TCCAP fiscal problems blamed on former central administration

Published Date Written by Barbara Tetreault

BERLIN — The special trustee overseeing the reorganization of Tri-County Community Action Program placed the blame for the agency's financial straits on its former central administration.
"The program people who deliver the services didn't do this. It was done at the highest levels of this organization," said Todd Fahey, the special trustee appointed by the Probate Court in December.
While not responsible for the fiscal problems, Fahey said the employees and program directors have had to deal with "the fall out."
The staff are dedicated and continue to do good work, he said, despite having their pay and benefits cut. As a result of their dedication TCCAP has continued to provide services with only a "minimal disturbance," he said.
Fahey remains cautiously optimistic that TCCAP will continue to operate, but he warned the organization will be restructured to focus on its core mission of helping low to moderate-income people with food, shelter and heat.
"I think it's more likely than not that TCCAP will remain a viable on-going organization," he said, but he predicted it will look "slightly different if not remarkably different than it does today."
Fahey met with representatives from the press last week, along with TCCAP Chief Operating Office Peter Higbee and consultant John Gilbert, president of the management consulting firm Synchrony Advisors LLC of Exeter.
Fahey said all of the agency's programs are being evaluated. He is close to making a decision on the future of various programs, he said. He has already eliminated the position of Economic Development Director Max Makaitis and announced TCCAP will divest itself of the Northern Forest Heritage Park in Berlin.
TCCAP's focus will be on retaining programs such as Senior Meals, Fuel Assistance, North Country Transit, and Head Start, he said, which are critical to the agency's core mission.
CAP's central administration, meanwhile, is slated for reorganization.
The agency was "a bit adrift," Fahey said, back in December when he was appointed to oversee TCCAP. Both Executive Director Joseph Costello and Chief Financial Officer Dori Ducharme were gone, he said, though he declined to comment on whether the two resigned or were terminated. The court had granted the motion by Attorney General's Charitable Trusts Director Anthony Blenkinsop to suspend the entire board of directors and appoint Fahey, who works for the Concord law firm of Orr and Reno, as trustee.
Only TCCAP Chief Operating Office Peter Higbee has remained since then. Last week Fahey
took pains to praise Higbee, describing him as invaluable and saying he has the confidence of the employees. Otherwise, Fahey said, there was a tremendous disconnect between the
central administration and the program directors and the programs they oversee.
In his January status report to the Probate Court Fahey wrote there was "a lack of financial sophistication relation to systems and accounting practice in place, a culture of distrust and dysfunction between central administration and the various programs, and a general running of TCCAP more like a (poorly run) small business than a critical multi-million social service agency."
When asked why various audits required by federal and private funders did not uncover the agency's shortcomings, Fahey replied: "We're trying to get to the bottom of that very question." He noted many of the funders relied on audits that were done by certified public accountants.
"It appears there may have been some omissions in some of those audits," Fahey said.
TCCAP is now looking for a new CFO and Fahey said he expects there will eventually be a new board of directors.
One of the issues that contributed to TCCAP's fiscal problems is how it is reimbursed for services. Higbee said at one time the agency would receive money in advance from government agencies, but now TCCAP is usually reimbursed. Federal funds are slower
filtering down to the state and then to the providers.
"We're at the end of that line," Higbee said.
That lag in reimbursements creates a cash flow problem. Fahey and Gilbert cited as an example the Weatherization Program, which makes energy conservation improvements for eligible homes. Once the work is completed and the employees and suppliers have been paid, Gilbert said, it can take up to 16 weeks for TCCAP to get reimbursed.
Fahey and Gilbert said government agencies have been responsive to TCCAP's problem and worked to speed up reimbursements. At the same time, TCCAP is getting invoices out quicker. Gilbert said a line of credit would be helpful.
Fahey noted the weatherization program has a good reputation, but he was still forced to furlough eight employees for two months.
Another issue facing the organization is coming up with matching funds for a program like North County Transit. Fahey said the program receives 50 percent of its operating funds through the state Department of Transportation and is responsible for raising the other
50 percent. CAP scrambles to raise its match through fees, sponsorships, donations and creative fundraising efforts. The rural nature of the region makes raising the 50 percent match
challenging, he said, even unrealistic. Six months into the fiscal year that program is running a tentative deficit of $190,000.
One of the most serious shortfalls, meanwhile, is within the Guardianship Services Program, where client funds were used to cover CAP's general operating expenses. Fahey said the fund has a $224,000 shortfall that will have to be repaid.
Higbee said the money came from a pooled account that served a number of clients. "No client has had any dollar that they needed not available to them," he said.
Fahey said the misappropriation of the Guardianship funds was done by the central administration. He said Guardianship Program Director Donna Keddy had no involvement in the misappropriation and no oversight of the account. Fahey said Keddy has spent years building the program and is well regarded.
A number of TCCAP buildings have also been used as collateral to obtain money from different lenders. Fahey said the organization has $4 million in long-term debt with a monthly payment of about $30,000. He said that debt service load is more than manageable for an
organization with an annual operating budget in the $17 million to $20 million range. Much of the debt is at very competitive interest rates, he said, and TCCAP is current on those payments.
That debt, however, plays a role in the effort to divest itself of the Northern Forest Heritage Park. The park was used as collateral, and Fahey said TCCAP has to receive some payment for it.
He said TCCAP has also invested three or four years of staff time in operating and building up the park's business. TCCAP has talked to the Androscoggin Valley Chamber of Commerce about taking over the park, but the purchase price is reportedly a sticking point.
Fahey said no final decision has been made about the future of the Brown House in Berlin, which houses various agencies.
The three men said there has been a lot of support for efforts to keep TCCAP a viable organization. Fahey said the highest levels of state government, including Gov. Maggie Hassan, are keeping an eye on the reorganization. TCCAP received $260,000 in funding from a group of funders to be used as working capital. Fahey said the money was provided as a repayable grant. He noted that many communities make donations to TCCAP at their annual budget meetings. He encouraged residents to support those appropriations. The level of oversight of the organization has never been higher, he pointed out, and the public can be confident that proper financial controls are in place.
Fahey was asked if there were discussions about whether having one agency serve all of Coos County and parts of Grafton and Carroll Counties was cost effective. "Thousands of people are served a week by this organization," he said, "and it
would be very hard to replicate those delivery systems and everyone
knows that."
Fahey acknowledged his services are expensive. His firm is billing TCCAP $275 an hour for his time. He estimated he is still only 20 percent through the reorganization and expects it will be summer before he is able to step aside.
There are still significant issues to be resolved, he said. "We're not really out of the woods."