Centro Hispano loses federal funding for Milwaukee's Head Start program over financial mismanagement
Annysa JohnsonA longtime Milwaukee nonprofit, which has operated Head Start programs for children for more than 50 years, has lost its federal funding because of alleged financial mismanagement.
The Council for Spanish Speaking, also known as Centro Hispano, has relinquished its contract and $5.9 million in federal grants rather than face termination by the Administration for Children & Families, which oversees Head Start, according to documents reviewed by the Journal Sentinel.
Those grants are Centro Hispano's primary source of revenue. And their loss could effectively cripple Wisconsin's oldest Latino nonprofit, which operates a number of programs — from housing for the elderly and disabled to bilingual immigration services, and the state's largest dual-language and bilingual Head Start program.
If Centro Hispano were to fold, "this would be a critical loss for the community," said Nicole Angresano, vice president for community impact for United Way of Greater Milwaukee and Waukesha County, which provides about $46,000 annually for the nonprofit's bilingual immigration services program.
"The Council for the Spanish Speaking provides critical services, particularly on the south side," she said. "They reach many clients who have been marginalized or don't receive services elsewhere."
Repeated efforts to speak with Centro President and CEO Toni Rivera-Joachin and board Chairman Julio Maldonado were not successful.
But Rivera-Joachin said in an email to the Journal Sentinel that the agency's issues stem from financial problems created in 2010-'11, under a prior administration, and that Centro Hispano has taken steps to "revamp its financial management and reporting" since she took over in February 2015.
"In the meantime, Centro Hispano Milwaukee will continue its commitment to the community through the many other programs that it provides," she said.
Rivera-Joachin's predecessor, Luis "Tony" Baez, who led the agency from 2006 to 2014, also did not return telephone calls seeking comment. Baez now sits on the Milwaukee Public Schools Board.
Effective Dec. 1, the Centro Hispano's Head Start programs will be run by Community Development Institute, a Denver-based company that specializes in interim operation of troubled Head Start sites. A letter to parents dated Nov. 6 said it would remain in place until the Federal Office of Head Start named a replacement agency.
Most of Centro Hispano's employees have hired been by CDI, but some were not because they lacked the minimum educational requirements to teach under the program, sources said.
Founded in 1964 with funding from the Catholic Archdiocese of Milwaukee, Centro Hispano served almost 780 low-income children in its Head Start and Early Head Start programs. But it has struggled to comply with the federal program's financial requirements since at least 2011.
Centro Hispano was designated a "high-risk agency due to financial mismanagement" in September 2014, according to the Administration for Children and Families. And an overview of findings by the federal agency dated Oct. 30 said it did not ensure the federal Head Start funds were used solely for that program.
"The grantee engaged in an ongoing and repeated pattern of inaccurate and delinquent financial reporting," according to the findings.
The Administration for Children and Families said Centro Hispano maintained negative bank balances and did not pay Head Start vendors in a timely manner.
It cited an audit of the organization's 2015 fiscal year to bolster its assertion that Head Start funds were diverted for other purposes.
That audit said the Council had listed about $726,000 in accounts payable and accrued expenses at the end of the year. It said the large balance would indicate that the cash drawn from the Head Start funds were not being used to pay "current expenses on which the draw was based."
The administration said additional field work would be required to determine how much money was potentially diverted to other uses.
At least three Head Start providers have terminated their contracts with Centro Hispano because of unpaid bills, including St. Joseph Academy, which is owed about $113,000.
"It's really unfortunate because someone loses out," said St. Joseph President and CEO Tabia Jones, whose organization will continue to serve the Centro Hispano students through the end of this school year, despite its failure to pay. "We are now in the red," she said.
The Center for the Spanish Speaking has struggled financially for several years. A review of its 990s, the federal document filed by nonprofits with the Internal Revenue Service, showed it operated at a deficit in five of the past six fiscal years.
Sources said the organization overextended itself during Baez's tenure by acquiring new, costly buildings.
Since 2015, Rivera-Joachin said in her email, the organization has sold off assets, put a new board and president in place and developed and implemented a new fiscal strategy to pay down debts.
She said Baez's administration was unable to provide documentation to address concerns raised by the Administration for Children and Families. But she said Centro Hispano would reapply for Head Start funding once it completes its update of its financial reporting system.