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BOSS Accounting WoesForce Cutbacks, Layoffs

By MATTHEW ARTZ
Tuesday October 21, 2003

One of Berkeley’s largest nonprofits—its survival threatened by accounting mishaps and mounting debt—has asked city and county officials for a helping hand to solve a looming cash shortfall, which some estimates place at $900,000. 

Some layoffs have already been scheduled, and more program cuts may be in order unless additional cash can be found. 

Building Opportunities for Self Sufficiency (BOSS) administrators told local government officials last week that cash flow problems stemming from a Housing and Urban Development (HUD) audit earlier this year were far more serious than once thought, and that cash advances would likely be needed for the agency to keep meeting payroll. 

“We can’t afford to lose BOSS,” said Alameda County Health Care Services Director Dave Kears. The nonprofit runs a Berkeley homeless shelter, transitional housing units and the multi-agency service center in Berkeley, as well as other programs in Oakland and Hayward. 

“Most of what we do in mental health relies on people coming to us,” said Kears, who is working with BOSS on a bailout plan to present to HUD. “BOSS is unique in that it can go out and engage people.” 

BOSS’s financial woes are deep-seated. HUD auditors found that BOSS had mistakenly overcharged the federal agency for various services over the past three years and ordered the group to return approximately $600,000. BOSS—which operates on a roughly $5 million annual budget—hopes they can cut their HUD debt by one third by reassigning some of their reimbursement requests. Until last month BOSS officials had hoped HUD would accept all of their reimbursement requests once they organized their paperwork. 

Local officials faulted BOSS for the accounting mess, saying that as BOSS took on more federally funded services, it failed to upgrade its accounting department to handle the added bookkeeping complexity required. 

A three-year-old program to place former roughly 40 BOSS clients into subsidized housing exemplifies the nonprofit’s problems. 

In several cases BOSS administrators failed to note that the rents paid exceeded the fair market rate allowed by HUD. “Staff was so excited to put people in housing, it just slipped through,” said BOSS Executive Director boona cheema. 

BOSS also mistakenly filed for HUD reimbursements on work done by administrators—even though HUD policy was not to pay for upper management. 

Working without a professional accounting staff and using an antiquated bookkeeping system, BOSS financial records were so disorganized that employees and auditors couldn’t find which programs corresponded to the appropriate grants. 

“That’s where I didn’t make the right decisions,” said cheema, who has a policy of filling many of the non profit’s jobs with former clients. “When HUD started asking for a higher level of detail we should have changed internal staffing and brought in higher skilled people.” She said part of an organizational restructuring will include bringing in a professional Chief Financial Officer. 

Compounding the accounting morass, BOSS—trying to keep its programs running in a slowing economy—exhausted its $300,000 line of credit. 

In the past, BOSS dipped into its credit line to pay for services while it waited for foundation money to arrive. But when private donations dried up, BOSS continued to spend to keep programs running. 

Cheema said the agency received a $100,000 grant to open a youth shelter in Berkeley in 2000, but as funding shrunk to just $20,000, the non profit continued to run it from reserve funds, until it transferred the shelter to another non profit earlier this year. 

“We’ve been overspending,” cheema said. “Costs have gone up and we didn’t want to let people go.” 

Berkeley, Oakland and Alameda County have all pledged to help keep BOSS up and running while it deals with HUD. The accounting confusion has resulted in a slower release of funds from HUD—which accounts for 40 percent of the non profits’ funding. In September, BOSS delayed a scheduled payday for nearly a week while it scrambled to find enough money to pay employees. 

Berkeley is planning to give BOSS a three-month cash advance totaling $100,000 and Alameda County will kick in an extra $200,000 to help meet payroll, payroll tax and health care costs while it sorts out it accounting problems with HUD. 

Both the city and county have also provided funds to help BOSS to pay for an accounting consultant to modernize bookkeeping software and practices. 

With Berkeley already staring at an estimated $8 million deficit, city Housing Director Steve Barton said there is little more he can do for BOSS. “All we can do to help out is come up with greater efficiencies,” he said. “We can’t go to City Council and ask for money.” 

Cheema said she expected BOSS to survive the crisis, but that she wouldn’t know how much BOSS would have to cut until the start of the next fiscal year in June. Some layoffs were likely, she said, especially in departments outside the core mission of providing housing and homeless services.  

The four-person staff at BOSS’ Urban Gardens Institute, which trains clients for jobs in horticulture, has been notified that, barring a sudden reversal of fortune, they would be laid off at the end of November. 

Cheema said she had been cooperating with HUD to get BOSS’ books in order, and last week she submitted a plan to reorganize its bookkeeping procedures. She said she hoped the non profit will be allowed to pay the debt over time or that some of the debt would be forgiven. 

HUD did not respond to telephone calls for the article. 

The specter of layoffs is just one concern for BOSS’ approximately 100 unionized employees. Their contract expired this summer, and last week they voted to reject BOSS’ latest offer—which would have frozen salaries and increased fees for medical benefits. The union has agreed to call in a federal mediator to help reach a new contract. 

“It’s distressing that the three-year contract came up at this time when BOSS is having financial troubles,” said shop steward Lisa Stephens. “Otherwise, they would have come to us and negotiated instead of unilaterally changing the benefits package.”