Board OKs plan with shortfall of nearly $52,000
By Joe Beck -- firstname.lastname@example.org
FRONT ROYAL -- After months of delay and considerable hesitation, the financially strapped Shenandoah Area Agency on Aging's board of directors passed a 2012 budget Wednesday.
But board Chairman John Hudson and several other board members made clear that the approved budget does not mean the agency's money troubles are over or even that they are making progress.
The budget, which totals $3.09 million, puts the agency on track to end the fiscal year on Sept. 30 with a deficit of $51,838, after beginning Wednesday's meeting with a proposed budget showing equal revenue and expenses for 2012.
Hudson said after the meeting that he was especially troubled by mounting legal and accounting expenses associated with a consultant's investigation into the agency's finances and lawsuits involving a pair of former top executives with the agency who were dismissed in early September.
"We were making progress, but now it's become extremely difficult to project where we'll be in the long term," Hudson said.
"The clocks are running on all these things," he said, referring to the money being spent on the accountants and lawyers.
The agency has been struggling financially since mid-summer as staff members began discussing financial problems that culminated in the discovery in August of unmailed checks to vendors totaling almost $265,000.
In the following weeks, the agency was rocked by the dismissal of Helen Cockrell, the agency's former president and CEO; Ann McIntyre, the director of development; and Jim Shaffer, the finance director.
Cockrell and McIntyre have since filed lawsuits challenging actions and decisions taken by the board related to their dismissals. The board has also filed a counterclaim against Cockrell, accusing her of embezzlement, fraud, and concealing "pertinent information from the SAAA board of directors." The claim also denied Cockrell's accusations that the reasons given by the board for her dismissal were invalid under the terms of her employment contract.
McIntyre has said in her lawsuit she was defamed by board members who were sources for newspaper articles appearing in The Northern Virginia Daily and The Winchester Star. She says in her suit that the articles imply she was dismissed for her role in financial irregularities when she was actually dismissed for unrelated violations of credit card policy.
The area agency on aging has hired the Winchester accounting firm of Yount Hyde & Barbour to conduct an investigation into the agency's recent financial transactions. The investigation, which encompasses an effort to determine whether any illegal acts were committed, is scheduled to be completed by the end of February.
The budget passed Wednesday designates $100,000 for attorneys and auditors fees, but Hudson said the expenses are outrunning the revenue coming into the nonprofit agency from federal, state and local governments.
For example, a projected $283,930 from local jurisdictions served by the agency -- Warren, Frederick, Shenandoah, Clarke and Page counties and Winchester -- could be slowed by delays in the budget process and completion of the audit, both of which local officials want to review in determining how much they will spend on the agency.
Jonathan Price, the agency's director of housing development, said after the meeting that the agency's total expenses for legal and accounting services stood at $36,000 as of Dec. 12.
Board members spoke about the importance of balancing the budget, but also said approval of a financial blueprint showing a deficit would be unacceptable under normal circumstances.
"I agree under normal circumstances, but this is anything but normal," Hudson said.
Lance Barron, the agency's interim financial director, opened the meeting by questioning the certainty of revenue from a projected mortgage loan of $380,000.
After wrestling with several proposed adjustments in revenue and expenses, the board changed the $380,000 mortgage line item to a $200,000 secure line of credit from Virginia Savings Bank with a monthly payment of $870 and the agency's headquarters building in Front Royal serving as collateral.
In another matter related to Cockrell's tenure, the agency set Jan. 20 as the date for raffling off a Ford Escape SUV that she used during her employment. The agency is raffling the vehicle in an effort to eliminate it $640 monthly payment.
Cindy Palmer, the agency's acting director and CEO, told the board that 280 of the 300 allotted raffle tickets had been sold, enough to pay off the entire sum owed on the SUV.
The raffle will be conducted by BB&T bank employees.