logo
Donate
    • Magazine
    • Membership
    • Donate
  • Racial Justice
  • Economic Justice
    • Collections
    • Glossary
  • Climate Justice
  • Health Justice
  • Leadership
  • CONTENT TYPES
  • Magazine
  • Webinars
  • Membership
  • Submissions

Pension Fund Grab to Balance Budget

Rick Cohen
December 9, 2010

December 6, 2010; Source: Gilroy Dispatch | The two charter schools operated by the Mexican American Community Service Agency in Santa Clara County, Calif., have long been on a downward spiral financially and managerially. One managerial miscue involved a practice that feels abhorrent and abusive to employees but may be pursued more frequently than some might think. MACSA was “skimming retirement money from charter school employee paychecks to pay for operating costs due to financial mismanagement,” according to The Gilroy Dispatch. In 2009, MACSA owed about $1 million to employee 403(b) pension funds and retirement accounts. MACSA’s executive director said that she had no choice; it was either take from the retirement funds to keep the schools running, or fire people and make the schools “dysfunctional.”

This is on top of evidence of misuse of restricted funds, such as a $250,000 program grant for general operating costs, and more evidence of commingling and diversion of resources. Having balanced the budget on the backs of employees, the MACSA leadership at the time—CEO Olivia Soza-Mendiola, COO (and San Jose City Council candidate) Xavier Campos, and CFO Ben Tan—have all left MACSA’s employ, but they were the people in charge when retirement funds went to the nonprofit’s general operations.

Retirement funds are for the future for most people (except those on the brink of retiring), so we expect that financially constrained nonprofits tap pensions and retirement accounts because there is no immediate pain felt by employees. Their ability to pay the rent or mortgage, put food on the table, and clothe the kids isn’t materially altered by their employer’s skimming from the retirement accounts.

Sign up for our free newsletters

Subscribe to NPQ's newsletters to have our top stories delivered directly to your inbox.

By signing up, you agree to our privacy policy and terms of use, and to receive messages from NPQ and our partners.

In MACSA’s case, it seems like the organization simply went into the 403(b)s and diverted money to operations. In others, we would guess that the employer’s contribution or match suddenly gets reduced or doesn’t get deposited at all, and perhaps staff who don’t pay much attention to their pay stubs don’t notice the lost future income.

The DA’s raid, which included files and computers from Campos’s office, didn’t hurt his candidacy enough to make a difference: On November 2, Campos won his seat on the City Council, succeeding his sister on the body. San Jose’s municipal finances are nothing to write home about, but we bet the city won’t muck around with the benefits packages pledged to City Council members.—Rick Cohen

About the author
Rick Cohen

Rick joined NPQ in 2006, after almost eight years as the executive director of the National Committee for Responsive Philanthropy (NCRP). Before that he played various roles as a community worker and advisor to others doing community work. He also worked in government. Cohen pursued investigative and analytical articles, advocated for increased philanthropic giving and access for disenfranchised constituencies, and promoted increased philanthropic and nonprofit accountability.

More about: Nonprofit News

Our Voices Are Our Power.

Journalism, nonprofits, and multiracial democracy are under attack. At NPQ, we fight back by sharing stories and essential insights from nonprofit leaders and workers—and we pay every contributor.

Can you help us protect nonprofit voices?

Your support keeps truth alive when it matters most.
Every single dollar makes a difference.

Donate now
logo logo logo logo logo
See comments

You might also like
Amid Disappearing Federal Funds, Could New York Be a Model for City-Level Health?
Rebecca L. Root
Madeleine L’Engle’s Books Were Never Meant to Be “Safe”
Charlotte Jones Voiklis
The Human Cost of Cutting Medicaid
Rebekah Barber
As Long as Social Media Is Around, Can We Really Break Free of Overconsumption?
Anmol Irfan
Flood Insurance Is Becoming Unaffordable—Can Community-Based Catastrophe Insurance Help?
Cinnamon Janzer
Arab and Muslim Advocates Fight Back Against Federal Repression
María Constanza Costa

Upcoming Webinars

Group Created with Sketch.
May 27th, 2:00 pm ET

Ask the Nonprofit Lawyer

Register
Group Created with Sketch.
June 26th, 2:00 pm ET

From Performance Management to Mutual Commitment

Fostering a Culture of Joyful Accountability

Register

    
You might also like
US Capitol Building
Tax Provision Would Give Trump Administration Unilateral...
Rebekah Barber and Isaiah Thompson
A piggy bank wearing a graduation hat and standing on a pile of cash, symbolizing how endowments for academic institutions can be accessed in difficult times.
Endowments Aren’t Blank Checks—but Universities Can Rely...
Ellen P. Aprill
Saving AmeriCorps: What’s at Stake and Why We Must Act Now
Hillary Kane

Like what you see?

Subscribe to the NPQ newsletter to have our top stories delivered directly to your inbox.

See our newsletters

By signing up, you agree to our privacy policy and terms of use, and to receive messages from NPQ and our partners.

  • About
  • Advertise
  • Careers
  • Contact
  • Copyright
  • Donate
  • Editorial Policy
  • Funders

We are using cookies to give you the best experience on our website.

 

Non Profit News | Nonprofit Quarterly
Powered by  GDPR Cookie Compliance
Privacy Overview

This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.

Strictly Necessary Cookies

Strictly Necessary Cookie should be enabled at all times so that we can save your preferences for cookie settings.

If you disable this cookie, we will not be able to save your preferences. This means that every time you visit this website you will need to enable or disable cookies again.