Utilization of Funds by the Kansas Human Needs Corporation, Kansas City, Kansas

Published by the Government Accountability Office on 1971-10-27.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

  tilization     Of F

Kansas Lullan
Kansas Cit

Office of Economic   Opportunity



                           COMFTROUR       GENERAL        OF      THE       UNITED      ST-AYES
                                         WASI-IIMGPORI.    D.C.         20548


    Dear Senator      Dole:

            Pursuant to your request of                May 24, 1971, we have ex-
    amined the use of funds provided                   by the Office     of Economic       13‘ /
    Opportunity     (OEO) to the Kansas              Human Needs Corporation          and > .'I,
    ha%e inquired     into other Federal               funds obtained      by Mr. Manuel
    Fierro,     the executive  secretary              of the corporation.
             We reviewed pertinent           records and held discussions             with
    officials       of the corporation           and the Salina Community Action
    Council,      Inc.,    a delegate       agency of the corporation.            Our re-
    view of the corporation             was made at several          locations    because
    of the dispersion           of activities.           Mr. Fierro was interviewed
    at his apartment          in Garden City,          Kansas, which served as his
    base of operations.            The president          of the corporation      was in
    Kansas City,        Kansas; the treasurer             of the corporation      was in
    Parsons, Kansas; the corporation's                    books were maintained        by
    a certified        public    accounting       firm in Topeka, Kansas; and the                -
    headquarters        of the council         is in Salina,       Kansas.     We also re-
    viewed records at, and held discussions                     with officials      of, the
    headquarters'        offices     of OEO and the Department             of Health,
    Education,       and Welfare and the agencies'                Kansas City Regional
    Offices.        Our fieldwork       was completed in August 1971.

            OEO, under its Emergency Food and Medical                 Services    pro-
    gram,     awarded   grants    of  $84,000    to the   corporation,       a private,
    nonprofit      corporation     chartered    by the State of Kansas.             A
    grant of $70,000 was awarded in June 1970, and a supplemen-
    tary grant of $14,000 was awarded in April                 1971.      The grant
    agreement provided         that $19,872 be contributed            as the non-
    Federal share of the total            program costs.       OEO regulations
    state that the non-Federal            share may be cash or in-kind            con-
    tributions,       such as donated personnel         time and office        space.
           The stated     objectives          of the grant                           were:

           1. 'I*** to document          and publicize                          the existence   and
              extent of hunger           and malnutrition                          in the State
              of Kansas,

                                   50 -i-H ,ANNlVERSARY                  1921- 1971

       2. "to develop  food programs    where             they do not       ex-
          ist and to improve   the delivery               of existing       pro-
          grams in Kansas, and

       3. "to develop     a pilot   project     in Saline,     McPherson
          and Dickinson     Counties     to develop models of ef-
          fective   action,     and show that barriers         to ade-
          quate nutrition       can be broken and participation
          in U.S. Department       of Agriculture       programs   can
          be increased."

         To carry out the third           objective,       a delegate      agency,
Salina     Community Action        Council,       Inc.,    of Salina      was estab-
lished     by the corporation          and was given responsibility               for
administering        the pilot     project      in these three counties             in
central     Kansas which were not being served by Community Ac-
tion Agencies.          The corporation         transferred        $58,122 of its
Federal     funds and the requirement               for obtaining       in-kind     con-
tributions       to its delegate         agency,      the council.        The council
had provided       in-kind     contributions          of $17,000 through        June 30,
1971.      The corporation       budgeted       the remaining        $25,878 of the
OEO grant for the purpose of paying                     the salary     and travel      ex-
penses of its executive            secretary        and the cost of a documen-
tary film.

       The OEO grants   were for 1 program year ended August 31,
1971.    According   to officials      of the OEO Kansas City Re-
gional   Office,   OEO will    make no further       grants to the corpo-
ration   because the first        two objectives     of the grant will
have been met by the end of the program year but plans to make
a grant of $60,000 to the council             to extend the pilot  project
through   June 1972.

         The corporation        also received      $5,000 from an OEO-funded
Community Action         Agency in Bakersfield,            California,       for use
in purchasing        food for migrants        in western        Kansas.      The cor-
poration      delegated     this activity       to the Kansas Council              of Ag-
ricultural       Workers and Low-Income           Families,       Inc.   (Agricul-
tural      Workers),    which the executive         secretary        of the


corporation     was instrumental    in organizing,     and earmarked            the
$5,000 for     use by this organization.        (See p. 8.)


       The nonsalaried   officers     of the corporation       are a presi-
dent, a vice president,       a secretary,      and a treasurer.       The
executive   secretary,   Mr. Fierro,       is the only full-time       staff
member.    His salary   (at an annual rate of $9,600 through              Jan-
uary 31, 1971, and $10,560 thereafter)            and travel     expenses
have been paid from grant funds.

       The corporation       hired an executive       secretary     pursuant     to
recommendations      made by OEO field       operations      personnel    and
consultants,    who believed        that operating      the corporation       solely
with volunteer      services      would not adequately       ensure completion
of the program.        Mr. Fierro)      who was appointed       in October 1970,
was the second person to fill            the position      of executive      secre-
tary .

       Through June 15, 1971, the latest              posting    in the books
of account)     the corporation      had spent       about $23,000 of $25,878
budgeted    for its operations.         Appendix      I includes    a schedule
of the corporation’s       expenditures.

       The corporation        completed     a 35-minute,     black-and-white
film documentary        which illustrated        the living     conditions      of
Mexican-Americans         in western     Kansas.     The film    shows evidence
of hunger and problems           of health,    housing,     employment,      educa-
tion,    etc. p in a 20-county        area in western       Kansas.      The bud-
get did not permit          coverage    of the whole State.         The corpora-
tion found the needs greater              in western    Kansas because that
part of the State lacked resources               that were available         in
the eastern      part of the State to combat these problems.
Mr. Fierro     told us that he and his wife had written                  the script
and had edited       the film and that a Washington,             D.C., firm
 (Welby A. Smith,       Jr.,    and E. Grayson Mattingly         of 5207 Canter-
bury Way, Temple Hills,           Maryland)    had done the technical           pro-


        We viewed the film,          along with OEO officials,          on July 27,
1971.      Mr. Fierro,       who showed the film,       explained     that the
film dealt       with the basic problems           of education,    medical     re-
sources,      welfare     agencies'     not reaching    people,   and difficul-
ties    in obtaining       employment      and housing.      An OEO official
stated     that,    although     the film documentary        was within     the
scope of the grant,            he was of the opinion       that it should have
focused more on food and medical                needs of migrants.        The grant
objectives       limited     the film's     scope to hunger and malnutrition.

        Mr. Fierro      told us that another           activity   of the corpora-
tion was advising          low-income      families     in western    Kansas of
their    rights    and eligibility         for the Department       of Agricul-
ture's     school    lunch programs        and food stamp programs.          The
corporation       also filed       complaints      with the Department      of Agri-
culture     and with State agencies             because of the way in which
some of the food programs             had been administered         by certain

        Most of the corporation's                 travel  was done by Mr. Fierro
whose travel           expenses      through    June 15, 1971, amounted to
$5,050.        Included       in this      amount are the costs of his air-
line    tickets        for three flights          to Washington,     D.C.;   one
flight      to Salt Lake City,             Utah; and one flight        to San Jose,
California.            According       to Mr. Fierro,     the trips      to Washington
were for the purpose of film                   editing   and consultations       with
Federal      officials        relating      to securing     grants   for migrant
workers       and the trips          to Salt Lake City and San Jose were to
attend      conferences         sponsored      by OEO. OEO officials         said that
they had no objections                 to Mr. Fierro's      use of grant funds for
his trips        relative       to OEO activities        outside    of Kansas.

       Our examination  of $21,449 of the               $23,021    expended
through   June 15, 1971, showed that:

       1. As of October      8, 1971, Mr. Fierro          had not submitted
          supporting     documentation,       contrary     to OEO require-
          ments,    for most of his travel.            From October    1970
          when he was appointed         through     March 1971, Mr. Fierro
          was advanced funds monthly           for travel     within   the
          State.      These advances were supported           by required


              travel       authorizations             outlining         the proposed          itiner-
              ary,    trip     purposes,          estimated          per diem allowance,                and
              estimated        mileage.           Mr. Fierro,           however,        did not sub-
              mit the required             vouchers           at monthend          showing       actual
              travel       costs     to liquidate             the advances.             In April        and
              May he submitted              travel       vouchers,         but these        did not
              show the odometer               readings          for mileage         claimed       or the
              days covered           by the per diem allowances                       claimed.          Un-
              der OEO regulations,                  the corporation            has 90 days af-
              ter termination             of its grant             to submit        reports       on its
              operations.            The corporation               should     have all        vouchers
              on hand to support                its expenditures              by November           30,
              1971.       Mr. Fierro’s            travel        expenditures          are. shown in
              greater       detail      on page 2 of appendix                   I.

         2.    In some instances         payments            to vendors    were not sup-
               ported   by vendors’        invoices.              Such payments      included
               $316 for hauling        a General             Services   Administration
               surplus    mobile    dental      unit         for use in the health           pro-
               gram, a telephone         bill     of        $306, a $27 battery          for   a
               truck   used in the program,                  and $20 for office          supplies.

        We discussed        the above items with         the corporation’s          pres-
ident    who said that         he would    contact    Mr. Fierro      and would       have
him submit        the documentation.          We discussed       the above    items
also with       the OEO Regional        Auditor    who initiated       a previously
planned     final     audit    of the grantee      on August       4, 1971.

        Mr. Fierro       acknowledged           that   additional       documentation
was needed       to support         his travel        expenses.       He stated       that     he
had made additional             trips      to Washington,         D.C.,     to assist       in
obtaining      Federal       funds     for    the Agricultural          Workers.        He
said that      these     trips      had been paid for by others;                 for    ex-
ample,     by a private         firm     which     has contracts        with   OEO for con-
sulting     services       and by a national             policy    advisory      group      to
the Department         of Health,          Education,        and Welfare.

SALINA        COMMUNITY       ACTION      COUNCIL,        INC.

         The council    received     Federal    funds                  of $58,122      from the
corporation      to operate      the pilot    project                    in the three      coun-
ties--Saline,        McPherson,     and Dickinson.                       The council’s      paid


staff    consisted     of a director,   a secretary,      six outreach
workers     to contact    needy persons     (two for each of the three
counties),      and three part-time     clerical     workers.

       Because the main thrust        of the project     was to advise     low-
income persons    to take advantage         of available   food programs,
most of the program funds were spent for salaries               and travel.
Payments for travel       expenses were made to outreach          workers,
to low-income    advisory     board members, and to the director           and
his secretary.     Appendix      I includes    a schedule    of these ex-

        We were informed   by the          director   that   the   council's     ef-
forts    had been directed   to:

1. Increased  participation           in
   Department  of Agriculture's
   food stamp program

         In all three counties          the outreach     workers    have con-
tacted     low-income      families      to determine     whether   they are hav-
ing any food or medical             problems.      The council's      program par-
ticipant      reports    for the period        July 1, 1970, through          May 28,
1971, showed that 3,066 participants                  had been contacted--l77
Mexican-Americans,           nine Puerto Ricans,        nine American       Indians,
326 blacks,        2,520 whites,       and 25 persons      of other     ethnic
groups.       The council       had not made follow-ups          to determine      the
effectiveness         of these contacts.

         The council's     efforts      to improve participation        in the
food stamp program included               (1) informing     low-income    families
of the program and urging             them to take advantage         of it if
eligible,      (2) providing       transportation       for needy persons,        and
 (3) seeing that the food stamp law was being interpreted                        cor-
rectly     by county welfare         departments     which distribute       the food

2. Expansion  of Department   of Agriculture's
   free and reduced-rate    school lunch programs

      The director told         us that       he had obtained    policy  state-
ments from each school          district       pertaining   to the operation


of its        school    lunch  program     and had informed        the school  dis-
tricts        where,    in his opinion,       the school     lunch    law had been
incorrectly          applied.      He said that,       in some instances,     he
planned        to institute      legal   proceedings      if no action     was taken
by the        school    board  to correctly       apply   the law.

          Illustrative           of the type of work done by the council                      was
its     action        to expand      the school     lunch      program       in the Salina
School        District.          The program     was available           at six public
schools.            The board      of education,       after      discussion       with    the
council,          agreed     to expand the school            lunch     programs      to three
additional            elementary       schools   located       in low-income        areas.
The board           of education         stated  that     it lacked        the funds     for
school        lunch programs           in 11 other      elementary         schools     in the

         The director      disagreed        with      the board       on this      latter
point     and contended        that    all    eligible       children       could      receive
free     or reduced-rate         lunches      if the board          adopted      the Cup-
Can Program       which    provides        heated,       canned meals to children.
The board       of education        did not agree with              the director          on the
efficacy      of the Cup-Can          Program.

3.   Establishment         of Department     of       Agriculture’s
     supplementary         feeding   program

         The director       stated     that     the council       had been instrumental
in obtaining        lunch     programs      for children         under      this    program.
As an example         of the result         of the council’s            work,      he said
that     the Salina      Recreation       Commission          had initiated         a program
to provide       lunches      to low-income          children     during        the summer
at recreation         areas     and that      the Salvation         Army had started
a supplementary          feeding     program       for children         from low-income
families      in Salina.


        Our selective      tests    of the council’s        financial    transac-
tions    showed that      (1) the program      costs     shown in the councilfs
monthly     financial    reports      to the corporation         had been over-
stated    by about    $2,200     because    of accounting        errors,   such as


including   an estimated   expense as an actual        expense,'   (2) per-
sonnel actions    such as a notification        of appointment   or of a
salary increase,    had not been documented and justified,            and
 (3) employee time and attendance        records were incomplete       in
some cases.
     We discussed  these matters with the OEO Regional    Auditor
and with council  personnel  who said that corrective  action
would be taken.


         Mr. Fierro      told us that the corporation           received     $5,000
in June 1971 from the Target Community Citizens                     Anti-Poverty
Council,     an OEO-funded Community Action Agency in Bakersfield,
California,       to provide       food to migrant     workers as part of its
activities      under the Emergency Food and Medical                 Services pro-
gram. As of July 20, 1971, these funds had not been recorded
in the corporation's           books.      Mr. Fierro    told us also that the
money had been deposited              in the corporation's        Garden City
bank account.          An official      of the bank confirmed         that the de-
posit had been made in the corporation's                   account in June 1971.
Corporation       officials      stated that the funds would be recorded.

       According     to Mr. Fierro     the corporation    delegated     the
tasks of contacting        needy migrant     and low-income    families     and
dispensing     funds for the direct       purchase of food under this
program to the Agricultural           Workers of Garden City,       a non-
profit   corporation     incorporated     in February 1971.

     The purposes of the Agricultural               Workers,    as stated    in
the articles  of incorporation,   are:

'The last monthly report   containing this overstatement     was
 dated June 23, 1971.    The data shown in appendix    I is as of
 June 30, 1971, and is based on actual disbursements       shown
 on the records as of that date.


      “To promote the improvement            of living       standards     for
      migrant   and low-income       families,       including      but not
      limited   to agricultural        workers     and Mexican-
      Americans   through     Federal     and non-Federal         programs,
      research,   and policies      designed       to alleviate        prob-
      lems and hardships;

      ‘I*** to receive     and accept funds and grants        from
      the Federal     Government    and all other available
      sources,   public    and private,    including    funds avail-
      able under the Economic Opportunity            Act of 1964,
      and any amendments thereto;

      “to enter into       agreements  and contracts           and expend
      funds to carry       out the above purposes;

      “and generally   to exercise     any and all powers and
      to do and perform      any and all things     properly     con-
      nected with or incidental      to all activities        as are
      hereinbefore   specifically    or generally      designated.”

        Mr. Fierro stated     that he was neither   an officer nor a
director    of the Agricultural     Workers but was an advisor    and
that he had helped this organization         to obtain  other Federal
funds a

       Mr. Fierro  gave us a list  of Federal    grants   that he had
obtained    or was in the process  of obtaining     for the Agricul-
tural    Workers.  Appendix  II is a listing    of the grants,    show-
ing the status    as of July 1971.

        Mr. Fierro    and officials      of OEO, the corporation,  the
council,    and the Agricultural         Workers have not been given an
opportunity      to formally      examine and comment on the contents
of this report.


       We plan to make no further        distribution    of this report
unless   copies    are specifically    requested,     and then we shall
make distribution      only after   your agreement      has been ob-
tained   or public    announcement    has been made by you concern-
ing the contents      of this report,

                                      Sincerely   yours,

                                      Comptroller   General
                                      of the United   States

The Honorable    Robert   J.   Dole
United States    Senate

                                                                               APPENDIX I




                                            The                The
                                      corporation           council
                                       (through           (through
                                       June 15,           June 30,
    Program     expenditures              1971)              1971)                Total

Personnel                             $ 9,361.28a        $48,089.63            $57,450.91
Consultants      and con-
   tract   service                       4,267.00b            483.00             4,750.oo
Travel                                   6,628.23'         7,725.37             14,353.60
Space costs and rental                                     4,752.26              4,752.26
Consumable supplies                         199.89         1,649.74              1,849.63
Equipment                                   342.89         1,630.57              1,973.46
Other costs                              2,221.87          3.238.47              5.460.34

        Total                         $23,021.16         $67.569.04            $90,590.20

Federal grants                        $23,021.16         $50,207.18            $73,228.34
Non-Federal     (in-kind)
  contributions                                           17,361.86             17,361.86

       Total                          $23,021.16         $67,569.04            $90,590.20

%    xecutive     secretaries'       salaries.

    Includes     $3,364   for    producing       the documentary       film.

'$5,050   of the $6,628.23 was for travel    by Mr. Fierro.     A
  schedule showing the details   of Mr. Fierro's    travel  expen-
  ditures  is shown on page 2 of appendix    I.
                                                                    APPENDIX I

                            STATEMENT OF MR. FIERRO'S

                               TRAVEL EXPENDITURES

                              THROUGH JUNE 15,    1971

                                                      bY               No
        Dpe     of expenditures        Total      vouchers         vouchers

               Local travel           $1,614       $     380        $1,234
               Per diem                1,906             325         1,581
               Air fare                1,180             670            510
               Unidentified               350a           -              350

                    Total             $5,050       $1,375           $3,675

ably      documentation available          is a notation       on a check     stub
 that     the funds were advanced          for travel.

Note:         Of the $5,050 expended for travel,           we identified    a
              total    of $3,604 of travel       funds that were obtained
              by Mr. Fierro      by a request      for an advance of travel
              funds.      Also travel   authorizations     for Mr. Fierro
              were on file     for $3,399 of the $5,050 in travel         ex-
                                                                APPENDIX II



                          AND LOW-INCOME FAMILIES,    INC.

                                                                  of grant

1. Department  of Health,  Education,           and Welfare
   Office  of Child Development

     Full-year        Head Start      program                     $110,616

           Purpose of grant- -To operate Head Start
           classes for 100 children    in Goodland,
           Leoti,  Ulysses,  and Garden City for the
           g-month period   September 1971 through
           May 1972.

           Status of grant --The Kansas City Regional
           Office   of HEW's Office   of Child Develop-
           ment awarded the grant on June 11, 1971,
           but the funds had not been made available
           to the grantee    as of the completion   of
           our fieldwork   in August.

     Health       Start     program                                 25,000

           Purpose of grant- -To provide        examinations
           and follow-ups    on medical,     dental,    vi-
           sion, and hearing    problems for 100 mi-
           grant children;    to introduce      the families
           to health    care opportunities,       and to make
           the professionals     aware of the health
           problems of migrant      workers.

           Status of grant- -Although    this grant also
           was approved by the Kansas City Regional
           Office  of HEW's Office    of Child Develop-
           ment on June 11, 1971, no payments had
           been made as of the completion      of our re-
           view in August 1971.

                                                                              APPENDIX     II

                                                                                of grant

      Summer Migrant              Head Start       program                      $ 33,367

              Purpose     of grant --To provide      Head Start
              service     for 120 migrant    children.

              Status   of grant- -This grant was processed
              and approved    by the Office    of Child
              Development,    Washington,   D.C.   The first
              payment under the grant was made on
              July 29, 1971.

      Supplementary          Head Start           Training                        45,373

              Purpose of grant- -To instruct   Head
              Start  staff   members. The funds go di-
              rectly   to the Kansas State Teachers  Col-
              lege at Emporia.

              Status     of grant- -The grant was processed
              by the     Office   of Child Development,   Wash-
              ington,     D.C.,   and was approved   on May 21,

2. Department     of Health,            Education,           and Welfare
   Public   Health   Service

      Kansas      Regional         Medical     Program                            12,000

              Purpose of grant- -Most of the                    funds will
              be used to pay nurses'   salaries                    at a
              clinic  in western Kansas.

              Status     of grant--The  Kansas Regional
              Medical     Program was in the process     of
              negotiating      with the Agricultural    Workers
              on a fiscal      year 1971 grant of $12,000
              for a 6-month program.

3. Office      of Economic          Opportunity

      Grant     for     central       administrative           staff              49,500

              Purpose of grant--To                provide      full-time
              administrative   staff              for the      Agricultural

                                                                               APPENDIX II

                                                                                 of grant

                          Workers.  This staff     will    be responsible
                          for the administrative       coordination,
                          planning, conduct,     and evaluation      of all

                          Status of grant --This   grant was being
                          processed by OEO's Kansas City Regional
                          Office.   Final approval    had not been made
                          as of August 11, 1971.

                 Migrant          Education   and Rehabilitation    Program      $ 49,500

                              Purpose of grant --To teach the migrants
                              how to deal with other Government agen-
                              cies to obtain  funds for their programs.

                              Status of grant- -This grant was being
                              processed by OEO's Migrant    Division    in
                              Washington,  D.C.   Final approval     had not
                              been made as of August 11, 1971.

U.S.   GAO,   Wash.,   D.C.