Tough Love Is Necessary To Wean Senior Service Association Off CSD Bail Outs

Unaccounted for Kiewit Pacific funds released to the senior
association should be returned to the community's fund !

CSD Board holds a duty to monitor all dispursements and use of the special designated funds.

•   Editorial   • December 14, 2012

Introduction

      Challenging an iconic and beloved institution in any community will strike a tender nerve with many; and so it is with the Newberry Springs Community Alliance taking a position that the Newberry Springs Senior Service Association needs a change in its managerial direction.

      This need was dramatically illustrated at the October 2012 Newberry CSD general meeting when the seniors' association came forth and requested funds for an operational bail out for the third time!

      According to the Community Alliance, the dependence by the seniors upon CSD financial rescues has become chronic.  The seniors were previously given $13,000; then $20,000; and now they are currently seeking $24,000 for a year from the CSD as their operational deficits seriously deepen.  For years now the senior association has demonstrated an inability to reverse its growing red ink.

The fund money is a "trust."

      The source of the seniors' bail out funds is the Kiewit Pacific community fund.  This fund, originally $350,000, was acquired from Kiewit Pacific in November 2004 in settlement of the CSD's removal of an appeal that was made by the CSD and local citizens against an operational permit granted to Kiewit Pacific by the county.  The appeal was made to block Kiewit Pacific from meeting a contractual deadline.  This forced Kiewit Pacific into a monetary settlement.  Note: Other conditions of the agreement were more costly to Kiewit Pacific than the cash-out.

      The Kiewit Pacific settlement contract states in part: "Kiewit in its desire to contribute to the overall well being of the community and as a new community business with the support from the CSD shall contribute to the community through the CSD a donation in the amount of $350,000.  This donation shall be distributed by the CSD in the sums of $20,000 for emergency services and $330,000 to be used at the discretion of the CSD for the benefit of the community."

      The Community Alliance feels that it can be meritoriously argued that the donation was given under the expressed written stipulation that the money was given for the exclusive "benefit"  and the "overall well being of the community;"  and that the CSD was vested ("shall be distributed by the CSD") as the custodian (trustee) to distribute the funds at its discretion "for the benefit of the community."

      Now eight years after the gift was given, the reasonableness of the CSD's discretion in handling the fund distribution is being considered by the Community Alliance as a fiduciary breach of the CSD's duty.  The contractual $20,000 for emergency services was quickly used by the fire department; but the Community Alliance points to funds that have been lost on the purchase of a road grader that has had no benefit to the community and which the purchase was hotly argued; the fund has been gutted of $33,000 that is financially unaccountable with the senior association; and other portions of the fund that have sat idle and haven't been placed to beneficial use after eight years.

CSD conducted a community survey in December 2004.

      As part of the CSD's proper due diligence in initially handling the agreement, the CSD in December 2004 prudently conducted an extensive community survey to find the community's highest priorities and compiled the respondents' responses in early 2005.  The survey revealed that the community primarily wanted road improvements and recreational opportunities for its youth.  Interestingly, only two respondents to the survey wanted any of the donated funding being directed to the senior association.  Despite the CSD having acquired the community's directive, the CSD has failed for eight years to perform its duty to use the funds for the highest and best use as designated by the community.

Trust funds are special.

      The Kiewit Pacific funds were donated as a gift to the community and are not part of the CSD's reserve or general operating funds.  Therefore, the funds have represented a unique opportunity for the community to leverage the funds with outside grants for the construction of long term infrastructure; such as a recreational facility for the community.

      Rather than directing the funds for such a purpose, the Community Alliance notes that the CSD appears to be using the money as a reserve slush fund and breaching its duty by draining the fund to money losers that do not represent the best management and long term benefit for the community.

      The community's funds that have been directed to the senior association have apparently not been monitored by the CSD nor by the senior association itself as to what true value (if any) is being returned to the community.  Rather than demanding a forensic audit for an accountability of the trust funds previously given for senior association services, the CSD now appears to be poised to give more funds under similar losing conditions.  As overseer of the funds, the CSD has been seriously breaching its duty, according to the Community Alliance.

Tough Love

      To stop the cascading momentum of the Kiewit Pacific community fund from being further depleted to what the Community Alliance feels is a mismanaged private operation, the Community Alliance has taken a 'Tough Love' position in a very public wake-up call.  The senior association should not be allowed further Kiewit Pacific community funds.

      The senior center's operation provides a service that is respected and appreciated within Newberry Springs.  Yet, some seniors do not want to tolerate the continuous mismanagement involving red ink; and don't wish to further injure the community's ability to build much needed infrastructure, especially for future generations.

Newberry CSD's duty over the community fund.

      The CSD was given control of the Kiewit Pacific funds (as a vested trustee-type administrator) and the CSD holds a discretionary yet fiduciary responsibility to manage the funds to the 'Highest and Best Use' for the betterment of the community.  As trustee, the CSD is responsible for the money but does not own it as the funds were a gift "to the community."

      In holding a trustee relationship, the CSD is responsible for any mismanagement of the fund; including any lost, missing, or unaccountable funds that the CSD has allocated under its control; as the funds were given with the stipulated direction "for the benefit of the community."   As a principle co-signer to the Kiewit Pacific agreement, the Newberry CSD contractually obligated itself to the expressed terms and conditions of the contract.

      Under the earlier survey undertaken by the CSD itself to establish the community's designation of the 'Highest and Best Use' for the establishment of the designated use of the funds, the senior association had only two votes from the entire community!

      If the CSD cannot demonstrate that it has properly distributed and monitored the funds allocated under its control to the highest and best designated use, then the CSD needs to replace any misused or unaccountable funds to the community fund.

      On target is the $33,000 previously allocated to the senior association in which no expenditures for the performance of contracted services have been publicly demonstrated.  Where is the CSD's monitoring?  If portions or all of these funds cannot be financially accounted for in benefiting the community to the highest and best use as directed by the community, then any unaccountable funds allocated to the senior association must be replaced to the community's fund.  The CSD as the trustee overseer of the community trust fund holds the liability and the fiduciary duty to see that this is done.

CSD is also responsible for collaterial damages to the community.

      The CSD is responsible for the damages that the community has suffered from the lack of benefits resulting from eight years of nonuse of the designated funds; funds that could have been used for youth recreational needs.  The community has lost the opportunity for a youth recreation facility that could have existed for one entire generation of kids.

Attacking the messenger.

      A few members of the community that do support the current senior association's management have attacked the Community Alliance's recent editorials.  These management supporters have voiced knee-jerk accusations that the Community Alliance's statements are based upon false and unsubstantiated information; and that the Community Alliance is attempting to ruin an important Newberry institution.  These supporters do not wish to acknowledge the 'wake-up' call that the senior association's management are the ones that have been slowly ruining the organization as clearly demonstrated by the continued financial bail outs.

      In a small community, there is the human behavior of supporting long time friends and neighbors; this can become political and obstruct the recognization of business reality.  As the small senior association's membership may have its best management available; courses in business and financial training may be the best remedy.

      Facts are facts, and the paperwork held by the Community Alliance (some documents are now linked in the editorials) substantiates the truth of the editorials.  Like Social Security, the direction of the senior association cannot financially continue unless modified by competent management.

Conclusion

      When a business seeks a loan, it must open its financial records for the lender to view any irregularities.  The senior association wants public bail out money but refuses to open its books to the public.

      The Barstow Senior Center has the last several years of its full financials publicly posted to the Internet, online 24/7 for the world to inspect.  Most nonprofit 501(c)(3)s want to be transparent.  What is the Newberry Springs Senior Service's management trying to hide?

      Like an addict taking money from others, the first step to recovery is admission of the problem.  Unfortunately, the senior association does not appear ready to admit that their management is the problem.  Rather, the seniors' management is pointing to other factors; not their management's incompetence to foresee and timely manage those factors.

      The Community Alliance continues its excellent reporting; the seniors association's disgruntled attacks against Community Alliance only demonstrates the unwillingness to acknowledge the root cause of the senior association's chronic problem.

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