(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.