Fairfax County has taken over several programs run by Fairfax Community Action Program Inc., a nonprofit antipoverty agency, amid what the county executive described as an apparent "management problem" that includes unpaid bills and taxes and missed payrolls.
County Executive J. Hamilton Lambert said a preliminary review by the county indicated that there have been no allegations and no evidence of criminal misuse of funds.
Lambert said the county internal audit staff will review the agency's books as soon as the group sends Fairfax a formal request for the audit, which he says it has promised to do. The director of the agency has acknowledged its financial difficulties but blamed them on funding schedules and cutbacks.
The Fairfax Community Action Program, commonly known as F-Cap, is a private nonprofit corporation that receives county, state and federal money to operate several antipoverty programs on a contract basis. Last fiscal year $386,000 in county funds were used to support an alcohol counseling program, job placement, transportation and two social service counseling programs, all for low-income people.
Fairfax took over the county-funded programs late last month and picked up 18 of the 26 employes after the group failed to pay its payroll taxes, phone bills, and employe medical insurance on time and missed the payroll for six weeks, according to F-Cap director Enoch Butler.
The Internal Revenue Service has placed a lien on the agency's bank account and since last August has taken $45,000 for late tax penalty payments, Butler said. "It's a real mess," said one county official.
F-Cap yesterday asked the Fairfax County Board of Supervisors for $26,000 to pay its debts and get the group back on its feet. Butler said the $26,000 would cover the back pay, phone bills and taxes it owes. But the supervisors did not act on the request.
Lambert said, however, that $26,000, "will not cover the liability of that corporation." He added that the county is concerned that by assuming part of the debt, it may become liable for the rest of the debt and may also entangle itself in any potential lawsuits.
According to Butler, the agency's major problem was that appropriations from the state and the county to the agency were made on a quarterly basis but agency bills were due on a weekly basis. Butler said that meant that the agency sometimes did not have the funds it needed to meet its financial obligations.
Faced with the prospect of meeting the payroll or paying taxes, the group met the payroll and paid the taxes whenever additional money came in, Butler said in an interview. IRS then began levying penalty charges, he said.
"It started on a small scale in 1979," said Butler, but by last August IRS put a lien on the bank account for $9,000. In April, the IRS took $10,000, in May $7,000, and in June $19,000. Butler said the last chunk was so huge it forced the agency to stop the payroll and the phones were shut off for about a week.
Butler also said that when the federal government about two years ago decided not to fund local programs directly but to give states block grants to distribute, the group lost $26,000 for administrative costs.
Verdia L. Haywood, deputy county executive for human services, said the county did not find out about the problem until mid-June. "That's part of the problem," he said.
Haywood said the county acted swiftly to try to temporarily take care of employes, who were without medical insurance or income, but he said Fairfax could only absorb those employes working on county contracts.
Remaining workers complain that they have no money for mortgage and car payments and rent and no health insurance.
The county plans to permanently operate the Alcohol Outreach program and to contract out for the other programs.
The former employes of F-Cap have only been guaranteed county jobs until Sept. 30, or Dec. 31 for the alcohol counselors.