State Pulls Latin Group’s Head Start Funding : Finances: Association will lose $600,000 grant despite reorganization, and will be barred from opening new classrooms.

The Latin American Civic Assn., which last year went through a radical reorganization to salvage funding for its Head Start programs after regulators discovered widespread mismanagement, once again faces a loss of financial support because it has not improved enough, government officials say.

The state Department of Education has decided not to renew a nearly $600,000 grant that paid for services for 257 preschool children in the San Fernando and Santa Clarita valleys. The Los Angeles County Office of Education--which contracts with LACA to run the federally funded Head Start program--also will exclude the agency from the list of groups that may open new classrooms after July 1.

“The state took a chance renewing them last year, but they were no better off nine months later,” said Mario Muniz, an administrator with the state Department of Education.

Andrew Kennedy, the county Office of Education’s senior project director for Head Start, told LACA in a letter that the agency’s service area is being reduced to give it an opportunity to remedy all its past problems.

Irene Tovar, a founding member of LACA who took over the executive directorship last year as part of the reorganization, said she was “really shocked” by what she called the “double whammy” of the state and county cuts.

LACA, the sole agency in the two valleys providing meals, instruction and health services to mostly poor preschool children since Head Start was created in 1965, is not accused of any new mismanagement. Rather, both the state and county decisions are based on the agency not moving quickly enough to correct those past problems, including repayment of $100,000 in 1991-92 expenditures that were found to be in violation of federal guidelines.

“What else did we have to do, bleed?” Tovar said in frustration. “We are being punished for something the previous administration did. Here we are like fools trying to clean up this mess and then for this to happen.”

LACA is not expected to have to close down as a result of the cuts because it will be allowed to reapply for county funds for its current 1,332 slots, and county education officials say the agency is likely to receive that support. But LACA will no longer have a monopoly on Head Start in the San Fernando Valley because another agency will be brought in to open new classrooms as part of the county’s expansion plans.

State and county officials say that children currently in LACA’s Head Start programs will not be affected by the cuts because other agencies can include them in their programs. And they said some LACA employees who lose their jobs because of the cuts probably will be hired by the new agency.

But Tovar says that it is bound to be disruptive for children if an outside agency takes over services in areas that her organization has served for nearly 30 years.

“It’s going to take them a while to set up programs,” she said. “Teachers and sites have to be licensed (by the state) and they are going to have to be able to deal with children who are predominantly Latino, and many who only speak Spanish.”

Problems with LACA first were uncovered in the summer of 1992. County inspectors, responding to complaints from parents and staff, found that LACA had violated federal regulations by renting office space and vans from its own employees, overpaying staff members and engaging in nepotism in hiring and contracting for services and equipment.

Last February, the county Office of Education stripped the agency of its $5.3 million in annual funding, saying LACA was riddled with problems, including a projected budget shortfall of $850,000, and $100,000 in expenditures from the preceding year that were not approved.

In response, LACA totally reorganized. Longtime Executive Director Ralph Arriola--who was tied in with much of the mismanagement by the county Office of Education--resigned under pressure and was replaced last May by Tovar, a longtime community activist who helped found LACA in 1965. Most of the members of the board of directors also resigned, and were replaced with other founding members of LACA.

To make up for the projected budget shortfall, LACA laid off more than 40 employees--most of them administrators--in the last two months of the fiscal year, which ended in June. The agency also promised to develop a plan to repay the $100,000 in disallowed expenditures.

In May, county officials reconsidered their earlier decision, and restored the funding for 1993-94. State officials also renewed their $600,000 state grant on the condition that LACA submit certain documents in a timely manner.

But late last year, state education officials notified LACA that they would not renew the state grant for 1994-95 because the agency had not met a Nov. 15 deadline to file a new budget proposal, a deficit reduction plan and an audit of expenditures with the state.

“They did not meet any of these requirements,” said Muniz, regional administrator for the Preschool Program/Child Development division of the state Department of Education. Without those documents, Muniz said, “We had no sense of where the organization was.”

Muniz said LACA will not be eligible to seek new funding for three years. He added that the state already has begun looking for another agency to take over the programs. Muniz said the state is seeking a locally headquartered agency to avoid a disruptive transition. He said the contract should be awarded by mid-June.

“It’s a personal tragedy,” Muniz said. “We were all rooting for the agency. Unfortunately, somewhere along the line, someone dropped the ball.”

In her defense, Tovar said she missed the state’s deadline by more than a month because she believed the agency’s accountant had obtained an extension. She produced a letter from the accountant in which he requested an extension, however she acknowledged that the state never granted it.

But regardless of any missed deadlines, Tovar maintains that the state should have been more flexible.

“The state acted on form rather than on substance,” she said. “We are on the road to making things happen, but the state cut these children off. (State officials) are so removed from reality. They have no idea what is going on.”

LACA is expected to be funded by the county Office of Education for 1994-95 at a level that will support its 1,332 children, but the number of communities it serves may gradually dwindle because it will not be allowed to replace students that leave the program.

The county Office of Education “recognizes the fact that the present administration of Latin American Civic Assn. is committed to serving children and their families,” said Kennedy in his letter to LACA. “However, due to the mismanagement of the previous administration, LACA needs time to heal itself and bring the Head Start program into compliance with the federal regulations.”

Kennedy said in his letter that LACA will only be allowed to expand when it “can demonstrate fiscal and administrative responsibility.”

In the meantime, LACA will be given “guest” status in several areas where it has run programs for years, including Van Nuys, Tujunga, Sun Valley and North Hollywood. Guest status means that no new children will be allowed to enroll in those areas, and LACA must close down classrooms when building leases expire. At least 20 classrooms that serve a total of 300 children could be affected, Tovar said.

In addition, county education officials have told LACA that it will have to close two of its six classes in Van Nuys before opening an already approved classroom at the Blythe Street Housing Project. Children who would have been served by the two closed classes instead will be served by a new agency, county officials said.

Tovar said that had she known LACA was going to be prevented from maintaining its existing programs, she would not have spent thousands of dollars this past year to improve some of the existing sites and vehicles.

The county Office of Education “is not being fair,” Tovar said. “We accepted the condition of not being able to expand to other areas, but we are concerned that we are being made guests in our own areas.”