During the past two years, the District's child welfare agency has sent $7.5 million--including some payments that D.C. records indicate were double or triple the amount owed--to a Northwest Washington home that has housed as many as 52 troubled youths, far more than its city permit allows.
The payments to Fedora Center, a hotel and group home in Columbia Heights, continued to flow even as dozens of foster parents and day-care providers went months without receiving any compensation from the city. Questionable payments to Fedora totaling more than $600,000 are among hundreds of transactions by the D.C. Child and Family Services agency that have been referred to the D.C. inspector general for investigation.
A recent city audit, done in part to investigate allegations of financial mismanagement in Child and Family Services, said that shoddy accounting and a lack of financial expertise and controls helped create a situation in which the agency had spent its $107 million annual budget by August, two months before the end of the last fiscal year. A total of more than $2 million is unaccounted for, auditors said.
Interviews with current and former Child and Family Services employees, along with internal documents obtained by The Washington Post, shed further light on the agency's chaotic financial operation--and on the District's problems in monitoring facilities such as Fedora, home to some of the foster-care system's most troubled youths.
In one case, documents indicate Child and Family Services may have paid Fedora $540,000--triple the amount owed--for room, board, counseling and other services for a 12-year-old foster child from June 1997 to July 1998.
Agency officials acknowledge that their own records make it appear that a triple payment occurred, but they say the amount paid actually was much less. Fedora officials say the group home was indeed paid hundreds of thousands of dollars more than it was owed and returned the extra money to the agency. There's so little documentation that D.C. auditors say they don't know whom to believe.
Meanwhile, some group home owners complain that Child and Family Services' payment system is so disorganized that checks to them often are delayed for months and arrive in amounts that vary wildly from what the agency was billed. Because Child and Family Services often does not identify what payments cover services for which children, it can be impossible to tell whether certain bills have been paid, the group home owners say.
"If I bill $23,000 for this program and $50,000 for that and I get a $32,000 check, I have no idea what it's for," said Vincent Schiraldi, executive director of the Center on Juvenile and Criminal Justice, another group home for troubled youths. "The checks just come in, and they're not tied in to any child. . . . It's hard to determine whether it's [done] deliberately or [is] inefficiency."
Part of the problem, D.C. auditors say, is that Child and Family Services has used two separate bank accounts--in addition to the city's financial system--to pay its bills, leading to instances in which one bill would be paid in full by more than one account. And auditors are investigating several instances in which agency employees used one of the accounts for personal needs, including a $3,700 salary advance to pay the college tuition of one employee's child.
Documents obtained by The Post indicate that employees used an additional $2,750 for a variety of personal expenses, including sending their mortgage and car payments by Federal Express.
Because of a class-action lawsuit in which a judge ruled that the District was neglecting its most vulnerable children, Child and Family Services has operated under a court-appointed receiver since 1995. It receives funding from the D.C. and federal governments but operates largely outside the realm of Mayor Anthony A. Williams (D) and other city officials. Many D.C. advocates maintain that the city's troubled child welfare system has not improved under receivership.
Ernestine F. Jones, the agency's receiver since November 1997, acknowledged that Child and Family Services has been plagued by organizational problems but said that her agency--which is responsible for about 3,200 foster children and 3,000 other neglected youths--is making a long climb back to respectability.
Jones disputed many of the findings in the audit, which was done as a part of an agreement in which the city covered many of her agency's bills for August and September.
She said there have not been many duplicate payments to group homes and other providers of care and services for foster children, and attributed most of the agency's financial problems to an "antiquated computer system" that was replaced last month.
"We were able in most instances to get payments out accurately," Jones said. "There were some circumstances [involving duplicate payments], but we corrected them and we had a mechanism to correct them. With the new system, I'm comfortable we won't have that happening."
But Jones said she was uncomfortable with the idea that the agency could have wasted money through duplicate payments and with the audit's allegations that her staff was lax in bookkeeping and misused funds.
"I'm not going to tell you that those things did not happen," Jones said. "I know they weren't happening on a large scale."
Beyond the Mayor's Reach
The scathing audit report--combined with recent complaints by 100 parents who threatened to return their foster children to the city unless they and their day-care providers were paid millions of dollars they were owed by Child and Family Services--has increased Williams's frustration with the agency.
For Williams, who has made accountability and improving city services a mantra for his 10-month-old administration, the problems in child welfare represent an embarrassing drag on D.C. government, made worse by his limited authority to fix them.
The mayor recently said he would appoint a Cabinet-level liaison to work with Child and Family Services, but it's unclear how much influence that appointee will have in trying to help the agency change course.
Williams also said he plans to speed up the inspection process for group homes to ensure the safety of the facilities where youths are being placed by courts and the city's welfare system. The idea, Williams said, is to quickly get youths for whom no foster home is available into a stable, safe setting.
"District children are staying in foster care three times longer than children in other cities," Williams said. "That is shocking and unacceptable."
Williams plans to submit legislation to the D.C. Council next month aimed at stepping up licensing requirements for youth group homes. Such facilities now are required only to get a certificate of occupancy, indicating that electrical, plumbing, construction and fire code regulations have been met.
Sometimes, as in the case of Fedora Center, a group home continues to accept youths--and receive payments from the city--despite not fully meeting even that minimal licensing requirement.
Fedora Center, in the 1400 block of Belmont Street NW, is one of 51 group homes to which the District paid a total of $40 million during the past year to shelter, teach and counsel youths.
It is in a complex that once was the Pitts Motor Hotel, a building with a rich history in Washington's African American community because it attracted prominent black entertainers and civil rights leaders when downtown hotels were segregated. It gained notoriety a decade ago as one of the city's hotel shelters for homeless people.
Opened as a group home in 1997 by businessman George H. Purcell, who named the facility after his grandmother, Fedora plays a key role in the D.C. child welfare system--even though the agency has rejected Fedora's bids to provide services to foster children.
Fedora has flourished because it accepts dozens of teenagers who are rejected by traditional foster families and other group homes, in some cases because of their explosive tempers and aggressive behavior. Fedora is paid by the child welfare system under emergency care agreements for individual children--pacts agency officials say can be more costly than standard contracts.
"There isn't any place to put these teenagers. . . . They're older and out of control," said a family court lawyer who is familiar with Fedora Center. "With these teenagers, nothing works. Fedora is a place of last resort."
For that reason, Fedora often has housed many more youths than it is permitted to have. Purcell has occupancy permits to house as many as 35 youths in four locations, including three row houses on Capitol Hill. He said he has had as many as 52 children at the center on Belmont Street, including some who had juvenile crime records. Some of those were housed in a building in the hotel's courtyard, for which Purcell has a group home certificate of occupancy for 15 residents.
But most were housed in the former hotel, for which Purcell has no such occupancy permit. Fedora appeared clean during a reporter's recent visit, but Child and Family Services does not have enough monitors to routinely check the conditions there. That's partly because the agency concentrates on facilities that are under contract with the receivership to provide services to foster children.
Until neighbors complained this year about rowdy youths from Fedora, D.C. regulators apparently did not know that the group home--which also had operated a school without a permit--was violating the conditions of its city permit. When the city inspectors responded to residents' complaints in March, they fined Purcell $500 for expanding the group home into the hotel.
Purcell said his group home grew because Child and Family Services and juvenile court judges keep sending him troubled teenagers whom other facilities turned away. He said agency officials knew his group home was over its limit, and he provided letters from the agency giving him permission to accept more children.
"If they had a situation where they didn't have any place to take kids, I'd accept them," Purcell said. "I don't remember if [Child and Family Services] said the hotel was okay, but they knew this was the only place I had."
On one recent day, Fedora was in compliance with its permit, housing 13 youths from Child and Family Services--down from 38 about this time last year.
Jones, the Child and Family Services receiver, is wary of her agency's reliance on Fedora and said she is trying to reduce the number of youths sent there--in part, she said, because the group home's prices for services tend to be higher than those of facilities that have set rates under city contracts.
"You're at the mercy of the provider to say, 'I'll do this for you at this amount or that amount,' " Jones said. "We have people who monitor the agencies that we have contracts with, but that's extremely hard to do" with freelance vendors.
The District's reliance on Fedora, and the millions of dollars the city was sending to the group home, was a focus of the recent audit of the D.C. child welfare system by Chief Financial Officer Valerie Holt's office.
The audit identified Fedora as the recipient of $600,000 in questionable transactions that the agency could not properly document. Auditors found a lack of paperwork in the vast majority of transactions they examined; there was little documentation for 156 of 176 of the agency's transactions with Fedora.
The case involving $540,000 in payments for services provided to one girl in a little over a year reflected the type of accounting irregularities auditors found in the child welfare system's dealings with Fedora.
Child and Family Services officials acknowledge that their records indicate a triple payment was made, but they say that Fedora actually was paid only $180,000 for the girl's care. Child welfare officials said that such an expense is not unusual for a year's worth of room, board, psychological counseling, clothing and education for a particularly troubled teenager.
An administrator at Fedora, Bill Stansbury, maintains that the group home received more than $600,000 in overpayments from Child and Family Services in September 1998, including extra payments for services the girl received. Fedora records indicate the center billed the receiver a little more than $200,000 for the child.
Stansbury said that Fedora never deposited the additional checks it received from Child and Family Services and returned them to the agency about two hours after it got them. He said two agency workers received the returned checks: Melvin Mooring, an accounting manager who has since resigned from the agency, and Ruth Banks, an accounting technician.
Banks said she did not see anyone from Fedora return any checks, and there is no record of such action. Mooring has an unlisted telephone number and could not be reached for comment.
Purcell, the owner of the group home, blames agency workers for any problem. "If that check hasn't cleared," he said, "then I'll bet it's in somebody's desk drawer. We wouldn't want to deposit a check that large if it isn't ours."
Although Child and Family Services officials took issue with some of the findings of the audit by Holt's office, internal agency documents make it clear that top officials have known about duplicate payments and other accounting problems for more than a year.
Seven months after an independent audit of Child and Family Services in July 1998, Milton Grady, the agency's deputy receiver for operations, sent Mooring, the accounting manager, a memorandum indicating that he wanted to form a special task force to tackle "ongoing procedural problems within the finance office."
Grady pointed out that accounting problems revealed in the 1998 audit were continuing and that "there is no excuse for not correcting problems we have known about for the past seven months or longer. . . . Double payments continue to vendors, with little or no procedures for recouping" them.
About the same time, Schiraldi, the executive director of the Center on Juvenile and Criminal Justice group home, complained that the foster-care system owed his center more than $400,000. That prompted Jones to write a sternly worded memorandum to her agency's accountants, stressing that continued payment problems could lead to bad publicity for the agency.
"If we don't get out in front on this, it is going to bite us in the back," Jones wrote. "I fully expect that one of these vendors is going to the mayor with a complaint now. . . . I want to be in the position of having corrected the problems on our end."
Ten months after Jones's warning, Holt's office released its audit, which alleged that Child and Family Services' bookkeeping and filing were being performed in a "grossly negligent manner" and should be investigated by the inspector general's office.
Holt's audit took aim at the agency's use of two independent bank accounts as well as the inconsistent payments to group homes, foster parents and other providers. When the receivership was created, its employees were not paid from the D.C. government's payroll system but from one of two accounts at NationsBank, now Bank of America.
Documents obtained by The Post indicate that agency employees had easy access to the accounts. Several checks had only one signature--despite the agency's requirement that all checks have two--including one for a $3,700 salary advance on Dec. 14, 1998, for Melvin Mooring, the accounting manager.
Mooring's request for the advance stated that "my son's tuition is due and I would like to pay it on time." Mooring said he would repay it in February 1999. Michael Cox, then the agency's controller, approved the check to Mooring.
Jones said Mooring had repaid the advance before he resigned in September. Grady, Jones's deputy, said that Mooring left the agency "under mutual agreement" but declined to elaborate.
Mooring's advance would have been a violation of D.C. government policy that limits salary advances to $250, but Jones said her agency, which operates under separate guidelines, had no such policy then. She added that it now does have a $250 limit on advances.
Cox's signature also was the only one on a check to Federal Express for $2,750 on Dec. 17, 1998. Copies of the sender's paperwork indicate that the shipping charges covered mortgage payments, car payments and other personal expenses.
Cox's signature, along with that of Grady, the deputy receiver, also appeared on checks written in December to pay for parking tickets issued to Cox and Mooring totaling $225 and a Wall Street Journal subscription for $94. Using agency money to pay fines such as parking tickets is a violation of federal appropriations laws, D.C. officials say.
Soon thereafter, Grady apparently decided to crack down on such personal expenditures. In a Dec. 30, 1998, memorandum, he directed the agency's senior staff members to "ensure that the NationsBank account is used only for the purpose for which it was intended."
Jones said she wasn't aware of every transaction that went through her agency but said such use of Child and Family Services money for personal expenses was a factor in her recent decision to revamp the agency's financial office.
Jones said Cox resigned in April, after she determined that he didn't have the necessary managerial experience for the job. Cox said he left the agency "on my own recognizance. There was no cloud of impropriety during my tenure at the agency." He added that the payments he approved "all went through the proper channels."
Jones said she is trying to quickly "clean up" Child and Family Services.
"I'm cleaning a mess that I inherited that has been going on for years," she said. "The price you pay is, all your linen gets aired out.
"This time next year, if I've got the same problem, it's me."
Metro researcher Bobbye Pratt contributed to this report.
CAPTION: Fedora Center, once a hotel, has been home to as many as 52 foster children.