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fr REACHThe staff of REACH of Macon County understands how difficult it is to leave your home, even under the most traumatic situations.

fr jacksonreachIt’s been two-and-a-half years since cash flow problems forced Jackson County’s domestic violence and sexual abuse resource center to close its doors, and REACH of Jackson County has remained a dead organization ever since.

REACH of Macon County won’t find out for another month or so whether its application for a $909,000 grant toward a new building gets approved, but the shelter for victims of domestic abuse is optimistic about the outcome. Already, REACH is working to raise the $303,000 it would need to unlock the grant, and the organization is knocking on the doors of county government for help. 

For nearly a year, REACH of Macon County has been helping domestic abuse victims in Jackson County. The group has handled more than 400 cases in Jackson since last July. 

“To be honest with you, we feel like that number should be higher,” Andrea Anderson, the group’s executive director, told the Jackson County commissioners recently.  “We definitely have been talking and trying to figure out how to reach out to more victims.”

The domestic violence nonprofit REACH of Macon County is facing a more than $80,000 shortfall next year due partly to state budget cuts and partly to repercussions of stepping up to the plate when assault victims in neighboring Jackson County had no one else to turn to.

Nearly a year has passed since a domestic violence support agency in Jackson County abruptly shut down under financial duress, and so far there’s no sign on the horizon of a new nonprofit to fill the void.

In the meantime, however, the domestic violence agency in Macon County stepped in and picked up the torch on an emergency — and presumably interim — basis.

Two months after the domestic violence agency REACH of Jackson County abruptly shut its doors in February, services to domestic violence victims continue to be handled by nonprofits in neighboring counties.

Jackson County commissioners would like to see a local entity fill that void and are likely to begin reviewing their options soon, with a discussion of the issue slated for a county meeting next week.

REACH of Jackson County’s board of directors shut down the agency in February amid questions of financial solvency and internal financial irregularities. REACH failed to remit payroll taxes for three quarters in 2011 to the Internal Revenue Services. Additionally, the organization was hemorrhaging financially. The board of directors fired the agency’s executive director and finance officer, and the seven remaining employees were laidoff.

Commissioner Doug Cody said that he believes Jackson County must move toward having its own agency in place to combat domestic violence and help victims.

“I think we do need a local entity that does what REACH did for us,” Cody said. “Macon County is taking up the slack right now. It’s unfortunate things worked out the way they did.”

Commissioner Mark Jones echoed Cody, calling the demise of REACH a “great disappointment,” and said that he, too, wants something in place soon on a local level.

“I think it is very important,” Jones said. “Our population is too large not to have a facility for servicing victims in immediate need.”

Commission Chairman Jack Debnam said the situation with REACH serves as a warning to people who serve on volunteer boards that they need to be cognizant of what’s happening with the respective agencies. That said, he’s looking toward another agency in Jackson County, too, to help victims of domestic violence.

“I’d like to see REACH back in Jackson County,” Debnam said. “Eventually we’re going to have to set something up. I think it needs a little different structure than last time.”

All calls are currently being handled by REACH of Macon County, which has been provided office space in the Jackson County Department of Social Services building. Ann VanHarlingen, executive director of REACH of Macon County, said there has been a continuity of services. The group is even offering life-skills classes and programming in Jackson County.

“It’s going to take some time for Jackson County (to decide what to do),” she said. “It’s up to the community to see how they want the work to go forward.”

VanHarlingen said starting a new agency up takes 18 months to two years on average, according to state statistics.

State grant funding previously earmarked for REACH of Jackson County has now been made available to REACH of Macon County, said Jackson County Manager Chuck Wooten. Since that agency is now providing the services to domestic violence victims, they can receive the funding previously allocated to REACH of Jackson, Wooten explained.

The root of the financial problems for REACH of Jackson County date to 2001 when REACH opened a $1.1-million transitional-housing complex for victims trying to escape abuse. The complex was a questionable financial venture from the get-go: The nine-apartment village could not actually generate the funds to pay the loans, much less keep pace with general repairs and upkeep. The loan amount owed was $840,074.

The REACH village went into foreclosure. Recently control of that housing complex shifted to Mountain Projects, a nonprofit that administers programs to benefit the needy and elderly in Haywood and Jackson counties.

An audit of REACH of Jackson County’s finances received by the nonprofit’s board last month show the money situation had become even more dicey than was previously made public.

The agency, which worked with victims of domestic violence and sexual assault, shut down last week amid accusations of internal financial irregularities. Jackson County women and children seeking help from abusive situations are now reliant on other counties’ agencies to provide services and emergency shelter.

What primarily triggered the sudden closure was the nonpayment of payroll taxes for three quarters in 2011 to the Internal Revenue Services. The board last week fired the agency’s executive director and finance officer. The seven remaining employees were laid-off.

The audit, reviewed this week by The Smoky Mountain News, reportedly played a huge role in the board’s decision to pull the plug on the 33-year organization. Here were some of the findings of the financial review, which was dated Dec. 28 and prepared by the Waynesville firm of Gahagan, Black and Associates:

• The organization lost $128,216 in net assets for fiscal year 2010-2011.

• At the time of the financial review, REACH’s assets totaled just $58,104, but the agency had current liabilities of $200,863. That included long-term debt totaling $100,789 and unpaid payroll taxes of $76,752 (that number continued to climb, totaling about $81,000, including penalties, by the time the agency closed).

• The situation was so dire the amount of assets held by REACH couldn’t even cover its temporarily restricted obligations of $10,295. These are funds restricted in use, with dollars required to be spent in a certain timeframe or be spent for specific purposes only.

“These conditions make it uncertain as to whether the organization will be able to continue as a growing concern,” the auditors noted.

 

End was quick following audit release

In an interview last week, fired REACH Executive Director Kim Roberts-Fer said she waited to tell the board about the payroll tax issue until receiving the results of this audit. Roberts-Fer indicated she’d learned about the IRS problem in October. She said that she’d been in contact with the federal agency to try to work out a payment plan.

Roberts-Fer said her delay in relaying what was happening to the nonprofit’s overseeing board was justified because she wanted to give board members a complete picture of the situation, one that included solutions. Roberts-Fer said she had successfully worked out a compromise with the IRS that would have enable REACH to continue serving the community.

REACH’s board still hasn’t made any public comment except for the release of a small, prepared statement last week expressing their regrets over closing the agency.

But the auditor’s findings, coupled with the sudden appearance of an IRS agent who demanded personal financial information from board members, clearly influenced the decision to finally end the protracted death writhing of the virtually financially insolvent group.

According to Roberts-Fer, fired Finance Director Janice Mason was working within a financial system long in place at the agency. Mason has declined to comment through her former boss.

The auditor noted the following “client response” to the issue of the nonpayment of IRS payroll taxes: “The client was unaware of how to classify expenses through the accounts payable function and wrote the checks to classify expenses.”

 

A crisis agency in crisis

REACH’s financial practices encompassed monkeying around with paying various bills because of an ongoing funding crisis that had threatened the agency’s survival for two years. The agency put off paying payroll taxes in hopes of catching up but instead fell more and more behind.

The root of the problem started before then, however. REACH in 2001 opened a $1.1-million transitional-housing complex for victims trying to escape abuse. It was a questionable financial venture from the get-go: The nine-apartment village could not actually generate the funds to pay the loans, much less keep pace with general repairs and upkeep. The loan amount owed was $840,074.

The REACH village went into foreclosure. Recently control of that housing complex shifted to Mountain Projects, a nonprofit that administers programs to benefit the needy and elderly in Haywood and Jackson counties.

The IRS put a lien on the property in early February because of REACH’s nonpayment of taxes. That almost boogered up last week’s scheduled transfer to Mountain Projects. But, the U.S. Department of Agriculture (which was one of the original loan makers to REACH) persuaded the IRS to knock the $81,000 down to $51,000. REACH has agreed to be responsible for that debt if Mountain Projects would go through with taking over the property title.

Additional questions surfaced this week about whether REACH would even have been able to apply for and receive federal and state grants anymore since the agency both defaulted on a government loan and failed to pay the IRS. An estimated 90 percent of the nonprofit’s funding base was dependent on grant money.

 

Macon bailing out Jackson

In the short term, which could mean at least a couple of years, REACH of Macon County will provide services in Jackson County, including key legal services for domestic violence victims. The agency has been given a temporary office and phone at Jackson County’s social services department.

“It has seemed fairly seamless at this point,” said Ann VanHarlingen, executive director of REACH of Macon County. “We realize that Jackson County and the people of Jackson County will devise a system by which they will take this project back over; we also realize this is a process, not an event.”

REACH of Macon County expects to move into more permanent office space in Sylva March 1. That nonprofit will provide three staff members to Jackson County to ensure a continuation of services, said Andrea Anderson, director of client services for REACH of Macon County.

“The debt of gratitude the people of Jackson County owes REACH of Macon County is quite large right now,” Jack Debnam, chairman of the Jackson County Board of Commissioners, told VanHarlingen and Anderson during Monday’s commission meeting.

For now, victims fleeing abusive homes will be housed in emergency shelters in Haywood, Macon or Swain counties. That could change, however. Bob Cochran, director of the Jackson County Department of Social Services, said Mountain Projects via Patsy Dowling has offered Jackson the free use of the old emergency shelter in the former REACH Village.

VanHarlingen told Jackson County commissioners that it requires 18 to 24 months to fully setup a nonprofit agency to serve victims of domestic violence and sexual assault.

Cochran said in an interview with The Smoky Mountain News that “the dust needs to settle” before the community can chart its best course of action.

“It is still early in determining the status and the final outcome of the current REACH,” Cochran said. “We hope there will be some assets left that can be used toward a rebuilding process.”

Given the audit findings, that scenario seems increasingly unlikely.

In addition to not paying the IRS, REACH failed to pay several months rent for the space housing its thrift store. A lien seeking payment on back rent has been filed with the Jackson County Clerk of Court, and there is the possibility of more creditors seeking payment. Also, some of the employees of REACH are owed back pay.

Asked if Jackson County wouldn’t be better served by simply eliminating REACH and starting anew with a different name and no baggage, Cochran responded that he couldn’t answer that question yet.

“I don’t know. I think that conversation has yet to take place,” he said.

A domestic violence and sexual assault agency serving victims of abuse in Jackson County abruptly shut its doors last week after more than three decades in operation.

REACH of Jackson County has been plagued for two years by an on-going funding crisis, but the sudden closure came amid questions about internal accounting irregularities.

The director and finance director were fired and seven other employees put on furlough.

This leaves victims of domestic violence and sexual assault in Jackson County without a local agency to turn to. They now must rely on help from neighboring counties. 911 calls from victims are being rerouted to Macon County.

“No client will go unserved — none,” said Ann VanHarlingen, executive director of REACH of Macon County. “We are providing room in the shelter, court advocacy, whatever an individual or family from Jackson County needs, we will provide.”

The domestic violence agencies from neighboring Swain and Haywood counties have pledged help as well, including Swain/Qualla SAFE and REACH of Haywood County.

Lisa Barker, the director of SAFE in Swain County, cautioned, however, that Jackson County’s leaders must figure out some other means, long-term, of helping victims living in the community — these small nonprofits all have limited resources and shallow purses, the very crux of the problem that ultimately destroyed REACH of Jackson County.

“It is very important that each county have the services available in that county,” Barker said. She noted that it places additional hardships on victims, who are already in crisis, if they are forced to seek assistance instead of finding help readily available within their home communities.

Children are often caught in the middle of domestic violence. Four-dozen children were among those housed in 2010 in the domestic violence shelter run by REACH of Jackson County.

 

Shutdown came rapidly

Board members of REACH of Jackson County aren’t saying much. In fact, all they’ll say about the matter is contained in a written statement released early Monday by board Treasurer Tommy Dennison.

“Due to uncertainty regarding our financial issues, REACH of Jackson County had to close on Feb. 9,” it stated in part. “We are very saddened that this has occurred but it was the only way we could fully understand the situation. This was a very difficult decision for the board to make.”

The budget for REACH this fiscal year was approximately $400,000, down from $1 million just two years ago. Grants made up most of the budget, but the agency had other sources of revenue, too. Jackson County has been giving REACH $35,000 for operational expenses on an annual basis since 2007.

County Manager Chuck Wooten said he was informed that an auditor is reviewing REACH’s accounting records, and that board members had expressed confusion over the true situation of the agency’s finances.

Here’s what happened: On the morning of Thursday, Feb. 9, there was a REACH board meeting. Later, REACH Board President Rich Peoples came to the agency’s offices just off N.C. 107 and fired REACH Executive Director Kim Roberts-Fer and Finance Director Janice Mason. He furloughed the other employees.

In an extensive interview just after she was fired, Roberts-Fer detailed the events leading up to the terminations. While the agency has been through financial struggles, she said there were adequate funds to keep it running. At the time of the interview, it was not yet clear that the REACH board would totally shutdown the agency.

“I don’t see why, after all we have done, that they would give up now,” Roberts-Fer said. “With or without me, that’s not the point — there are too many women depending on them.”

 

Payroll tax problems

REACH eked out a day-to-day existence. The agency had no piggy bank, and no real bank that was willing to extend credit — REACH was turned down twice when it sought loans. The agency missed payroll at least twice and had its water cut off once for nonpayment of bills.

The financial straw breaking the camel’s back, however, seems to have come when board members learned that REACH owed $47,000 to the Internal Revenue Service. REACH had failed to pay three quarters worth of payroll taxes last year. The amount owed included fines and penalties as well.

Roberts-Fer said there was nothing sinister involved. Partly, the finance director, Janice Mason, didn’t realize she was supposed to remit payroll taxes regularly, according to Roberts-Fer. But, cash flow problems clearly played a major role.

“Her only goal was to keep the agency going. What she was doing was paying when she got the money. But, it kept getting further and further behind, and basically, she didn’t have the money,” Roberts-Fer said.

The IRS showed up. A deal was worked out. REACH would pay $700 to $1,000 a month, Roberts-Fer said, with the expectation that the fines and penalties probably would be waived once the taxes were paid.

“Once I got the information, I shared … with the board and let them know we were in contact with the IRS,” Roberts-Fer said, adding that she went without her own paychecks in November and December to try and help the agency recover financially.

This wasn’t the first accounting issue at REACH.

Mason also failed to properly deposit retirement plan contributions into two employees’ accounts on several occasions, Roberts-Fer said. When employees elect to have part of their take-home pay withheld and put into a retirement plan, the money is supposed to be deposited regularly.

That money was paid back, but the amount of interest involved remain points of contention with the employee and former employee involved, she said.

The motivation again seemed to be plugging cash-flow shortfalls to keep the agency going.

“(The finance director) had been for years charged with paying the bills with no money. She inherited a system; she worked within it,” Roberts-Fer said.

New guidelines were put in place to standardize and regularize the agency’s methods of doing business, she said.

“Everybody makes mistakes. For an organization, the question is, do you respond to the problem? We did,” Roberts-Fer said.

 

REACH’s financial problems longstanding

The financial woes of REACH of Jackson County weren’t a mystery. Exactly one year ago this week, Roberts-Fer warned that the financial situation was so bleak the nonprofit faced the possibility of shutting down.

Before Roberts-Fer took over three years ago, REACH had opened a $1.1-million transitional-housing complex for victims trying to escape abuse back in 2001. It was a questionable financial venture from the get-go: The nine-apartment village, no matter how skillfully operated and managed, would never actually generate the funds to pay the loans, much less keep pace with general repairs and upkeep. The only income to offset the expenses was rent from the tenants, and even if fully rented, it would not pay the mortgages and expenses. The loan amount owed was $840,074.

The REACH village went into foreclosure, and associated costs bled dollars from the agency. Recently control of that housing complex shifted to Mountain Projects, a nonprofit that administers programs to benefit the needy and elderly in Haywood and Jackson counties.

Roberts-Fer said REACH of Jackson County also had been overspending during those years, including dipping into, and ultimately depleting, emergency financial reserves.

Even the agency’s thrift shop had been barely breaking even.

Adding to the difficulties were sky-high insurance payments on the agency’s emergency shelter after Bonnie Woodring, who was seeking protection from an abusive husband, was gunned down by John Raymond “Woody” Woodring in September 2006. He shot her inside the shelter after muscling his way in. Woodring later killed himself.

Additional security measures at the shelter were added in the wake of the shooting, another expense for REACH.

But perhaps most critically, at least when it came to the agency’s financial wellbeing, grants and other funding streams REACH relied upon have virtually dried up. Macon County’s VanHarlingen said her agency also has faced increasing financial constraints because of the overall economic climate.

“It is difficult for everybody,” she said.

In response to the financial crisis, Roberts-Fer had cut the number of employees at the agency and streamlined programs to barebones levels: operating an emergency shelter, offering legal advocacy and maintaining a hotline.

Jackson County Manager Chuck Wooten raised the possibility of combining some elements of the individual agencies in the region to offset costs. But, VanHarlingen cautioned that immediate shelter and help needed to be available in individual communities. At one time REACH of Macon County was an extension of the Jackson County agency.

“When we were the Macon outreach for Jackson County, that meant sometimes transporting a client over Cowee on a snowy night,” she said.

The need for help in Jackson County, REACH or no REACH, isn’t likely to disappear.

During fiscal year 2009-10, REACH of Jackson County received more than 400 crisis-line calls, provided emergency shelter for 37 women and 48 children, and was involved in 269 counseling sessions.

Wooten described the need as critical and said he expects REACH’s demise to be a topic of discussion at the Feb. 20 Jackson County Board of Commissioners meeting.

REACH of Jackson County continues to struggle financially, but fears this winter that the agency might actually shut down now seem unlikely.

The “village,” a transitional-housing complex for women escaping domestic violence, was bleeding dollars from the nonprofit organization. The complex has since been taken over by Mountain Projects, and that has certainly helped REACH’s financial outlook, said REACH Executive Director Kim Roberts-Fer.

But even more importantly, she said, REACH is a leaner, meaner, anti-domestic violence fighting machine … or something like that, anyway.

“Sometimes a crisis can get you to rethink, and I think this has put us in a place where we will be even more efficient and effective,” Roberts-Fer said.

The near financial meltdown has taken its toll, however. The projected budget for REACH this fiscal year is $400,000, down from $1 million just two years ago. And the staff is down, too, with nine positions slashed: half of the people who once worked for the nonprofit are gone.

What’s left, Roberts-Fer said, is the core, essential duty that rightfully belongs to an agency such as this: the ability to help victims of domestic violence during times of crisis.

The hotline is manned, the money-raising thrift shop is open, and the workers remaining for the agency are being cross-trained to handle a multitude of services. The days of specializing are over, Roberts-Fer said, and so are nice-but-not-essential services, such as long-term counseling for victims. That’s being farmed out into the community when there’s a need.

The continued viability of the nonprofit hinges on two critical points: continued grant money from a dollars-strapped state, and the ability of REACH to ride out a four- to five-month expected delay in receiving that funding. These days, North Carolina is slow to put the checks in the mail, and agencies that desire solvency have learned to stash money or use lines of credit from banks to ride out the drought that begins with each new fiscal year.

REACH, however, has no piggy bank, and no real bank that is willing to extend credit — the agency went into foreclosure proceedings with the village, subsequently missing payroll twice and even seeing the water cut off for nonpayment of bills. REACH isn’t exactly the kind of customer most banks will open their vaults to.

Money woes or not, the need for the nonprofit’s services are great; however, during fiscal year 2009-10, REACH of Jackson County received more than 400 crisis-line calls, provided emergency shelter for 37 women and 48 children, and was involved in 269 counseling sessions.

Finance Director Janice Mason said the thrift shop isn’t making much money, but that it is holding its own. One positive sign is that donations are up, she said.

Roberts-Fer has warned her staff that she cannot guarantee all the hard times are over, or even that the agency might not again miss payroll. Still, she remains optimistic.

“Progress towards stability has been slow, but there is definite progress,” Roberts-Fer said.

 

REACH fundraiser

A REACH of Jackson County fundraiser is set for Saturday, June 18, from 6:30 p.m. to 10:30 p.m. at the Country Club of Sapphire Valley. Tickets are $75 per person. The evening includes dinner, drinks, dancing and gaming, with a special appearance by the Gamelan Ensemble. 828.631.4488 ext. 207.

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