NORWALK, Conn – The news – and the timing – got worse Thursday for Norwalk Economic Opportunity Now (NEON).
A day after releasing the news that the agency’s childhood development program, located at Norwalk’s Ben Franklin Center, was re-accredited for a five year period by the National Association for the Education of Young Children (NAEYC), the federal government issued a notice of summary suspension “all federal financial assistance awarded to your agency …under the Head Start Act.” The suspension is for at least 30 days.
Stephenson issued a press release Thursday night, saying that the sudden suspension will create a hardship for parents who depend on Head Start so they can go to work in the morning.
“While NEON has been addressing and responding to Office of Head Start concerns regarding our program, we were surprised to learn of today’s suspension,” she said in the release. “Our main concern is that the sudden closure of Head Start for an indefinite period of time will throw hundreds of area families into chaos, taking away child care at the last minute – which will in turn jeopardize employment for many, and the ability of families to pay rent, put food on the table and buy medicine. We feel this inconvenience could have been avoided had federal Head Start officials worked with NEON to plan ahead for any transition to new management that had been decided. NEON is now working to do everything possible to minimize the inconvenience to our Head Start parents, and is urgently seeking solutions to remedy the indefinite loss of child care services for our families.”
The 11-page letter from the Department of Human Services Administration for Children and Families contained a litany of reasons leading to the suspension, including items from the recent draft audit report from Connecticut Department of Social Services, which was reported on NancyOnNorwalk Wednesday. Specifically cited were assertions in the audit of “inappropriate decisions made by NEON’s management,” and the DSS claim that “the likelihood of NEON becoming financially stable in the short term is remote.”
The letter to NEON is attached at the end of this report.
Those claims and most of the others made in the DSS draft audit drew a sharp and combative response from NEON interim President and CEO Chiquita Stephenson and Board of Directors Chairman Michael Berkoff. In their response, the two pointed the finger back at DSS, Connecticut Association for Community Action (CAFCA) and former president and CEO Pat Wilson Pheanious for the agency’s troubles.
The complete response is attached in multiple pdf’s at the end of this report.
The suspension, the ACF letter said, was to begin at 5 p.m. Thursday, Oct. 24, and may be continued beyond 30 days upon notification. The suspension means that NEON : is immediately prohibited from making any new expenditures or incurring any new obligations with Head Start funds in connection with its direct operation of Head Start services in its service area unless expressly authorized by ACF to do so.”
ACF named Community Development Institute as interim grantee to operate the program.
In the letter, ACF pointed to the Office of the Inspector General audit of NEON’s Head Start program covering 2009-March 2011 and another, more limited covering April 2011-Oct. 21 2011. As a result of those audits, which showed misuse of federal Head Start funds, NEON was required to comply with a set of requirements and/or conditions in order to continue its programs (see Summary Suspension document below, Page 4).
“To date, NEON has not adequately complied with these special award conditions,” the letter said. As recently as Oct. 15, it said, NEON supplied inadequate financial documentation. The unannounced two-day shutdown Oct. 7-8 further highlighted “NEON’s noncompliance with, as well as a non-understanding of, its special award conditions.”
The letter said NEON had $500,000 in unused Head Start funds at the time of the shutdown but had not requested their release. On Oct. 16, it said, NEON tried to withdraw $250,000 but could not because it had not requested prior approval from ACF in direct violation of Condition One of the high-risk designation letter it received recently from DSS’s ACF has not received requests from NEON to draw down funds, ACF is unsure how the agency is paying for the program “if at all,” the letter said.
The letter notes a phone conversation ACF said took place Oct. 18 with Stephenson, who described a “new system” and “restructuring” of the agency’s financial culture, saying that, to meet its financial obligations, NEON “considers all incoming funds, regardless of funding source, and ‘see(s) where [the money] fits’”
The letter pointed out that Stephenson had described a system of comingling funs, “something that is expressly disallowed under the terms of NEON’s Head Start grant.”
It was the misallocation and misuse of funds under former president and CEO Joseph Mann that resulted in NEON being told to refund hundreds of thousands of dollars to the government and the departure of Mann.
In the letter responding to the DSS draft audit, NEON repeatedly pointed to its merger with Stamford anti-poverty agency CTE as a major reason for its financial problems and for it increases in staffing and payroll. It was a merger, NEON said repeatedly, that was mandated by DSS chief Roderick Bremby. NEON said it was taking on CTE’s debt, programs and, during transition, its employees that put the agency behind the financial eight-ball.
NEON also repeatedly pointed to decisions made by former interim president and CEO Pat Wilson Pheanious, who was placed in the position by DSS, as contributing to the problems. It was Pheanious, who’s 18-month appointment ended in early September, who was in charge when the decision was made to continue unfunded programs, and it was Pheanious who was part of the decision to add staff, make promotions and increase salaries, the response letter said.
The draft audit cited Stephenson’s dramatic pay increase and the employment of several of her family members as among the “inappropriate” decisions that caused NEON’s problems.
Stephenson, who was promoted from a mid-level manager to chief operating officer during Pheanious’ term, was paid $66,221 annually as of June 22, 2012, according to the ACF document. On June 22, 2013, her salary was $135,000, a 103.86 percent increase. The previous employee in her position, the document said, was paid $83,641. Stephenson’s new rate was a $51,359 increase over the previous employee’s salary.
Mary Mann, whose job title was changed as duties increased, NEON said, received a 100 percent salary increase, the document said. Mann, the sister of departed NEON chief Joseph Mann, was a program director on June 22, 2012, when she was making $50,000 a year. A year later, as chief program officer, Mann was making $100,000 a year. Daniele Watson Yates, listed as chief financial officer, made $53,040 on June 22, 2012; a year later, her pay jumped to $90,000, a 69.68 percent increase. The previous CFO made $14,000 less, at $76,000, the document says.
A day earlier, NEON was told it’s childhood development program, located at Norwalk’s Ben Franklin Center, was re-accredited for a five-year period by the National Association for the Education of Young Children (NAEYC).
In a press release, NEON wrote, “There are 10 standards programs seeking accreditation must meet that cover various aspects of a well-run quality Early Childhood program. Each standard has several criteria that must be met including: Evidence of staff competence; quality relationships with children and families; safe and welcoming environments and curriculum implementation. Compliance with these standards are assessed through careful study by the NAEYC Assessor who spends significant time in classrooms observing staff, child interactions and implementation of curriculum.”
The programreview took place over a two-day period, Sept. 23-24, consisting of a full day and a half-day, and included classroom observations, review of classroom and program portfolios and a playground inspection.
“It takes a strong team to manage such a large program as this effectively,” the NAEYC assessor said. “NEON staff are working in the same direction, which is a difficult thing to accomplish…”
“Our staff continues doing the hard work necessary to ensure that the children and families that we serve come first, receiving quality, caring education,” Stephenson said. “Excellence comes with great sacrifice, and I salute everyone at NEON’s Childhood Development Program who earned this well deserved recognition.”
Here are the documents referred to in this story:
NEON summary suspension – signed(1)
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