Debt to HUD Puts Jobs Program in Danger

Tuesday July 13, 2004

Berkeley’s primary provider of job training and placement for homeless residents shut its doors without warning last week after a federal review determined the nonprofit owed the Department of Housing and Urban Development (HUD) $1.2 million in back payments. 

The future of the Jobs Consortium—which has served between 700 and 800 Oakland and Berkeley residents per year since 1988—remains uncertain as city, county and HUD officials discuss a possible bailout. The Berkeley City Council is expected to consider an emergency funding plan for the nonprofit at its July 20 meeting. 

Claude Everett, the senior assistant manager at the Job Consortium’s Berkeley center, said the organization’s roughly 50 employees at its three locations have been given time off while it searches for a solution to its monetary woes. 

Should the Jobs Consortium fold, Cisco De Vries, an aide to Mayor Tom Bates, said Berkeley would be losing one of its most vital services. 

“It would be a massive hole in our funding for providing job services for homeless people,” De Vries said. 

Through its federal grant, the Jobs Consortium leveraged $1 million to train Berkeley homeless residents in a job trade, prepare resumes, and help find them stable jobs. Berkeley has given the nonprofit in the neighborhood of $19,000 a year. De Vries said the city was prepared to fund the program this year from its Mental Health Department budget. 

To pay for services, the Jobs Consortium relied on a $2.2 million grant from HUD, of which $1 million was earmarked for Berkeley. But to qualify for the HUD money, it had to raise 20 percent of the grant ($550,000) from local sources. 

Unable to garner enough money from city, county and private donations, the nonprofit counted job training services it received from local unions and assigned it a monetary value to make up the difference.  

For years, HUD accepted such in-kind services towards its grant match, but in 2000 the department changed its rules. The upshot, said Councilmember Dona Spring, is that for the past three years the Jobs Consortium has been short about $350,000 and HUD wants its money back. 

Recently, HUD has become increasingly stringent about holding nonprofits to its changing guidelines. Last year, the department dinged Berkeley-based Building Opportunities for Self Sufficiency (BOSS) approximately $600,000 for filing reimbursement requests for services HUD determined no longer qualified for federal aid. 

It’s believed that the Jobs Consortium, with a smaller operation than BOSS and twice the debt to HUD, will require a more vigorous bailout. 

HUD spokesman Larry Bush said HUD was “open to taking steps to make sure services are continued. How that happens remains to be seen.” 

Councilmember Kriss Worthington is counting on quick delivery of $1.5 million he said Oakland plans to pay the Jobs Consortium as part of the closure of the Oakland Naval Yard. Worthington hopes that government officials can convince bankers to advance the money to the nonprofit so it can pay its debt and meet its match for this year.