What’s the Problem with this Key Santa Clara Nonprofit?

August 3, 2018; San Jose Inside

The Community Child Care Council of Santa Clara County (the 4Cs) has had a rough couple of years. In 2016, their financial stewardship was questioned not only by parents, but by staff. In March 2018, they were accused of harassing and silencing parents. After what Jennifer Wadsworth of Inside San Jose called “a damming audit…[that] identified misspending and fraud,” the nonprofit came close to losing their $43 million a year in government fund, but, notes Wadsworth, “State regulators threw the struggling agency a lifeline by extending its contract for another year under conditional status.”

Now it would appear that those conditions may have been violated. As Wadsworth explains, “Last month, 4Cs failed to pay its child care providers on time and didn’t even send out a notice to expect a delay, leaving them scrambling to pay their personal bills.” It is only four months since the conditional contract was extended, leaving state regulators to wonder if they made a mistake.

A lot is at stake, which helps explain the state regulators’ caution. Wadsworth notes that 4Cs has been in operation for 47 years and “offers subsidized day care to roughly 6,000 children so their parents can lift themselves out of poverty.”

Community Child Care Council of Santa Clara County was founded in 1971 to provide free child care to destitute families. They received their tax-exempt status shortly thereafter and went on to be the county’s sole referral agency for government-funded child care. As NPQ readers know well, early childhood education has a lasting impact on health, economic, and social outcomes of the children involved and society at large.

4Cs’ presence in the community is heavily felt, and when it disappears, the impact is just as great. In 2015, one of the 4Cs sites closed down. This closure, two weeks after parents first learned the daycare center was at risk, left 33 low-income families searching for child care at the last minute. 4Cs blamed low enrollment as the reason for the closing, but many aren’t buying that.

There have been many signs of trouble with 4Cs. In 2016 alone, there were canceled grant agreements, bitter labor disputes, a longstanding failure to meet enrollment targets in a slew of programs, and an eviction that shuttered another daycare site. And in 2018, they were close to losing funding.

San Jose Inside reports that “Auditors found that 4Cs fraudulently backdated child care renewal forms, which gave parents little to no time to respond and resulted in hundreds of impoverished kids losing day care.” They also found that 4Cs used California Department of Education grants to pay for unauthorized expenses, including an executive pension that stood to benefit the nonprofit’s former executive director, Alfredo Villaseñor, who resigned a year ago once regulators started taking a closer look at his decades-old organization. Regulators also found problems at 4Cs’ preschools, instead of complying with the conditional contract and stronger oversight, the nonprofit shut them all down.

Why is an organization like 4Cs struggling like this? Some may believe it’s the leadership. Throughout the course of the audit, 4Cs’ interim director Joe Manarang, board president Ben Menor, and management staff failed to provide requested documentation, shifted blame on the previous executive, and claimed ignorance during interviews with state investigators. (Although putting the blame on the previous executive director may not have been too off—Villaseñor did appoint a man who misused $219,900 in public funds to president of the Board of Trustees.)

Still, 4C has been given many opportunities to get its act together, develop new processes and systems to help become compliant, and provide the services they were created to provide. It is now clearly at risk of running out of second chances.—Diandria Barber