Despite a mounting ledger of unpaid bills and a pending criminal investigation against its former executive director, the Haywood County Council on Aging board of directors asked the Haywood County commissioners this week to back a $125,000 loan to keep the agency afloat while it regroups.

The odds are not in their favor, however.

For starters, county commissioners seemed skeptical about pumping more money into an agency with so much debt and a now tainted reputation. More than $100,000 in donations intended for victims of the 2004 floods entrusted to the agency are unaccounted for, prompting an investigation into former director Denise Mathis for possible embezzlement, according to police reports.

The agency is also $61,000 behind on a $1.2 million mortgage for its office building. It is more than $4,000 behind on rent for its senior day care building. The power was nearly cut off at the senior day care last week for unpaid bills. The agency had trouble making payroll two weeks ago and is behind on state and federal payroll taxes. It has laid off two workers and others have gone to work elsewhere.

The agency has outstanding bills with as many as 17 suppliers and vendors. For example, the Council on Aging owes WNC Hearing Aid more than $2,500 for a hearing aid program, a program that has all but gone down the drain now.

But those costs could be the least of it, according to Frank Queen, a Council on Aging board member and an attorney. Queen said the agency might have to repay charities and philanthropists if the board discovers grants weren’t used for their intended purpose. During a meeting between the Council on Aging board and county commissioners Monday (March 13), Queen described grants as a liability met in one of two ways — do what the grant was intended for or give back the money.

“What would happen if a grantor came in and said, ‘We want our money back?’” Commission Chairman Mark Swanger asked Queen.

“This is a huge issue,” Queen answered. “I could absolutely see a grantor coming in and saying we want all our money back and we say ‘Get in line.’”

The Council on Aging board’s plan is to sell part of its property on Russ Avenue adjacent to its office building, the Mountain Area Resource Center, to pay their debts. In addition, the board plans to apply anything left over from future grants and government funding to pay off debts racked up under Mathis’ leadership. While Mathis was forced to resign by the board, the other top leaders in the agency are still there — namely Bridget Stamey, the assistant director, and Phyllis Osborn, the finance manager. Both women were aware of the financial trouble at the Council on Aging but failed to blow the whistle sooner.

Commissioners were uneasy about the agency’s request for help.

“How much total debt is there?” asked Swanger in the first of what would be several attempts to glean a dollar figure over the course of the meeting. “How much in arrears are you?”

The Council on Aging board of directors said they did not know exactly.

“I understand from your point of view that it seems like ‘These people are stupid. They don’t even know how much they owe,’” Queen said. But he said the agency didn’t want to guess, especially given the wildcard of charities and philanthropists who might want grants repaid. Most grants have a provision that requires the entire grant to be returned if any of it wasn’t spent as intended.

“If you don’t spend the money in exactly the way you said you would, you have to give back all the money. As a practical matter, if you get into that kind of situation ...” Queen said, drawing in a deep breath. “I don’t want to speculate.”

Queen said if such a claim went to court, the agency could likely avoid returning all the grant money and instead only return the portion that wasn’t used as intended.

“Was there not a grant for a specific purpose, say paving a parking lot, that wasn’t used in that way and therefore would be cut and dry?” Swanger asked.

“You would have to cope with those make or break claims,” Queen said. “As you can see, I am not in an ideal situation. I am in a terrible situation.”

Constance Daly, the chairman of the Council on Aging board, said they have been addressing more immediate concerns — like making payroll and paying the light bill — and haven’t finished analyzing the status of grants.

“We have to look through all the terms of all the grants and match it up with the finances,” Daly said. “I expect to see a full report of all the grants and how all the money was spent, but that investigation is not yet complete.”

Up in the air

In the meantime, the county commissioners don’t know what to do. Commissioners said they want to ensure the elderly can still get the aid they need, but don’t know whether the Council on Aging is stable enough to provide those services. Swanger said the county needs to know how much debt the agency has to determine whether it is insurmountable.

“Not having that number bothers me,” Swanger said. “Is the Council on Aging at this point in time a viable agency we can have confidence in?”

Other commissioners shared the same concerns.

“I know the Council on Aging does good things, but I’m watching out for the taxpayers’ money,” said Commissioner Kirk Kirkpatrick. “That puts us between a rock and a hard place.”

The Council on Aging board agreed to get the total debt by week’s end. The commissioners said they will try to decide what to do at their meeting next Monday (March 20).

Daly alluded several times during the meeting that the financial problems were created by Mathis, the former director, and should not reflect on the agency’s future viability.

“Our accountability in the past was not what it should have been,” Daly said. “We are under new management. We have basically become a new agency. We want to continue serving our community and make things right.”

Commissioner Mary Ann Enloe, who lives near the senior day care center in Hazelwood run by the Council on Aging, said she was concerned about that service. Enloe did not get a straight answer initially when she asked Daly about back due rent on a building leased by the Council on Aging for a senior day care.

Daly replied that “the rent is currently being paid,” but when pressed acknowledged there was more than $4,000 in back rent.

“You are correct. It is $4,506 as of three o’clock this afternoon,” said Enloe, who had investigated it herself.

Enloe said she doesn’t understand why the program had accrued so much debt, including back rent, utilities and meal bills. According to some “elementary arithmetic,” Enloe said the Council on Aging seemed to get enough government funding to cover its expenses for the day care.

Waiting in the wings

If the commissioners decide not to help the Council on Aging bail themselves out of debt and continue helping the elderly, the needs of seniors could be met by other agencies in the county.

Tony Beaman, the director of the Department of Social Services, and Patsy Dowling with Mountain Projects, a non-profit service agency, attended the meeting Monday night. They told commissioners they are prepared to assume responsibility for the senior programs currently provided by the Council on Aging.

Daly said the Council on Aging does not want to dissolve, however. They want to pay back their debts and keep operating.

“I wouldn’t anticipate that any of those services couldn’t be picked up,” Dowling told commissioners.

The biggest dispute involves a Medicaid program that provides care for disabled elderly in their own homes instead of going into a nursing home. Known as the CAP program, it brings in $345,000 a year in Medicaid funding. The Council on Aging only spends $250,000 providing the in-home care — generating a $95,000 surplus that subsidizes the agency and its other services.

If the CAP program is taken away, it would be the end of the Council on Aging, Queen said.

“If we don’t have the CAP program, then I’m going to the bankruptcy court,” Queen said. “It would be the dissolution of the agency.”

Beaman, director of the Department of Social Services, said he and his staff have “grave concerns” about services for house-bound elderly in the program.

“What was reported in the newspaper and confirmed is that CAP clients did not receive the supplies they needed in their home,” Beaman said. “So far no one has expressed concern about the quality of care those clients are receiving. That’s what we are concerned about.”

There is currently a waiting list of elderly who want help from the CAP program. Those who can’t get help to stay in their homes can end up in nursing homes. Beaman said he could get some of the elderly off the waiting list and start serving them.

Beaman said he has spoken with Council on Aging employees who support transferring the CAP program to DSS.

Council on Aging employees who operate the CAP program attended the meeting. Swanger asked them about whether getting supplies for the elderly — which range from bed pads to protein drinks — has been a problem.

“Yes,” answered Jennifer Mason, a Council on Aging employee with the CAP program.

Daly objected.

“It was a problem,” Daly said, but not anymore.

Addressing Mason, Swanger asked how long she has had trouble ordering supplies.

“Since I’ve been in the position in August,” Mason answered.

Daly again objected.

“That was under the former director,” Daly said, adding that the supply problem has been fixed.

Beaman said elderly clients in the CAP program have read about the Council on Aging debacle and have been calling with fears of losing their care. The transition to DSS would be seamless, Beaman said.

“All these clients are Medicaid clients. They come through our door first to qualify for Medicaid anyway,” Beaman said. “We are already involved with many of those clients. We are already in many of their homes.”

Haywood Regional Medical Center has also volunteered to take over management of the CAP program.

Commissioner Kirk Kirkpatrick asked why there was so much competition over the CAP program.

“Money,” answered audience members, including a few Council on Aging staff and board members.

Beaman said money was not his motive, however.

“I don’t care it there is revenue over cost or not,” Beaman said.

But the Council on Aging board members insisted they need the CAP program, hoping to use left-over Medicaid money from the program to help pay off old debts racked up under Mathis’ management and pay overhead, which in turn will keep the agency viable so they can continue providing their other senior services.

“We are using the income to fund the rest of the program,” Queen said. “Without the CAP program, you don’t have the money to run the other programs.” Queen did not explain why, if the CAP program generates extra revenue to cover overhead, the agency has still ended up with so much debt.

Beaman said if the program was under DSS, any left over funds would stay in the county’s social services coffers to provide more social services.

The county commissioners have final say over what agency will run the CAP program, another decision they plan to make at their meeting on Monday, March 20.

In jeopardy

The Council on Aging is in jeopardy of losing other programs as well. It receives government funding to operate a senior day care, to retrofit the homes of disabled elderly with ramps and grab bars and serve as a general resource for elderly seeking aid.

For example, a steady stream of seniors have come to the Council on Aging for help navigating the new Medicare prescription drug plans, often toting shoeboxes of their medications and folders of paperwork they can’t figure out.

In order to get the government grants that fund many of its senior programs, the council on aging must produce audits for the past two years. That would cost $15,000 — $15,000 the agency doesn’t have. So the agency is asking the county commissioners to pay for the audits.

Daly said the audit for 2003-2004 has already been completed, but they have to pay the auditor $6,800 for his work before they can get a copy of it. The 2004-2005 audit has not been started.

Mary Barker with the Southwestern Commission, a government agency that administers money for the programs in question, attended the meeting Monday night.

“They are not in compliance because they have not turned in an audit and not been able to show us an accounting of monies they have received,” Barker said.

If the Council on Aging wants to apply for funding to continue the programs, Barker said she needs a copy of the 2003-2004 audit and a contract showing a 2004-2005 audit is underway. The deadline is March 27.

But commissioners questioned whether the Council on Aging would be in the running for the funding even if it did get the audit.

“Everyone keeps talking about the audit, but chances are it is going to be kind of scary when it comes back,” Commissioner Kevin Ensley said, prompting laughter throughout the room.

Julie Davis, the county finance director, had the same concern.

“Since the ’05 audit might have findings that could be not very good, I wonder how valuable the audits are going to be?” Davis told commissioners.

Robert Sherman, a finance expert hired by the Council on Aging to straighten out the agency’s books, said he does not think the 2004-2005 audit will have any findings.

That means the financial mess at the agency was created this fiscal year, which started July 1, 2005. Nonetheless, problems must be out there somewhere, and Swanger questioned the wisdom of moving forward as if they don’t exist.

“What kind of due diligence do we have knowing there’s these other problems lurking out there?” Swanger said.

Whether to pay for the audit and pave the way for the Council on Aging to apply for more funding is another decision the commissioners will make at their meeting on Monday.

The commissioners will also decide whether to back the Council on Aging’s $125,000 loan to keep them afloat until they can sell off land adjacent to their building. The Council on Aging board hopes the sale of the land would pay off debts and get the agency back on even footing to move forward.

It is unclear, however, whether the Council on Aging could easily sell the property beside their building, also known as the Mountain Area Resource Center, located on Russ Avenue near Kmart . Commercial property has been for sale for years on that stretch of Russ Avenue and still not sold. The land has a large depression with a potential wetland in the middle of it.