supervision of the $68-million program for low-income preschoolers in response to a critical federal report obtained by The Times.

The report comes after the disclosure last year of financial irregularities and other problems at two county-supervised agencies based in San Fernando and East Los Angeles. It reveals that the county failed to conduct on-site financial and administrative reviews at 80% of its 27 agencies during the three-year period between 1990 and the end of 1992, a violation of federal regulations.

Jerry Gomez, the federal administrator who wrote the March 30 report, said county officials have cooperated with him in quickly reforming the monitoring program. The report stresses the importance of increased scrutiny of the agencies before the federal government gives the county Office of Education an additional $14.5 million to expand the program during the next two fiscal years. Only New York City receives more federal funds for Head Start programs, which provide meals, medical services and instruction to low-income preschoolers.

“Until recently, monitoring was problematic and inadequate,” Gomez said. “But since December, there have been quite frequent monitoring visits.”

Even before the federal Administration for Families and Children issued the report, the county had begun taking steps to more closely monitor the 27 nonprofit agencies and school districts that provide services to 13,197 poor children countywide, said Andrew Kennedy, the county’s newly appointed Head Start director. The changes were prompted by the exposure of problems at La Azteca in East Los Angeles and the San Fernando-based Latin American Civic Assn., and spurred by the federal report, he said.

In February, the county stripped the Latin American Civic Assn. and La Azteca of $7 million in future federal funding, saying the programs were riddled with problems that came to light after parents and employees complained.

The Azteca program, which serves 700 children in East and Southeast Los Angeles and the San Gabriel Valley, has a history of fiscal and other problems, including having to return $76,000 in 1990 funds used for unauthorized air fares and checks made out to cash, a county spokesman said.

The Latin American Civic Assn. is the county’s largest Head Start agency and the sole provider of the program for more than 1,300 children in the San Fernando and Santa Clarita valleys. County investigators found that it had violated federal regulations by renting office space and vans from its own employees, overpaying staff members and engaging in nepotism, including hiring the executive director’s wife.

They also discovered that the agency was $822,000 short of meeting its $5-million budget for the remaining months of the current fiscal year.

County officials said they are likely to restore funding because both agencies have made significant changes in the past several months. The Latin American Civic Assn., for instance, has replaced its executive director and laid off more than 40 employees. But the scandals will have a widespread impact on the way the county monitors its Head Start agencies, county officials said.

“We have made massive changes,” Kennedy said. “The old model was hands-off. Our assumption was the agency would clear up problems in their own way and in their own time. Now, when the yellow caution flag is waving, we’ll go in right away.

“When our agencies first saw my new comprehensive monitoring plan, they freaked out,” Kennedy said. “They said, ‘This is not how the county has done business before.’ ”

Among the changes, the county will:

* Respond immediately to complaints. In the case of the Latin American Civic Assn., the county essentially ignored complaints by parents and employees, taking action only when Rep. Howard L. Berman (D-Panorama City) interceded, Gomez said.

* Conduct quarterly fiscal reviews of each agency instead of relying solely on an annual audit conducted by an accounting firm hired by the agency. The county hopes to prevent a repeat of its abrupt discovery in December of the San Fernando Valley agency’s deficit.

* Follow up when problems are discovered instead of assuming that the agencies will solve them. Agencies will be required to respond in writing to complaints and to concerns raised by county monitors.

* Distribute information to other agency personnel besides the executive director. Kennedy said that Ralph Arriola, former executive director of the Latin American Civic Assn., misled the board of directors and parents advisory council about the county’s actions and requirements.

* Provide more training in financial management to Head Start monitors and agency employees.

In the past few months, the Valley agency has reorganized and a new board of directors has been named.

But Kennedy cautioned that stepped-up monitoring can go only so far.

“It’s real clear that LACA had a superior cover-up system,” he said. “You still need what I call Deep Throats to find out what’s going on.”