Officials of the District's Department of Employment Services, who said they were unaware that their largest summer jobs contractor owes $240,000 to the Internal Revenue Service, said yesterday that they knew the firm owes an additional $27,700 in delinquent taxes -- this time to their own department.
According to records filed with the D.C. recorder of deeds, the summer jobs contractor, Associates for Renewal in Education, failed to pay D.C. unemployment taxes from December 1979 through December 1983. The Department of Employment Services filed two liens against the firm, in January 1982 and in April 1984. Neither has been paid.
The director of the Employment Services Department, Floyd Goff, said there was "nothing illegal" in awarding a $1.2 million contract to the tax-delinquent firm for its services this summer, since ARE had set up a schedule to repay its debt. "The payment schedule had not been followed," Goff acknowledged, "but this is the only agency in the city that can do the services."
Goff added, "We've got 24,000 kids in the city who need something." He said ARE is "struggling and we know it, but there are contracts let all the time with big companies that owe the federal government taxes," adding that the District will make "every attempt to collect the money."
ARE, a 15-year-old nonprofit group that runs youth group homes and day care centers, has won some of the District's largest summer jobs contracts in the past six years.
Brenda Strong Nixon, executive director of ARE, said the firm's financial problems will not affect the summer jobs program. However, employes of the firm have had their paychecks bounce on occasion in the past several years. Several employes complained about their pay problems in May to another section of the Employment Services Department, the Wage and Hour Office, and Goff said the situation was settled.
Several employes told The Washington Post they cannot cash their paychecks at banks because of the firm's history of insufficient funds.
On July 2, Mayor Marion Barry visited an ARE job site to kick off the city's summer jobs program. ARE is responsible for hiring more than 4,000 14- and 15-year old youths to tutor about 6,000 elementary school students. Most of the older students receive $3.35 an hour for their work.
The students are paid directly by the Employment Services Department. The $1.2 million contract awarded to ARE by the city for this summer's services is being spent on teachers' salaries and administrative expenses, Nixon said.
Nixon said the firm is attempting to pay its debts to the Internal Revenue Service in order to avoid having its District contracts garnisheed. The IRS has filed seven liens from December 1983 through December 1985 against ARE for a total of $240,142.
The firm's financial situation last month prompted another agency, the Department of Human Services, to form a contingency plan in case the firm can no longer operate three group homes for youths it runs for the city. ARE has pledged its assets from two of the group home contracts for a loan arranged through D.C. National Bank in December 1985, according to city records.