NVDAILY.COM | Local News
Posted January 28, 2012 | 25 Comments
Troubles mount for Agency on Aging
Organization won't be able to make payroll in March without cuts
By Joe Beck -- email@example.com
FRONT ROYAL -- A new financial storm is heading toward the Shenandoah Area Agency on Aging and is likely to force cuts in personnel, programs or both, the board of directors learned Friday.
The agency has no way of meeting its payroll in March without cutting, staff members warned the board.
"We have to do something," Jonathan Price, the agency's director of housing development, said after the meeting.
A deluge of bills from lawyers and accountants is fueling a cash flow crisis and diverting money from debt reduction and other agency programs, staff members said. They also cited reduced aid from the state's Department for the Aging as another major source of the cash flow problems. The reduction is linked to an earlier crisis that included state help in paying for accountants, staff members said.
The money advanced to the agency from the state to survive a cash flow crisis in late September has led to lower amounts currently received from the Department for the Aging, Price said.
"It's a tough time, and I hate to think about laying off people, but it's a tough reality we face," said Clarke County Sheriff Tony Roper, who sits on the board.
The agency has budgeted $100,000 for legal and accounting fees in this fiscal year, but has already paid or received bills equaling nearly 90 percent of that amount. The fiscal year ends Sept. 30.
One major legal expense stems from lawsuits the agency and its former executive director have filed against each other. Helen Cockrell is suing the agency for $20,000 in accrued annual leave and sick leave that she contends is owed to her after the agency fired her in early September.
SAAA, in turn, has sued Cockrell, accusing her of fraud and embezzlement and demanding a total of $70,000 in compensatory and punitive damages, plus attorneys' fees and costs.
Price said no new attorneys' bills have been received in the past few weeks, but that is likely to change as a May 22 trial date in Warren County Circuit Court draws near.
Board Chairman John Hudson estimated that the agency's legal expenses could reach $150,000.
"There are months left on these lawsuits," Hudson said.
Agency officials also face mounting bills from Yount, Hyde & Barbour, a Winchester accounting firm hired to conduct an audit of agency finances that includes examining the possibility that laws have been broken.
State police also are investigating the agency's finances.
Hudson said he and other agency officials will be meeting with bank managers in the next few weeks in an effort to obtain a loan that was deemed necessary to balance the budget even before the magnitude of the legal and accounting expenses became clear.
Price warned that the fiscal uncertainty is likely to last until July, when the agency expects money from the jurisdictions it serves -- Warren, Page, Frederick, Page and Shenandoah counties and Winchester -- to begin flowing in for fiscal year 2012.
"This will carry over for the next three or four months," Price said, referring to the cash flow shortage.
The agency has not eliminated any positions since the dismissal of Cockrell and two other top agency executives in September. Price said agency staff members are running "preliminary figures," and have yet to determine what combination of services and personnel will be cut.
Price and Lance Barron, the agency's interim financial director, said the agency has $20,900 in the bank and is facing $253,000 in unpaid vouchers.
Barron said the agency does not have enough money in the bank to meet its payroll due next week, but said he was confident that money from the state Department for the Aging and Federal Transit Administration would be arriving "any day now" and allow the agency to pay its employees through February.
But March is another matter, he said.
Pressed by Roper whether the agency would be unable to pay its employees in March, Barron replied, "There is a possibility of that, yes."
Price said the cuts being studied could reduce the deficit to a manageable $38,000 in March and $17,000 in April.