NEON Head Start’s suspension foretold in ACF documents

Three classrooms at Nathaniel Ely school have no phone access for 911 calls, according to a report issued by the Administration of Children and Families.

(Updated 9:18 a.m. with promised attachments)

NORWALK, Conn. – Two letters issued in September by the Administration for Children & Families (ACF), Office of Head Start, obtained by NancyOnNorwalk, show that Norwalk Economic Opportunity Now’s (NEON) deficiencies went far beyond financial controls and that ACF’s suspension of NEON’s Head Start program was anything but sudden.

While the first letter focused on the financial problems that had been enumerated but not corrected in earlier audits, the second detailed a laundry list of “deficiencies” that placed Head Start children’s health and safety at risk. Both letters were issued as NEON was transitioning control from interim president and CEO Pat Wilson Pheanious to Chiquita Stephenson. Pheanious’ last day was Sept. 6.

A letter from ACF to NEON, dated Sept. 5, alerted NEON that it had been designated a “high risk/special award conditions” Head Start grantee as of that date. According to the letter, “A high risk organization is an organization whose management practices raise serious questions about its ability to assure proper programmatic use and financial stewardship of Federal grant funds.”

That letter, attached at the end of this article, set restrictions on NEON’s ability to withdraw advance payments on its grant, requiring at least five business days’ notice and a detailed list of payments and accruals representing each request. Also, NEON was required to submit a monthly schedule of all expenses paid for the month just ended, identifying each payee and purpose, certified by the Head Start director, chief financial officer executive director and president of the Board of Directors, attesting that “all payments are for obligations incurred in the current budget period.” The first report was due in the ACF office by Oct. 15. Also due Oct. 15 was a board-certified report detailing and updating corrective actions taken to resolve the problems with internal financial controls and deficiencies.

By Sept. 16, NEON was required to submit to ACF its formal response to the audit findings dated July 19, 2013. And, by Oct. 1, NEON was to have submitted its most current comprehensive cost allocation plan, “clearly identifying the methodology used to allocate all payroll costs, along with a status of any planned revisions to the plan.”

The letter stated that failure to comply with the special conditions would place continued funding in jeopardy. The letter gave NEON 30 calendar days to submit a request for reconsideration, with a determination by ACF due with 15 days following receipt of such request.

Six days after that letter was sent by ACF, another document was sent to NEON with an overview of findings from a Sept. 6 monitoring review of the NEON Head Start program. The letter contained a report of deficiencies that put the health and safety of the children at risk, and gave NEON 10 days to request an extension of time to remedy the problems. A copy is attached at the end of this report.

The report detailed a lack of internal systems to assure vendors were paid on time, resulting in several vendors cutting off services for non-payment. That resulted in  problems obtaining supplies for first aid kits, special dietary items required by some children, and a mental health consultant suspending services. Interviews with those vendors showed they were owed in excess of $205,000. One food vendor said his company was owed $197,882.94. Another vendor of specialty food items had stopped deliveries nine months earlier.

The report said it discovered NEON was informed in June the medical company would not provide medical gloves due to non-payment. The report said the CEO (Pheanious) said she contacted Americare, which gave medicals kits to Head Start in the past and would do so again. However, during the September monitoring visit, the NEON Health Manager said no kits had been received.

Also, NEON was having computer and phone connectivity and access issues between departments and units. Three classrooms at the Ely school had no phone access for 911 calls.

An interview with the kitchen manager showed equipment was serviced only when it broke down, with no routine maintenance scheduled. The grease trap, for instance, has not been cleaned since November 2012, and the kitchen manager said cleaning was done “when it began to smell.”

A dishwasher at the Benjamin Franklin school was reported to be broken, forcing kitchen staff there to use paper products.

The Sept. 11 letter stated, “If your program continues to have uncorrected deficiencies beyond the specified timeframes (30 days from receipt of the letter), you will be issued … a letter stating our intent to terminate the Head Start designation of your agency.”

A letter to NEON from ACF, dated Oct. 23, sent by UPS Next Day Air, informed NEON of the imminent suspension of the program and cited a lack of compliance with the conditions set forth in the September communications. In particular, the letter, previously published by NoN and attached at the end of this report, details at lack of compliance with the conditions laid out in the Sept. 5 and Sept 11 documents; NEON’s unannounced Head Start shutdown Oct 7-8 – of which ACF was unaware until Oct. 17, according to the Oct. 23 letter – blaming a lack of funds on the government shutdown when, in fact, $500,000 was sitting in the NEON Head Start account; and an Oct. 12 email from DSS to ACF detailing ongoing financial mismanagement at NEON.






11 responses to “NEON Head Start’s suspension foretold in ACF documents”

  1. LWitherspoon

    Thank you Nancy. It will be interesting to see the attachments referred to in the article, once they are posted.

    1. Mark Chapman


      Attachments are now included. Hate it when that happens. We apologize.

  2. WHAT?

    On September 11, 2013, there was a NEON board meeting held at the CTE building in Stamford wherein four members from that federal office in Boston came in person to discuss all of these written warnings with the board, detailing the very grave deficiencies and the real (likely) risk of a shutdown of Headstart.
    After the Boston people left, the board asked newly acting CEO Stephenson about this. She stated that there was nothing to worry about, the Boston people were “lying.” The six board members who found this pretty hard to believe all resigned over the following three weeks. The explanation that these four professionals traveled all the way from Boston to hatch these lies, however, was a perfectly acceptable management response for the Berkhoff and O’Dea crew and they just kept on keepin’ on, looking for “like-minded” board members who were not “naysayers.” And if you go look at my post after the suspension was announced you will see that I stated the same facts now presented in this article.

  3. Dawn

    And there are still people who want to give them my tax dollars. You have got to be kidding.
    Thank you mayor moccia for bbeing the first to say no

  4. Oldtimer

    When Moccia first became aware of financial problems at NEON, real leadership would have dictated fixing those problems, perhaps even putting his own choice in as CFO, as a condition of the grant for that year. Instead, he insisted there would be no more City grant money until Joe Mann was removed from his position, and did nothing to fix the book keeping, implying that City grant money would be available after Joe Mann was gone. After Mann was out, the city grant was not resumed. It was not resumed the next year, either, and the City did nothing to help fix NEON’s terrible book keeping. Now, NEON seems to be going down the drain, but the Moccia administration can brag about the 2.6 million saved. Somebody will have to fix the problems at NEON and probably reconstruct financial records for the last few years or figure out a way to get the same services from another source.

  5. LWitherspoon

    It’s easy to play “shoulda coulda woulda” and to talk in vague terms about “real leadership”. Back here in the real world, what evidence do you have that NEON would have agreed to a demand from the City to install a new CFO as a condition of restoring the City’s grant? Remember, the City’s grant only amounted to something like 10% of NEON’s annual budget. The City imposed a much lower standard – removing Joe Mann and presenting audited financials. NEON dragged its feet on the first condition, and to this day has not complied with the second condition. Why?
    I have a theory. You have noted in other comments that outright theft may have been occurring at NEON amid the lack of financial controls. If true, everyone benefiting from same would have found a 10% budget cut far more palatable than a new CFO. Perhaps this is what happened. I have great difficulty understanding how an anti-poverty agency full of caring, compassionate individuals spent two years refusing to get its financial house in order when $1.3 million per year in funds were hanging in the balance.
    I would love to know what was known back when Mayor Moccia, Bruce Morris, Bob Duff, and Gail Lavielle held a press conference calling for Joe Mann’s ouster. I would also like to understand more about who appointed the new board which served during Pat Wilson Pheanious’s “turnaround”, which appears not to have been a turnaround at all.

  6. Oldtimer

    1.3 million is a strong incentive to co-operate. But, it only takes one thief getting fat down there to obstruct any change in how they were doing things. I believe most of the people at NEON are well intentioned, honest people. It only takes one thief going undiscovered for a while to take a lot of money. Right now, there doesn’t seem to be any records to confirm or disprove any shortage. I am puzzled why the state and federal agencies funding programs at NEON haven’t either initiated their own investigations or asked for a local investigation by local law enforcement. There has to at least be a checkbook, doesn’t there ? There were allegations of all kinds of misuse of NEON assets under Joe Mann, but none may have quite qualified as thefts.
    Didn’t Pat Wilson Pheanious name her own board ?

  7. Dawn

    NEOn is a private organization and the city is not responsible to fix their problems. Stop saying that moccia should have done anything but say no more money til you fix yourself.

  8. My god, the people can not even depend on the reps they VOTED into state positions to HELP them – the ONES THAT HAD THEIR NAMES ATTACHED TO NEON WHEN IT WAS “GOOD” –
    HEY, DUFF & MORRIS – WHERE ARE YOU NOW!!!???? Duff, you came out for one photo op when “cavalry” was sent out to the press to announce that Chicky was made to take unpaid time off.

  9. Oldtimer

    The building is city-owned, the school spaces they use are city-owned, they have been getting money support from the City since they started, their charter originally called for 1/3 of their board to be appointed by the mayor, and they are a private organization and the City has no responsibility to fix, or help fix, their problems ? Are you serious ?
    Who else will have to pick up the slack if NEON goes out of business ?
    Technically, you may be correct, but they are a creation of the City, for a specific purpose, and we should be very interested in keeping NEON going.

  10. LWitherspoon

    I agree that $1.3 million would seem like a strong incentive to cooperate, but the fact is that it wasn’t strong enough, and that’s why we are where we are today. The City withheld the $1.3 million in funding while demanding NEON get its financial house in order, and NEON couldn’t, or wouldn’t comply. It would be interesting to learn why, although I suspect that this could be a situation where a lot of notable people will be embarrassed when the truth comes out – including Mssrs. Duff, Morris, Hempstead, and others. So maybe it will all be swept under the rug.
    Also, those who ask why other cities served by NEON/CTE contribute no money in support of the organization deserve an answer. NEON’s mission is a worthy one, but Norwalkers are already taxed far beyond what’s reasonable in order to support spending in other CT cities.
    I believe you are correct that Pat Wilson Pheanious named her own board. Before that, as you say, 1/3 of the board was City-appointed. It would be interesting to know how and why the City lost the ability to appoint board members.

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