tilization Of F Kansas Lullan Kansas Cit Office of Economic Opportunity BY THE COiWTROLLER GENERAL OF THE UNITED STATES OCT.27,1973. . COMFTROUR GENERAL OF THE UNITED ST-AYES WASI-IIMGPORI. D.C. 20548 B-130515 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. I 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 B-130515 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 2 B-130515 corporation was instrumental in organizing, and earmarked the $5,000 for use by this organization. (See p. 8.) KANSAS HUMAN NEEDS CORPORATION 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- duction. 3 B-130515 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 counties. 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 4 B-130515 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 5 B-130515 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- penditures. 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 stamps. 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 6 B-130515 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 district. 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. REVIEW OF FINANCIAL TRANSACTIONS 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 7 B-130515 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. KANSAS COUNCIL OF AGRICULTURAL WORKERSAND LOW-INCOME FAMILIES, INC. 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. 8 B-130515 “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. 9 B-130515 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 10 APPENDIX I STATEMENT OF PROGRAMEXPENDITURES OF KANSAS HUMAN NEEDS CORPORATION AND ITS DELEGATE AGENCY, SALINA COMMiJNITY ACTION COUNCIL 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. b 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 Supported 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- penditures. APPENDIX II FEDERAL GRANTS APPROVED OR BEING PROCESSED FOR KANSAS COUNCIL OF AGRICULTURAL WORKERS AND LOW-INCOME FAMILIES, INC. Amount 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. 3 APPENDIX II Amount 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, 1971. 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 4 APPENDIX II Amount of grant Workers. This staff will be responsible for the administrative coordination, planning, conduct, and evaluation of all programs. 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.
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)