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Accept a report on the Community Action Partnership Solano Joint Powers Authority; Consider writing off $129,713 of uncollectable Community Services Block Grant funds which were administered by Community Action Partnership Solano Incorporated (Non-Profit); Approve an Appropriation Transfer Request for FY2014/15 in the amount of $129,713 to make the necessary end of year budgetary and accounting entries to transfer County General Funds to CAP Solano JPA Fund 173 (4/5 vote required)
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Published Notice Required? Yes ____ No _X _
Public Hearing Required? Yes ____ No _X _
DEPARTMENTAL RECOMMENDATION:
It is recommended the Board of Supervisors accept a report on the Community Action Partnership (CAP) Solano Joint Powers Authority; Consider writing off $129,713 of uncollectable Community Services Block Grant funds which were administered by Community Action Partnership (CAP) Solano Incorporated; Approve an Appropriation Transfer Request for FY2014/15 in the amount of $129,713 to make the necessary end of year budgetary and accounting entries to transfer County General Funds to CAP Solano JPA Fund 173 (4/5 vote required).
SUMMARY:
The Board is asked to accept an update of the revenue recovery efforts related to the Cap Solano JPA and outstanding advances secured by the former financial/ administrative agent to the CAP Solano JPA. County staff recommends the Board approve actions to write off as uncollectable $129,713 of Community Services Block Grant (CSBG) funds. The CAP Solano JPA retained independent staff to administer all aspects of funding and financial reporting who in turn was required to fulfill the requirements of the MOU between the County and the CAP Solano JPA (Attachment A). Managing and administering Housing and Urban Development (HUD) and CSBG funds were some of the primary responsibilities. In 2013, a review of the CAP Solano JPA financial records was undertaken by the Auditor Controller and H&SS to reconcile a $749,675 negative cash balance created in CAP Solano Fund 173 by the independent staff. As part of the financial review, H&SS completed and billed all eligible outstanding reports to HUD including claims for reimbursement of eligible costs and recovered over $425,000 in revenues on behalf of the CAP Solano JPA to cover the majority of the negative cash balance. The review identified $102,178 of HUD audit exceptions and $221,089 of expenditures relating to Community Services Block Grant Funds which were determined ineligible and disallowed costs. The recovery for these costs was investigated and pursued; however, the funds were expended by various non-profits who relied on the CAP Solano JPA independent staff’s approval and county staff determined recovery of funds was not feasible without adverse impact to the nonprofits ongoing operations. On June 24, 2014 the Board of Supervisors was asked and approved an initial write off $102,178 in HUD related audit exceptions on behalf of the nonprofits involved. At this time County staff has determined that $129,713 of the remaining outstanding balance is uncollectable, and therefore recommends the Board approve an appropriation transfer request for FY2014/15 in the amount of $129,713 to make the necessary end of year budgetary and accounting entries to transfer County General Funds to eliminate the negative cash balance in CAP Solano JPA Fund 173 (4/5 vote required).
FINANCIAL IMPACT:
The CAP Solano JPA as initially established and empowered by the Board of Supervisors in 1999 was authorized to receive and administer the County’s Federal funds from HUD estimated to be $1.1 million per year, and the County’s Community Service Block Grant funds (CSBG) from the State of California estimated at $400,000 per year. The CAP Solano JPA through the partnership was to use the funds as a means to bring local government together to focus on reducing poverty and homeless issues throughout the County. The County Board also authorized and annually appropriated a General Fund contribution of $86,975 to the CAP Solano JPA to assist in securing independent administrative support for the JPA. Given the HUD and CDBG funding requiring financial reporting and are cost reimbursement programs, the Board authorized a cash flow “Float” under the agreement to allow for timing of reimbursements for eligible costs for services provided by local providers under the two funding sources.
The cash flow advances were authorized by the Board and a separate fund was established to allow for reimbursement of claims made to the State and Federal government through the Auditor-Controller’s Office with a commitment the CAP Solano JPA would be responsible for any repayment. By 2012, the cash draw advance had increased to $749,675, and inquiries were made by H&SS and Auditor staff. In 2013 a financial review was undertaken jointly with H&SS staff working to secure and file outstanding financial reports for contracted services provided and reimbursed locally by JPA staff but not reported and claimed to HUD or CSBG. These initial efforts by County staff were successful in securing reimbursements of over $425,000. H&SS Staff has been able to recover all eligible HUD costs, but due to audit exceptions, and disallowed costs, $102,178 of HUD funds were deemed uncollectable and written off on June 24, 2014 leaving a remaining balance of $221,089. The County Administrators Office and Auditor Controllers Office were able to secure a credit of $92,975 for services performed by CAP Solano Inc. (Non-Profit) as staff to the CAP Solano JPA bringing the negative cash balance as of June 30, 2015 to $129,713. The JPA independent staff support is no longer working for the Cap Solano JPA, so further credit repayment for work performed is not an option, and in a letter (Attachment B) has indicated the nonprofit who secured the funds is in the process of dissolution and any further cost recovery is unlikely without legal action.
DISCUSSION:
Background of the CAP Solano JPA:
In 1994, the Solano County Economic Opportunity Council, provided safety net services to low income residents in Solano County, abruptly closed its doors after twenty four years of operations. The Board of Supervisors took action to establish the Solano County Community Action Agency to help rebuild the safety net and to ensure the State Community Services Block Grant funds would continue to be available in Solano.
In 1998, the County, along with the cities of Fairfield, Vacaville, and Vallejo, established a task force to address homelessness in Solano County. As a result of the recommendations from the task force, in 1999 the County established the Solano Safety Net Consortium, a Joint Powers Authority (JPA), which was joined by the cities of Fairfield, Suisun, Vallejo, Vacaville, Benicia and Dixon. The purpose of the JPA was to develop and implement strategies, services and systems to assist low income and homeless persons and families become self-sufficient, on a countywide basis. The intent of the JPA was to maximize Federal and State funding that otherwise would not be available to any one entity. The JPA would also be able to leverage all existing resources within the county, hold each jurisdiction accountable to contribute to the solution, and develop consistent policies and practices to service homeless individuals and families. The JPA was delegated the authority to administer jointly the county’s Federal HUD grant funding totaling $1,120,575.
In 1999, the Board of Supervisors held a public hearing and passed resolutions to de-designate Solano County as the Community Action Agency to comply with changes required by the funding sources and designated the Solano Safety Net Consortium (JPA) as the Solano Community Action Agency and receive State Community Services Block Grant (CSBG) funding for programs that reduce poverty. On May 9, 2006, the Board of Supervisors approved the name change from Solano Safety Net Consortium (JPA) to Community Action Partnership of Solano (JPA).
The CSBG funds were paid directly to Cap Solano Incorporated the non-profit rather than the JPA from December 2012 to December 31, 2014 through a Memorandum of Understanding between the State of California, the CAP Solano JPA and the CAP Solano Inc. (Non-Profit). A review of county records did not reflect the Board of Supervisors concurred with the transfer and the change in designee from the JPA to the non-profit.
On June 16, 2014, the CAP Solano JPA voted to re-designate the CAP Solano JPA as the Community Action Agency which makes the CAP Solano JPA the recipient of the State Community Services Block Grant funding for programs that reduce poverty, revitalize low income communities, and empower low income families and individuals to become self-sufficient effective January 1, 2015.
County Memorandum of Understanding (MOU)
H&SS on behalf of the County entered into a Memorandum of Understanding (MOU), for the period of July 1, 2009 through June 30, 2014, between the County of Solano and the CAP Solano JPA, wherein the County agreed to provide a County General Fund contribution of $86,975. This amount has continued to be included in the County Budget as a General Fund contribution to a Non-County Agency.
The primary purpose of the MOU was to designate the CAP Solano JPA as the administrator of the Health and Social Services Housing and Urban Development (HUD) grants, and Community Services Block Grant (CSBG) for homeless services. The JPA staff support was originally provided by a small business owned and operated as PJ Davis and Associates and later became CAP Solano Inc. (Non-Profit) with PJ Davis as the Executive Director. A copy of the MOU is provided as attachment A.
In 2014, the CAP Solano JPA issued a request for proposals for independent staff support consistent with the requirements of the HUD and CSBG funding and entered into a new support agreement effective January 1, 2015 with HomeBase, The Center for Common Concerns.
ALTERNATIVES:
The alternative for the Board of Supervisors would be to not write off as uncollectible the negative cash balance and pursue legal action against the CAP Solano JPA and the individual Board of Directors of the CAP Solano Incorporated (Non-Profit); however, this is not recommended since the County is a partner in the CAP Solano JPA and the CAP Solano Incorporated (Non-Profit) is in the process of dissolution requiring to pursue legal action against the individual Board of Directors of the CAP Solano Incorporated (Non-Profit).
OTHER AGENCY INVOLVEMENT:
The County Administrator’s office, in conjunction with the Solano County Department of Health and Social Services and the County Auditor Controller has worked to reconcile, and address operational and financial questions surrounding CAP Solano JPA Fund 173. Currently, the CAP Solano JPA has contracted with the City of Vacaville to be the financial administrator for the JPA. The CAP Solano JPA has also contracted with HomeBase to provide staff support for the JPA and the Continuum of Care. County Counsel has reviewed the documents entered into by various organizations and has provided legal support.
CAO RECOMMENDATION:
APPROVE DEPARTMENTAL RECOMMENDATION