oversight

Operation Heatwave Program at Gaston Community Action, Inc.

Published by the Government Accountability Office on 1977-06-07.

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

                              DCCIUENT   RESrU"

027~4F   - [A1672672'   (Restricted)

[3peration Heatwave Proaram at Saston Community Action, Inc.].
HRD-77-100; B-163922. June 7, 1977. 1 pp. + enclosure (12 pp.).

Report to Sen.    Jesse Helms;   by Elmer 9.      Staats, Comptroller
General.

Issue Area: Income Security Programs: Program Effectiveness
     (1302) ; Energy: Federal Efforts to Conserve Energy (16C2)
Contact: Human Pesources Div.
Budget Function: income Security: Public Assistance and Other
    Income Supplements (604).
Organization Concerned: Community Services Administration;
    Department of Ccmmerce; Gaston Community Action, Tnc., NC;
    North Carolina: Economic Opportunity Office.
Congressional Relevance: Sen. Jesse Helms.
Authority: Public works and Economic Development Act of 1965,
    title Y.

         Questions were answered relating to the Operation
Heatwave Program operated by Gaston Community Action, Inc., in
North Carolina to provide assistance to low-income people in
meeting fuel needs and reducing energy consumption. Questions
related to administrative expenses, personnel activities and
qualifications, agency representation, eligibility criteria, and
alleged theft of fuel.  Findings/Conclusions: Administrative
portions of the program budget for FYs 1976 and 1977 were
relatively high, but reclassification of some program items
reduced the percentages of these costs. No evidence was found of
illegal actions or misappropriated funds. However, there were
some weaknesses in administrative procedures related to fuel
supply controls and in accounting classifications for salaries.
These weaknesses were corrected by Gaston Community Action, Inc.
(Author/HTW)
                         />a     B   COMPTROLLER GENERAL OF THE UNITED STATES

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                                                           D.C.                 JU
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             B-163922

             Thne Honorable Jesse Helms
             United States Senate               'ESTRICTE£    -    dot to he released out-;.J.      aCm?    -
                                                Accemnt!ng Office except on the bas',i oef     za.;Ji: i;
┬░            Dear Senator Helms:                by the Office el CU "rossioral Reatia,

                  In response to your June 15, 1976, letter and subsequent
             agreements with your office, we have answered your questions
             about the Operation Heatwave program operated by Gaston Com-
             munity Action, Inc., Gaston County, North Carolina.

                  The Operation Heatwave program is designed to provide
             assistance to low-income individuals and families to lessen
             the impact of the high cost of energy and to reduce individual
             and family energy consumption. The program provides funds
             for home repairs to minimize heat loss and improve thermal
             efficiency, for assistance to prevent hardship or danger to
             health due to utility shutoff or lack of fuel, and for other
             related activities. During fiscal year 1976, the program
             received $41,966 from the Community Services Administration,
             the North Carolina State Economic Opportunity Office, and the
             Department of Commerce.

                  We examined the program's financial accounts for fiscal
             year 1976, analyzed the program's administrative costs,
             verified benefits distributed, inquired into the eligibility
             of program recipients, and investigated into the alleged theft
             of fuel.

                  We found no evidence of illegal actions or misappro-
             priated funds; however, we did find some administrative weak-
             nesses in fuel supply controls and in accounting classifica-
             tions for salarLes. These weaknesses were corrected by
             Gaston Community Action, Inc.

                  As requested by your office, we did not obtain written
             comments from officials of the Community Services Adminis-
             tration on information contained in this report.
                                                       Sin        ly yours



                                                       Comptroller General
                                                       of the United States

             Enclosure
                                                                                     BHRD-77-100
ENCLOSURE I                                          ENCLOSURE I


QUESTION 1

     The fiscal year 1977 budget request for the Operation
Heatwave program is $17,800. About $16,800 of this amount
is for administrative expenses.  The administrative expenses
in the preceding budget year included the salaries of two
janitors that are no longer paid under Operation Heatwave.
If the janitorial cost is no longer included, why hasn't
the ratio of administrative/direct expenses changed and why
are the administrative expenses such a large portion of the
new budget?

ANSWER

     The fiscal year 1977 budget requested $13,364 in Federal
funds and provided for $4,450 non-Federal contributions, bring-
ing the total to $17,814.   The non-Federal contributions may
be cash or "in kind."   Under Community Services Administration
(CSA) regulations, in-kind contributions may include such
items as volunteer time, donated office or storage space, and
donated materials.   Instructions are provided to value :hese
contributions. Non-Federal contributions may be provided by
any public or private agency or individual, but assistance
provided through other Federal programs is generally excluded.

     The ratio of administrative expenses/direct expenses
changed, but not significantly. This change, before our re-
classification of budget items, is shown below.
                                                 Fiscal years
                                                1976     1977

Federal share:
    Administrative (including salaries)        $15,049      $12,214
    Program                                      1,026        1,150

         Total                                 16,075        13,364

Non-Federal share                                5,358        4,450

         Total                                 $21,433      $17,814

    Administrative cost as a
   percentage of total budget       FY 1976       FY 1977     Change

                                                 (percent)

   Excluding non-Federal share            94        91          -3
   Including non-Federal share            70        69          -1



                                1
ENCLOSURE I                                                     ENCLOSURE I



     The administrative portions of the program budget for
fiscal years 1976 and 1977 were relatively high because they
included the salary cost of the Operation Heatwave program
director and most of the other administrative costs.   For
example, the salary and fringe benefit costs of the program
director budgeted for fiscal year 1976 and 1977 were $8,483
and $8,950, respectively. The salary costs budgeted for
fiscal year 1976 also included salary costs of $4,241 for
two custodians for Septembrer 1975 through January 1976.

     However, the foregoing analysis addresses only those
local initiative CSA funds which were intended to support
the administrative burden of Operation Heatwave.  Additional
energy funds were received from CSA's Emergency Energy Con-
servation Services program, the State Economic Opportunity
Office's energy program, and the Department of Commerce's
weatherization labor program, as authorized in title X of
the Public Works and Economic Development Act of 1965.  An
analysis of the total budget, before our reclassification
of budget items, is shown on the following table.


                          1976 BUDGET--OPERATION BEATWAVE

                                   CSA
                                 Emergency                  Title X
                       CSA        Energy        State       weather-
                      local      Conserva-     Economic     ization
                      initia-      tion      Opportunity     labor
  Funding source       tive       Service       Office      program     Total
Federal funds:
    Administrative   $15,049     $ 271          $  450      $  0       $15,770
    Program            1,026      5,500          5,969       13,701    :26,196

        Total         16,075      5,771          6,419       13,701     41,966
Non-Federal:
    Volunteer time
      (note a)           5,358    1,924          1,375          0        8,687

       Total         $21,433     $7,695        $7,794       $13,701    $50,653

  Administrative costs

Excluding non-Federal share       $15,770 - 38 percent


Including non-Federal share       $15,770 - 31 percent


a/Volunteer time oriented towards programmatic rather than administrative
  activities.




                                       2
ENCLOSURE I                                                       ENCLOSURE I


                         1977 BUDGET--OPERATION HEATWAVE


                                       CSA                    Title X
                                    Emergency     State       weather-
                         CSA          Energy     Economic     ization
                        local       Conserva-   Opportunity    labor
                       initia-        tion        Office      program
    Funding source      tive         Service     (note a)     (note b)   Total

  Federal funds:
      Administrative   $12,214       $ 371       $   879       $ 0       $13,464
      Program            1,15'        5,400       16,584        4,704     27,838

          Total         13,364        5,771       17,463        4,704    41,302

  Non-Federal:
      Volunteer time
         (note c)           4,450     1,924         5,574         0      11,948

           Total        $17,814      $7,695       $23,037      $4,704    $53,250


     Administrative costs

  Excluding non-Federal share          $13,464 - 33 percent


  Including non-Federal share          $13,464 - 25 percent


  a/Includes fur.;. r:naining from the previous grant and funds requested fo.
    1977.
    -

  b/Punds remaining from the previous grant.

  c/Volunteer time oriented towards programmatic rather than administrative
     activities.


     During our examination, we noted several program items
that were misclassified as administrative costs.  These
included local travel and vehicle expenses for program pur-
poses.  Also, agency records of the program director's
duties showed that he spent about 47 percent of his time.
providing programmatic service to recipients.  Accordingly,
we made adjustments to the Operation Heatwave budgeted and
actual costs for fiscal year 1976 and budgeted costs for
fiscal year 1977. Our reclassifications significantly re-
duced the percentages of administrative costs as shown in
the following table.




                                          3
ENCLOSURE I                                            ENCLOSURE cI



                             Fiscal     Fiscal     Fiscal
                              year       year       year
                              1976       1976       1977
                             budget     actual     budaet
    Federal:
        Administrative      $10,925    $10,683    $ 6,985
        Program              31,041     20,383     34,317

              Total          41,966     31,066     41,302
    Non-Federal:
        Volunteer time        8,687      7,362     11,948
        Space donated           0          530        0
        Other in kind           0          141        0
              Total
                (note a)      8,687      8,033    11,948
    TOTAL                   $50,653   $39,099     $53,250


                                      (percent)
Administrative costs:
    Excluding non-Federal        26     34        17
    Including non-Federal        22     27        13
a/Non-Federal contributions oriented towards the program-
  matic rather than administrative activities.




                                4
ENCLOSURE I                                           ENCLOSURE I


     The nature of the administrative costs shown in the
preceding table were identified as follows:

                        Fiscal      Fiscal   Fiscal
                         year        year     year
                         1976        1976     1977
  Description           budget      actual   budget

Salaries               $ 7,748     $ 7,738   $4,198
PICA fringe                481         540      252
Other fringe               411         462      294
Local travel               560         342      684
Non-local travel           215         266      208
Audit                        0           0       75
Utilities                  370         370      360
Office supplies            170         161      420
Insurance and bond         260         145      110
Telephone                  370         318      360
Postage                     30          29       24
Contract services          310         310        0
Miscellaneous                0           2        0

    Total              $10,925     $10,683   $6,985

QUESTION 2

     To what extent did the director of Operation Heatwae
perform programmatic work?

ANSWER

      We reviewed weekly reports the director submitted showing
his daily actions for the first 8 months of the 1976 program
year.   We determined that he spent 74 days (47 percent) on
programmatic activities and 84 days (53 percent) on adminis-
trative work.

     Programmatic work included:

     --Installing plastic on windows, caulking, or insulation
       in homes.

     --Making repairs to homes.

     --Attending weatherization workshops.

     --Delivering coal and fuel oil.

     --Speaking at community group meetings on weatherization.



                              5
ENCLOSURE I                                       ENCLOSURE I


     --Cutting down weeds and plowing gardens.

     --Issuing seeds and fertilizer.

     --Inspecting gardens and giving advice on canning
       foods.

     --Working with local businesses, public officials, and
       charity groups to obtain and distribute resources to
       .id the poor.

     --Talking to citizens door to door about forming com-
        munity groups or block clubs in their neighborhood.

     Administrative work included:

     --Preparing weekly and monthly reports.

     --Working to obtain in-kind contributions.

     -- Attending meetings with the board of directors, the
        executive director, or staff.

     --Gathering information and preparing grant proposals.

     --Working with the advisory committee on Operation
       Heatwave.

     --Documenting all program work and services.

QUESTION 3

     Determine circumstances involved with janitors being
included in the Operation Heatwave budget. Was this to cir-
cumvent excessive payroll expense in another Gaston Community
Action program? Why were janitors later transferred out of
Operation Heatwave?

ANSWER

     Gaston officials said the janitors were included in the
Operation Heatwave budget to reduce the overall administrative
costs of the community action agency.  Under CSA regulations,
overall administrative costs may not, without prior approval
of CSA, exceed 15 percent of the total funds allotted to the
community action agency.  Because of this, in 1976 a CSA field
representative advised Gaston officials to lower costs; Gaston
officials placed the salary costs of the two janitors into
the Operation Heatwave budget.



                               6
ENCLSOURE I                                      ENCLOSURE I



     Gaston officials said that salary payments for the
janitors were transferred out of tha Operation Heatwave
budget because of the adverse publicity.

QUESTION 4

     Identify actual janitorial work under Operation Heatwave
budget.

ANSWER

     The fiscal year 1976 program budget submitted on August 26,
1975, included the salaries for one custodian and one mainten-
ance man.  The custodian is responsible for all general light
cleaning at the agency.  She sweeps the floors; dusts all desks,
window sills, and other items; empties office trash cans; and
cleans bathrooms.  While assigned to Operation Heatwave, she
performed no duties specific to that program.

     The maintenance man said that he opens and closes the
building each day, carries typewriters and adding machines,
mops and waxes floors, delivers supplies to homes, cuts the
grass, and performs any other duties deemed necessary. While
assigned to Operation Heatwave, he performed some duties
specific to that program--issuing coal and fuel oil and de-
livering building materials. He was not required to record
the time devoted to any particular activity.

     The janitors' salaries were paid out of the local initia-
tive funds provided by CSA which were intended to support the
administrative burden of Operation Heatwave.  Since the
janitors performed work for the entire agency, their salaries
may have been better allocated among all programs at the agency,
rather than just to Operation Heatwave.  However, we were un-
able to make this allocation because Gaston Community Action,
Inc., did not have a system which would enable us to distri-
bute the custodians' time accordingly.

QUESTION 5

     Are there discrepancies between CSA statements that
grantees were visited twice a year and the situation at Gaston
not being discovered because there was no representative
in the area?




                             7.
ENCLOSURE I                                      ENCLOSURE I


ANSWER

     Our review of CSA records showed that regional representa-
tives had made two field trips to Gaston during each of calendar
years 1975 and 1976.  The following are excerpts taken from the
field representatives 1975 trip reports.

     --Field Trip Report February 18 through 21, 1975--"We
       found that objectives are being met with strong em-
       phasis being placed in developing and carrying out the
       objective in Operation Heatwave (energy crisis)* * *."

     --Field Trip Report May 20 through 23, 1975--"The objec-
       tives are being met with strong empnasis being placed
       in developing and carrying out the objectives in
       Operation Heatwave (energy crisis) program* * *."

     We noted the reports for trips made during April 13
through 15 and December 9 through 10, 1976, contained no
comments on COeration Heatwave.  We also noted that although
two field trips were recorded for each of calendar years 1975
and 1976, there was no record of any field trip following
May 1975 until April 1976.

QUESTION 6

     What are the qualifications of Gaston employees involved
in the Operation Heatwave program?

ANSWER

     Information about employees' qualifications was obtained
from agency records and interviews for the following employees.

     The former executive director of Gaston graduated from
Winchester Avenue High School, Monroe, North Carolina, in 1951
and received a degree in vocational agriculture from Agricul-
tural and Technical State University at Greensboro, North
Carolina, in 1957.  He worked as an insurance agent for North
Carolina Mutual Life Insurance Company from 1959 to 1963.
In February 1963 he began work for Winston Mutual Life In-
surance Company, Charlotte, North Carolina, as an agent a;nd
staff manager.  He came to work for Gaston in May 1966 as a
neighborhood center director and head start director and was
promoted to executive director on January 2, 1970.  He held
this position until April 1976.

     The current executive director of Gaston received a high
school diploma from Lincoln High School, Bessemer City, North



                              8
 ENCLOSURE I
                                                   ENCLOSURE I


 Carolina, in 1966.  She attended Durham Business College for
 2 years, receiving a diploma in secretarial
                                             science in 1968.
      She began work at Gaston Community Action,
                                                  Inc., as a
clerk typist in 1970 and was promoted in 1971
                                                to secretary of
community organization, with duties consisting
ing, and other administrative duties for the     of typing, fil-
                                              director, assist-
ant director, eight outreach workers, and eight
                                                  target area
communication systems workers.   In 1972 she was promoted to
secretary of the youth program, alcohol program,
                                                   and housing
program; handled the clerical work for all
directors; and was receiving and stockroom three program
                                            officer.
      In November 1972 she was promoted to director
                                                     of internal
affairs--secretary.   She supervised all clerical staff, and,
in the absence oL the executive director,
                                           she was in charge
of the agency.   In 1974 she was promoted to director of in-
ternal affairs--planner.   In this capacity she interviewed
applicants for program director positions
mendations for employment to the executive and made recom-
                                            director.   While
in this position, she also served as career
                                             development of-
ficer and training officer for the agency and
                                                conducted
regular employee evaluations with program
                                           directors.   In April
1976 she was appointed acting executive director
                                                   and was pro-
moted to executive director in September
                                          1976.
     The assistant director of Gaston graduated
                                                 from Ashley
High School in 1965.  He attended Gaston College but did not
receive a degree.  From 1970 to 1973 he worked as a lab tech-
nician for Sodyeco in Mt. Holly, North Carolina.
                                                   From May 197,
to September 1974 he worked for Central
                                        Yarn and  Dyeing
Gastonia as a lab technician and computer controller.    of

     The Operation Heatwave program director graduated
                                                        from
Highland High School in 1951 and attended
                                           Friendship College
for 2 years, majoring in building trades.
                                            He worked in the
carding department of Klopman Mills for 8
                                          years and later for
the Burlington Industries textile plant.
                                          In 1973 he became
a self-employed building contractor.  On January 3, 1974, he
began working for Gaston in community services,
                                                 and in January
1975 he was appointed program director of Operation
                                                     Heatwave.
QUESTION 7

     What are the criteria recipients must meet
                                                to be eligible
to receive benefits from Operation Heatwave?




                              9
ENCLOSURE I                                          ENCLOSURE I

ANSWER

     CSA eligibility guidelines for     the program are stated
in terms of family size and income.

Family size    Nonfarm poor        Farm poor
1                  $2,590            $2,200
2                   3,410             2,900
3                   4,230             3,600
4                   5,050             4,300
5                   5,870             5,000
6 (rote a)          6,690             5,700
a/For family units with more than six members add $820 for each
  additional member in a nonfarm family and $700 for each addi-
  tional member in a farm family.

QUESTION 6

     How many persons (or families) received fuel oil and
weatherization benefits from the program? CSA's inspection
report indicates 33 families received oil; other information
shows that 10 families received 14 gallons each. On a sample
basis, independently verify that program receipients actually
received these benefits and determine if recipients included
in the sample meet the eligibility requirements.

ANSWER

     Gaston records show that during the 1975-1976 program
year the following benefits were distributed:

     --315 gallons of fuel oil to 21 recipients.

     -- 3,300 pounds of coal to 21 recipients.

     --51 homes winterized (temporary plastic over windows and
       doors, caulking, and insulation).
     --25 homes weatherized (permanent storm windows and doors).

     We visited 9 of 42 oil or coal recipients and 12 of 51
winterization recipients chosen randomly from Gaston records.
All recipients interviewed confirmed receiving the oil, coal,
or winterization as recorded by Gaston.

     Eligibility for assistance is based on family size and
income. Recipients are required to provide personal data on
income, family size, and need when applying for assistance;


                              10
ENCLOSURE I                                      ENCLOSURE I


agency officials review the applications and determine eligi-
bility. The officials said that in most cases they know the
applicants or have Personal knowledge of the situation and
that the emergency energ- assistance was of such nominal value
that a more extensive investigation is not waLranted.

     Additionally, we asked a CSA official if CSA required any
verification of applicant's eligibility. His comments follow.

     --CSA has no specific requirements for verification of
       income.
     --Eligibility is based upon a review of the applicant's
       self-declaration.

     --Outreach workers usually have personal knowledge of ap-
       olicant's financial situation. If additional informa-
       tion is required, the outreach worker will visit ap-
       plicant.

     --Because of the small amounts of benefits involved,
       agencies rarely conduct extensive investigations on
       eligibility.

     We selected a sample of recipients, 9 of 42 oil or coal
recipients and 12 of 51 winterization recipients, from Gaston
records and attempted to verify their eligibility. We reviewed
the applications and noted that the reported income was within
the specified criteria. The applications also showed that
11 were receiving social security benefits, 3 were receiving
welfare, 3 were receiving unemployment benefits, 3 were employed,
and 1 had no income.
     We visited the homes and interviewed these recipients.
During the visits we noted that conditions in the homes were
poor--much of the housing was'dilapidated and had no heat
at all. Small children were observed to be in their beds-in
the middle of the day to keep warm; in two homes children
were huddled around a kerosene heater to keep warm.

     Because of the small amount of benefits involved, the
sources of reported income, and the observed living condi-
tions of the recipients in our sample, we felt that further
verification of recipient eligibility was not necessary.

QUESTION 9

     What happened to the 128 gallons of fuel oil that were
not accounted for? Verify if fuel oil was stolen, the amount
involved, and if it was reported to police. Are there government


                            11
ENCLOSURE I                                       ENCLOSURE   I


regulations which require thefts which occur at co-munity ac-
tion agencies to be reported to both CSA management and to
local law enforcement agencies?

ANSWER

     On October 2, 1975, Gaston purchased 268 gallons of fuel
oil for distribution to needy families.  As a general rule,
each recipient could receive 10 gallons of fuel at a time.
Agency records show that 220 gallons of fuel were issued to
16 recipients between November 3, 1975, and January 24, 1976;
13 recipients were issued 10 gallons each, 1 received 50 gal-
lons, and 2 recipients received 20 gallons each.  We could
not account for the remaining 48 gallons of fuel valued at
about $19.00.

     We could not verify that any fuel oil was stolen.   We
found some records of fuel issues that had been misfiled
which indicated that more fuel could have been issued and
the records misfiled.

     The Operation Heatwave program director became aware of
a discrepancy in the fuel supply in late January 1976 when
the fuel storage tank was emptied.  On January 28, 1976, he
reported to the Dallas, North Carolina, police department
that approximately 120 gallons of fuel oil had been taken.
CSA instructions require all grantees to report thefts to
both local police and the CSA property administrator.

QUESTION 10

     Ask the program director about discrepancies in his
statements made to the press and to CSA's inspector concern-
ing the 128 gallons of unaccounted for fuel oil.

ANSWER

     The program director told a reporter, by telephone,
that i0 gallons of fuel were issued to each of 14 families
and that he could not account for 128 gallons of fuel.   Fur-
ther, he denied telling the reporter that he was sure that
the unaccounted for fuel went to needy families.  The director
said he was rushed and busy when the reporter called, and he
did not make a thorough review of the fuel issue records be-
fore responding.  The agency had not determined that the fuel
had been stolen prior to his conversation with the reporter.

     The program director said that after the conversation
with the reporter, the fuel was presumed stolen and was
reported to the Dallas police and to CSA in Atlanta.


                             12