• by Juan Sanchez    (Editor’s note: links provide view of documentation)

In a letter dated July 31, 2008, Susan Johnston, the Acting Regional Program Manager for the Administration for Children and Families (ACF), which oversees the Head Start program, notified Pilo Vasquez, the Chairman of Community Council of Southwest Texas, Inc., (CCSWT) that the Head Start program remains in suspension.

Johnston refers to the meeting between CCSWT personnel and the general counsel for the Department of Health and Human Services, as well as representatives of the Administrative Office for Children and Families Office of Head Start. It was at this meeting that CCSWT personnel were provided the opportunity to show why the Office of Head Start should rescind the suspension of the Head Start program run by the agency.

The letter goes on to state that the various representatives of the federal agencies reviewed the materials and that the CCSWT “failed to show just cause” to rescind the suspension. The letter effectively removes CCSWT from consideration for operation of the Head Start program for the year currently underway as of Aug. 1. This also means that Community Development Institute (CDI), out of Denver, Colorado, will continue operating the program until either CCSWT regains the program, or it is taken over by another agency.

The Uvalde Leader-News previously covered the basis for the suspension of the Head Start program, but in order to refresh the memories of our readers, La Voz includes the following reasons as indicated by ACF in a letter sent to CCSWT on July 16, 2008.

The items cited as cause for suspension were: 
•  The Community Council of Southwest Texas failed to ensure that appropriate internal controls were established and implemented to safeguard federal funds as required by federal guidelines.
• The Community Council of Southwest Texas failed to maintain a financial management system capable of providing records that adequately identified the source and application of funds for HHS sponsored activities as required by federal guidelines.
• The Community Council of Southwest Texas failed to maintain a financial management system, as required by federal policy, capable of providing effective control over and accountability for all funds, property and assets.
• The Community Council of Southwest Texas failed to ensure only allowable costs resulting from obligations incurred during the funding period were charged to the grant award for that period as required by federal guidelines.
• The Community Council of Southwest Texas failed to immediately notify the Head Start awarding agency of developments that had a significant impact on Head Start supported activities as required by federal guidelines.

Having lost the program that provided the largest amount of funding source for the agency, and which provided a partial source of salaries for administrative personnel, the question is whether the personnel who received part of their salaries from Head Start will have their pay reduced accordingly. A review of salaries obtained through open records request, indicates that 12 administrative personnel received part of their salary from Head Start funds.

At the top of the list is Jorge Botello, the executive director, who received 55% of his salary of $98,728.24 from Head Start funds. In a July meeting of the CCSWT board of directors, Botello was directed to reduce his salary by 20%. This was at the time that Botello had laid off 16 Head Start employees due to the funding shortfall.

However, with CCSWT no longer receiving Head Start funding, will Botello, as well as other CCSWT personnel who received part of their salaries from Head Start funds, have their salaries reduced by the percentage provide by this funding source?

With respect to Botello who received 55% of his salary from Head Start, does this mean he will reduce his $98,728.24 salary to $44,427.92? Or, will he, as he normally does, work it so his income suffers as little as possible. Based on a copy of the last four wage payment cycles obtained as part of an open records request, Botello’s salary was indeed reduced by 20% as directed by board members, but will it be reduced the further 35% equal to the overall percent he received from Head Start funding?

Based on records obtained, the Head Start funding shortfall of $540,539.00 stems from two deficiencies included in the notice of suspension dated July 15, 2008. The first dealt with expenses exceeding revenues by $493,795.00. The second was a bank overdraft of $274,775.00.

The current liabilities of the agency (as of July 200 exceeded assets by $540,539.00. However, among the documentation obtained by La Voz, another $24,822.00 needs to be added to the liabilities.

This is based on a July 15, 2008 letter from the Texas Health and Human Services Commission citing overpayment of $24,822.00 to the medical transportation services and request of return of the cited amount. (see La Voz website) Adding the $24,822.00 overpayment sum to the $540,539.00 brings the total liabilities of the agency to $565,361.00.

Adding to the problems cited above is the on-going investigation of the agency by the Office of the State Attorney General (AG). The initial investigation began on June 26, 2008, at that time the AG stated “This office has become aware of certain alleged improprieties related to the operation of the Community Council of Southwest Texas Inc. (“CCSWT”) which there is reason to believe may include the possible misuse of grant funds and other funds donated to the charity.” Although making no determination that impropriety had occurred, the AG requested that CCSWT make available materials of a financial nature that covered the period from January 1, 2004 to the present.

Also included in the request were copies of CCSWT board of director’s minutes, inclusive of the minutes of the executive committee, finance committee, and the audit committee. Among other items requested were the agenda and handouts of a financial nature provided to the CCSWT board of directors, and documentation related to any retreats or meetings held at the executive director’s cabin, and status sheets related to employee hiring, terminations, and salary increases.

Apparently, once the AG became aware of the funding shortfall, a supplemental investigation began on August 1, 2008. Whereas the original request included 13 numbered and itemized entries, the request of August 1 included 24.

The new items included:
• a request for copies of all newly formatted monthly statements reflecting revenues and expenses from May 1, 2008 to the present,
• copies of all loan documents from October 31, 2007 to the present including, but not limited to, new loans from Community Transportation Association of America and the Uvalde National Bank,
• Documents identifying all loans and lines of credit held by CCSWT and the current outstanding balance of each, and the monthly payment due on each,
• all balances which identify the current balances due on each of CCSWT’s credit cards,
• all documents which identify the current amount of health and dental payments for CCSWT employees which are in arrears,
• all documents which identify all expenses incurred by CCSWT related to the trip made to Dallas on July 25, 2008,
• all documents which identify the current balance of in-kind contributions to the Head Start program for the grant period ending July 31, 2008 and the source/nature of those contributions,
• all documents which identify the expenditure of funds from the most recent CTAA loan and the specific use of those funds,
• all documents which identify the funds used to “pay-off” the charter school deficit,
• all documents which identify the monthly “unrestricted income” generated by the rural transportation program from January 1, 2007 to the present,
• all documents which identify the monthly “match” for transportation grants that the transportation program’s unrestricted income has satisfied from January 1, 2007 to the present,
• all documents which identify action taken to-date to “downsize” the entire agency as represented to Mr. Huerta in the June 3, 2008 e-mail from Botello,
• copies of all internal transfer and/or request for transfer of funds from November 1, 2007 to the present,
• copies of all inter-agency correspondence, including electronic communications, related to the Head Start program, the Transportation program, or CCSWT’s financial shortfalls from November 7, 2007 to the present
• copies of all correspondence to or from the Head Start program from January 1, 2008 to the present.

What this new request indicates is that the investigation by the AG of CCSWT is still active and on-going. The last time any information had been obtained by La Voz pertaining to the investigation, our sources had estimated a one to two month period for resolution.

However, in light of the Head Start funding shortfall, as well as what appear to be other developments being pursued by the AG (such as looking into the transportation accounts), the investigation may be prolonged.

What the final outcome of the investigation will be, as well as the status of the agency, is yet to be determined. There is no doubt that the predicament in which Botello and the agency finds itself has been years in the making. The eventual resolution may well involve legal consequences being faced by various individuals. Only time will tell.

(to view all documentation, please see the PDF/downloads section)