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NEON CEO explains ‘unreasonable situation’

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NEON interim CEO and President Pat Wilson Pheanious speaks at a recent board meeting.

NORWALK, Conn. – Unreasonable is the right word in reference to bookkeeping at South Norwalk’s anti-poverty agency, but you have to put that in context, NEON interim CEO and president Pat Wilson Pheanious said.

Pheanious, who has just over a week left in her contract with Norwalk Economic Opportunity Now (NEON), was explaining comments she made at the agency’s last board meeting and responding to a letter to the editor written by Susan Wallerstein. As she gets closer to becoming a private citizen she is becoming more willing to speak her mind bluntly, as it won’t be coming from the voice of NEON, she said.

“I guess I lost my temper a little bit because he ought to know better by now,” she said of board member Alan Rossi, who repeatedly demanded “reports of the financial situation of the corporation.”

The comment she was explaining was, “What you’re asking for is a perfectly reasonable response, it’s a perfectly reasonable question, but it’s not a reasonable situation that we have been in. This is an agency that operated off of not even balance sheets and income statements for years. The information that has been provided by this team, as inadequate as it looks to you, is the best information that has come out of this agency.”

Rossi doesn’t understand what he is dealing with, she said, as he is coming to NEON from a high level of the business world.

“Generally speaking you’re dealing with a less sophisticated financial system and people with less sophisticated financial expertise,” she said.

In 47 years of operation, nobody at NEON had ever done a cash flow record until she got there, she said.

“Their record keeping and the way they handled and explained or didn’t explain their financial situation was not up to par and hadn’t been for years,” she said.

It’s therefore impossible to make financial projections at this point because the records only go back 18 months, she said. You need a history to make projections, and none was kept.

As DSS (Department of Social Services) commissioner, she was responsible for sternly reprimanding and penalizing agencies with poor record keeping, she said. Now she answers questions from auditors, trying to explain an irrational situation rationally.

“I feel like a fool,” she said.

But some community level non-profits began as mom and pop operations, she said, and over the years grew into multi-million dollar organizations, still running like a mom and pop.

“NEON is not the only one,” she said. “NEON is just the one that is under scrutiny at the moment.”

NEON runs on three or four separate fiscal years simultaneously, she said, as federal grants and state grants are run differently. Money comes in erratically, and paperwork is challenging. The result is non-profit agencies run on heart instead of head, she said.

“Non-profits that work with the state are always supplying services before they sign the contract because if you wait for the contract you would never be able to perform the services,” she said. “The biggest crime of non-profits is that they’re always helping. They’re trying to do right, they’re trying to help people. Sometimes they skip appropriate steps, and sometimes they get in trouble, and they should get in trouble. But they’re always stretching the envelope in order to serve.”

NEON staff members have only been working for 18 months to fix an agency with nearly five decades of history, she said. Rossi should know better, as she’s explained it to him, she said.

“A lot of people who don’t have non-profit experience or community action experience don’t understand how the dollars are blended, how you can have one or two employees working under two or three contracts,” she said. “When it comes time to lay somebody off, it’s not as simple to say, ‘OK, we need to lose three people, chop them off.’ Because you can’t chop people into thirds. It’s just not as simple as it looks.”

Some of Wallerstein’s letter was downright untrue, she said.

At a recent board meeting, Ernie Dumas of A Better South Norwalk said board members had been required to have college degrees, thereby leaving out many South Norwalk residents. That got into the press.

It isn’t true, Pheanious said.

The NEON board recruitment packet dated Nov. 15, 2012 (attached below) does not list a college degree among the qualifications that potential board members must have.

Pheanious said she thinks Wallerstein was referring to the reporting of Dumas’ comments when Wallerstein asked, “Why were there more requirements for NEON board members than for the person the Board approved to serve as Acting President & CEO?”

That’s in reference to Chiquita Stephenson, and news reports calling Stephenson’s college degree into question. Stephenson’s resume includes an associate’s degree from Norwalk Community College, but she has been able to produce it.

Wallerstein asked, “Why after several months hasn’t this person been able to present official proof that she has earned the associate’s degree claimed on her resume?”

Pheanious pointed out that NCC gave Stephenson a distinguished alumni award in 2011. She said she has reason to believe that Stephenson has the degree.

“I understand some of the technicalities of what may have happened and it may eventually get straightened out,” she said. “It could be more about somebody not doing something – but it wasn’t Chiquita – somebody not following up with something to record something correctly.”

Wallerstein also criticized Pheanious’ plan to create a NEON University after she leaves her position, working as a volunteer.

“Why did most Board members agree to allow the current Interim CEO to continue as a volunteer to work on a new online employee education program when it is having difficulty running its current programs and services?” Wallerstein asked. “Isn’t this something NEON might collaborate or partner with others on if it’s really needed?”

The university is Pheanious’ pet project.

“What difference does it make to her? What I’m doing I’m doing for free,” Pheanious asked.

Pheanious said recently that coming to Norwalk to right NEON is the hardest job she’s ever had. She added that it is thankless.

“Norwalk has more snakes in the grass than I have ever encountered in my life,” she said. “Inside and outside of the agency, inside City Hall, they’re all over the place. A lot of the difficulty stems from people responding to a dysfunctional environment. Norwalk is dysfunctional in my opinion.”

board-recruitment-packet-revised-11-15-12

14 comments

jlightfield August 29, 2013 at 7:53 am

Financial literacy should be the number one requirement of a “C” level position. You cannot have an organization run under “three or four separate fiscal years simultaneously” an organization has one fiscal year. Funds that are obtained by grants can have contract periods that run on different fiscal years, but from an accounting pov the funds are recorded and characterized in the fiscal year of the organization and encumbered for future use as outlined by the contract if they span past the organizations’s current fiscal year. Financial forecasts are easily obtained from the bank (assuming that the organization realizes that online access to bank reports exist) and rarely go back more than 5 years. The whole point of the Headstart $400k if mischaracterized funds is exactly the point about allocating individuals, who are hired to operate head start, to other programs. The letter was quite specific, the NEON head start grant specified that all labor was a direct expense, meaning that each employee was exclusive to Headstart, and not an indirect expense, meaning that an employee operating a Headstart program could not also be working on another program. Pheanious is right, past boards never provided oversight to the shoddy financial reporting, but it would seem that her current stream of excuses means nothing has changed.

loveforthecity August 29, 2013 at 8:12 am

Can you tell this woman after all this time still does not get it. She has her juris doctorate and is oblivious. Now she recommends a woman with a high school diploma and neither can produce an income and expense report? Are they not embarrassed? Oh wait probably not because they earn 130k plus. Her contract is up soon so now she wants to speak her mind. The more these people talk the more evident it is that they are incompetent. She feels like there are snakes every where, look in the mirror, you are on the defensive now because you were sent here to do a job but fell into the snake pit yourself. No one respects your opinion and Norwalk wants you out faster than you can take your next breath. Good riddance and get out of our city.

JustAsking August 29, 2013 at 12:43 pm

Excuses and finger pointing for incompetence at all levels. What is the salary of all these “execs”? Past and present board are to blame as well.

Neoscam August 29, 2013 at 12:53 pm

It doesn’t get lower than stealing from poor kids. $130k and you can’t even balance a checkbook? That is stealing.

Don't Panic August 29, 2013 at 1:31 pm

The venom on all sides here is counterproductive. There is no reason for anyone at NEON to get defensive when a citizen like Ms Wallerstein simply asks questions. Ms Pheanious and she both have the same goal-to see that NEON gets back to being a functional resource for the community.
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A simple point by point response would have gone a long way towards answering the questions that many have, now that NEON’s operations have been put under a spotlight. They are not unreasonable questions.
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Conversely, blaming the current management at NEON for years of bookkeeping neglect is not entirely fair. If the records truly are missing, then the job will be much more difficult.
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And missing records present a much larger risk than just an inability to do a cash flow analysis. Federal tax filings should be maintained beyond 18 months, and state grants probably have record-keeping requirements as well.
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The focus needs to be on getting the books back on track, because it is clear that all of the potential grants to pay for services will be at risk. Services will suffer.
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Projections can be made without historical data. Start-up companies do it all the time. The previous commenter is correct to point out that an organization cannot operate it’s own books under multiple fiscal years. I suspect that Ms Pheanious misspoke.
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Regardless of the expertise (or lack thereof) of past NEON management, the objective now should be to adhere to a higher standard. That means making sure you have people with the expertise needed to deal with the books, and the qualifications listed for the job description.

Amazed August 29, 2013 at 3:44 pm

“Norwalk has more snakes in the grass than I have ever encountered in my life,”

Did Ms Pheanious really just insult everyone in Norwalk and at the same time announce that she would like to volunteer to get University of Pheanious up an running?

With all of the troubles NEON is enduring at this time University of Pheanious is her primary focus.

I must have missed Ms Pheanious’ contribution to NEON for the last 18 months, NEON appears to be in a far worse position than it was 18 months ago.

I wish NEON much success in the coming year.
God Bless and continue making a difference in the community.

ScopeonNorwalk August 29, 2013 at 4:12 pm

This situation makes me want to stop paying taxes.

“This is an agency that operated off of not even balance sheets and income statements for years. The information that has been provided by this team, as inadequate as it looks to you, is the best information that has come out of this agency.”

And they’re still getting state and federal dollars? Ridiculous.

EastNorwalkChick August 29, 2013 at 4:57 pm

If what Ms. Pheanious said is correct, that this agency did not operate off of a Balance Sheet or Income Statement for years, then I suspect that the 990 Tax Returns that they have filed over the years are incorrect. Without these financial statements, it is very hard to file a correct return. Which opens them up in the future for an IRS audit when and if they get their act together and realize that they have to file amended returns.
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Any good bookkeeper or CPA can re-create a set books and financial statements by using the bank statements, I do it all the time for my clients. Most of the major banks now have copies of your deposits and checks online. Hardcopy detail is the best, but when push comes to shove, you can do it.
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I can’t believe they let go on this long, I know non-profit accounting, I’m ready to drive down there an volunteer my time and expertise to get this mess straightened out….geesh, enough already.

Norwalk Spectator August 29, 2013 at 4:59 pm

@ Amazed,

Like you, I was shocked to read Ms. Pheanious’ comment about snakes in the grass. While her tenure is winding down, she is CURRENTLY STILL the head of N.E.O.N. and quite truthfully, my sympathy toward N.E.O.N. has turned to disdain. I’m now much more in favor of letting Norwalk Housing Authority run Head Start. While I don’t always agree with NHA, they seem to be able to deal with HUD and appear to run an ethical agency.

Neoscam August 29, 2013 at 5:12 pm

@ENChick. If you volunteer for that group, be prepared to do it from 10 to 2 and not on weekends and not on some other certain weekdays. You see that is when they are open usually. Don’t bother to try during nights or weekends, you know when most people do their volunteerism.

bill August 29, 2013 at 5:39 pm

“Pheanious said recently that coming to Norwalk to right NEON is the hardest job she’s ever had. She added that it is thankless.”….what is she talking about? she has a $130,000 salary, get over yourself, it is called a job.

piberman August 29, 2013 at 6:33 pm

Lets acknowledge the major contribution made by Ms. Pheanious. She deserves our appreciation.

The real story here is that the City Administration apparently made no effort to examine NEON’s financial records over many years despite giving the agency tens of millions of taxpayer dollars. Similarly the City was deficient in overseeing the BOE financial records for many years. Clearly the current City administration has been negligent in performing some of its required financial reporting and examination duties. That is a matter of serious concern. We call it “financial malfeasance”.

Given the City’s unwillingness to examine NEON’s books over these many years one naturally wonders what other major league financial reporting failures remain to be discovered. It may take another administration with more “energetic” administrators to learn whether there are more financial irons in the fire.

What is especially disturbing beyond the absence of standard financial records for NEON is that for many years distinguished members of the Common Council including its current President were NEON Board Directors. They failued their responsibilities to both NEON and the City of New York.

NEON is a great embarrassment to the residents of the City of Norwalk. Yet our elected officials – Common Council members and City financial administrators – turn their heads hoping no one will notice. We deserve much better governance. Unless the citizens of Norwalk simply don’t care how their local government functions.

Once again thanks Ms. Pheanious for your efforts on shining the light on a failing public agency charged with helping the less fortunate in our community . Norwalk has failed its responsibilities.

loveforthecity August 29, 2013 at 11:14 pm

16k per month paid for by NEON and the state is paying her another 7,500 per month and for what? Do the math people. She is getting paid 23k per month and for what? To cook the books and create more chaos.

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