The H.O.P.E. Center, an acronym for Helping Our People Excel, provides a multitude of services for developmentally disabled adults in Carroll and other counties. The Huntingdon-based Center, previously known as the Carroll County Developmental Center, serves approximately 80 adults by providing them with continuing developmental skills, off-premise work enclaves, transportation to and from the center and work. H.O.P.E. also operates residential group homes. It is a non-profit corporation providing vocational, residential, and day habitation services to mentally-challenged adults.

In a letter dated February 7, Sandra Sturgis, Interim Deputy Commissioner of the Department of Finance and Administration, Division of Mental Retardation Services, read, "The Office of Audit and Investigations, Office of Health Services, has performed an investigation of H.O.P.E. Center. The report to the Division of Mental Retardation Services indicates that the agency continues to have on-going, serious internal control problems and severe financial difficulties. After meeting with the auditors, I have concluded that your agency's critical financial problems, if not successfully addressed immediately, will result in adverse consequences for persons served by the agency. According to the auditors, your (HOPE Center) monthly expenses exceed your monthly revenues by approximately $25,000. In addition, it is my understanding that your bank is unwilling to extend any further unsecured line of credit after this month. The loan you presently have will take you through the next several weeks.

"The DMRS received a plan to address these issues from the agency's director, Ms. Barbara Gray. We have determined that this plan is not sufficient to resolve the serious financial issues identified by the State auditors. Therefore, DMRS is requesting that the agency's board of directors develop a plan for the continued operation of the agency that addresses the concerns that have been identified. No later than February 18, close of business, please provide to DMRS a detailed plan for your agency that demonstrates how it can remain viable over the next several months and become financially solvent in the near future...

"Without a plan that has been accepted by DMRS by February 28, it will be necessary to terminate our contract with you and seek other providers to assume the responsibility for service provision to the individuals served by H.O.P.E. Center."

One board member said some members of the board requested the independent state audit because of alleged improprieties. State auditors visited the Center and other creditors earlier this year.

In the year 2001, the U.S. Department of Treasury - Internal Revenue Service filed liens in the amount of $384,015 against the Center's real estate for unpaid payroll taxes. Those taxes were both employee Social Security and Federal Income Tax that the Center failed to pay each quarter of the year. The tax lien, filed in the Carroll County Register of Deed's office, indicates past due payroll taxes for the years 1997 to March 31, 2001. The Center is presently paying the IRS $4,500 monthly on the overdue account. One board member, who wishes to remain anonymous, estimated the current past due liability to the IRS at $377,000. That board member also indicated that the Center had previously deducted funds from employee checks for a retirement account and didn't make the appropriate deposits with the Penn National account for seven months. "We have not heard the outcome of that," said the board member. In conclusion, the board member said the Center recently converted to a central gasoline depot to fuel the 19 Center-owned vehicles. Gasoline usage dropped by 400 gallons monthly immediately after the usage of individual credit cards was eliminated, according to the board member.

H.O.P.E. Center Executive Director Barbara Gray said the Center has experienced problems with funding coming from the State of Tennessee. She said the Center is paid on a "fee for service" basis and often receives delayed payment for services provided months earlier. For instance, the services provided by H.O.P.E. in February will be paid in April. She noted that sometimes the State requires the Center to provide certain services but does not provide funding for those services. An audit by the Memphis firm Cook, Greer, Huddleston, McLean, P.C. concurs with the ever- increasing accounts receivable from the State of Tennessee. A June 2001 audit reveals $238,081 due from the state compared to $202,068 one year earlier.

The Executive Director praised the current employees for their service and endurance.

During a meeting of the Board of Directors and the Financial Oversight Committee last week, Mrs. Gray outlined a plan to cut expenses to place the Center on a good financial track in three to six months.

Board Chairman Marie Burzler presented the following procedures to reduce and control the monthly expenses:

1. Contact all creditors to "work out" a repayment schedule. Mrs. Gray estimated the present bills at $45,000. The Center hopes to keep all future bills "current" while applying minimal payments to all past due accounts.

2. Restructure employee insurance and require employees to pay a portion of their coverage. Presently, the Center pays 100 percent of the employee's major medical and dental coverage. The employee pays premiums for all dependent coverage.

3. Eliminate or reduce longevity pay for veteran employees.

4. Establish better control of all purchase orders and payment of bills. Purchase requisitions must now come to Mrs. Gray for approval and all accounts are submitted daily before being paid.

5. Reduce the number of staff members by three - two full-time and one part-time. Two have already left employment of the Center and a third is scheduled to leave in late February.

6. Change the pay week to eliminate some staff overtime pay at the residential homes. The current pay period has four hours of overtime built-in, said Burzler.

7. Refinance the mortgage debt and increase the repayment plan by five, 10, or 18 years. Presently the debt is scheduled to retire in the year 2004 with a monthly payment of $7,800 at 5.45 percent interest. If the debt were restructured to 180 months, the monthly payment would be $2,427.45; 240 months - $1,641.02; and 336 months - $1,201.53. On June 30, 2001, the mortgage balance stood at $302,408 on an original note of $670,000 made in 1994. The financial statement reveals assets in "buildings and improvements" at $953,535.

8. Convert staffing of some of the residential units to a "companion model" to reduce payroll costs for operating the group housing.

9. Reduce Mrs. Gray's annual pay by $5,000 to help balance the budget. Mrs. Gray offered this concession.

One internal control established in January was the hiring of Business Manager Linda Reynolds, who is an accountant, said Burzler.

Mrs. Gray estimated the monthly savings at $38,422 (with a 20-year mortgage refinancing plan) if the plan is fully implemented, but she noted that Miss Sturgis indicated the restructuring plan was "not sufficient."
           

Ordinance No. 379 states every vehicle operated within the corporate limits of McKenzie must be in compliance with the Financial Responsibility Law: "At the time the driver of a motor vehicle is charged with any moving violation. .. or at the time of an accident... the officer shall request evidence of financial responsibility as required by this section... from all drivers involved in the accident, without regard to apparent or actual fault."

Proof of financial responsibility is required in one of three forms: (1) documentation showing that a policy of insurance meeting the requirements of the law has been issued, such as the declaration page of a policy, an insurance binder, or insurance card; (2) a certificate issued by the commissioner of safety that a cash bond or deposit has been paid and filed by the commissioner, or qualification as a self- insurer under the law; (3) that a vehicle owned by or assigned to a governmental agency is operated with the consent of the owner.

Pursuant to the pending ordinance, failure to provide evidence of financial responsibility will be punishable by a civil penalty in the amount of $50.00 in addition to state penalties or other local or state laws.

Counsels Mayor Patti Edwards, "I want people to know you better have a receipt in your car because if you have a wreck they (the State) will charge you $100.00 right off the bat if you don't have insurance."

Persons charged with violating the ordinance will be given the opportunity to submit evidence of compliance on or before a court date, at which time the charge of failure to provide evidence of financial responsibility may be dismissed.

Council Considers Sharing Costs of Dependents' Insurance Coverage

Council member Gene Hale reported on the possibility of offering city employees dependent insurance coverage while sharing in the cost of the program. Along with Hale, council members James Knolton and Jerry Arthur comprised the committee studying the options along with City Clerk Dana Deem. It is Mayor Edward's hope that offering the enhanced insurance coverage will impact retention and satisfaction among employees of the City of McKenzie.

The cost of dependent coverage under the city's current insurance carrier, Tennessee Local Government Blue Cross/Blue Shield, is reported to be $400 per month, which Hale acknowledged is out of range for most people. According to the plan, the city would be required to assume responsibility for at least 40% of the cost. With 12 city employees currently indicating an interest in the plan, the cost to the city at 40% would be $160 per month per employee, or $23,000.00 per year. If the city chose to pay 50% of the costs, city share of the coverage would rise to $28,000. 00 per year. Costs of the enhanced coverage would be realized through each departmental budget.

Mr. Hale stressed employees must sign up at the inception of the program or be forever barred from participation.

"It's a one-time proposition," he stated, adding that anyone who signs up and later drops the coverage will never be allowed to re-instate coverage.

City Clerk Dana Deem explained the provision is consequential to the carrier's concerns regarding pre-existing conditions. As an example, he stated a family may be able to enroll in the coverage subsequent to the birth of a child but not during the pregnancy.

Council Approves Purchase of Truck

Street Department Superintendent Joe Curtis advised board members that while visiting the state surplus center last week to pick up items for the city, he discovered a 1985 International two-ton truck with 66,000 miles available at a price of $8500.00.

Curtis stated the truck is nearly identical to the truck currently in use by the street department with the exception of the automatic transmission, which he says is what is needed to hook up to the leaf machine the city runs each fall.

The Council approved the immediate purchase of the vehicle.

$150.00 Donated to McKenzie High School Business and Professional Club.

Ms. Sheila Ridley, sponsor of the MHS Business and Professional Club, appeared before the Council seeking a donation toward the club's expenses for state competitions slated for March 13 - 16 at the Sheraton Hotel in Nashville. Total expenses for the stay are expected to total some $1400.00.

In the program's first year, 11 of the club's 12 members recently competed, with six members - Jake Smith, Allison Adams, Ashley Watson, Andrew Cross, Heidi Thomas, and Stacey Burchum - now eligible for competition at the state level.

Council Member James Knolton reported the Donations Committee met prior to the meeting and agreed upon a donation of $150.00 which was subsequently approved by the Council.

"I don't think we can donate to anything better than to children's futures," Councilmember Knolton stated.

During the current fiscal year, the Council has granted $8,350.00 in donations of which $5,850.00 benefited local programs. In addition to the donation just approved, $3,000.00 was approved to assist in the funding of the McKenzie Memorial Library; $2,500.00 went toward the costs of the Gordon Browning Museum; and $200.00 was donated to the Shriner's Hospitals for burned and crippled children. Following the September 11 disasters, the Council approved a donation to the 9-11 Fund in the amount of $2,500.00.  

Phone (731) 352-3323 or Fax (731) 352-3322
washburn@mckenziebanner.com