CLEARWATER — Two years ago, Pinellas County's Juvenile Welfare Board wanted to make sure that the tax dollars it gives to small neighborhood programs flowed to needy children, not boondoggles.
So the board created a little stepchild agency for just that purpose: It would help churches and neighborhood centers run their counseling and tutoring programs more efficiently. It also would function as a fiscal watchdog, collecting JWB payments on behalf of the programs, paying the bills, keeping a close eye on expenses and ferreting out waste.
Last week, however, a damaging audit showed that the welfare board's attempt at fiscal responsibility went terribly awry.
The new agency screwed up its own cash flow so badly that it bounced checks to the tune of $207,742, paid $5,655 in overdraft fees and failed to document its own expenses — the very kind of problems the agency had cracked down on whenever they popped up at any of the neighborhood programs.
At one point, the agency's chief financial officer lent the organization $35,000 from a company she owns, the audit said.
Today, the welfare board's directors, many of them prominent Pinellas County officials, will start sorting out this mess at their monthly meeting.
The audit "absolutely shocked me," JWB executive director Gay Lancaster said Wednesday. "We were expecting some shortcomings, but this was far more alarming than what we expected."
The agency in question is called Pinellas Core Management Services. Its executive director, Paul Lackey, resigned Friday after the audit became public.
The JWB staff and board face several complications as they sort through Pinellas Core Management Services records and try to figure out what happened.
• Though both JWB board members and Lancaster speak of the service as a separate, arms-length entity, lines of authority remained fuzzy for more than a year after JWB created it.
Lackey was a JWB employee when Lancaster charged him with getting service up and running. He operated with no board of directors for more than a year, so he was answerable only to Lancaster.
Some events criticized by the auditor came while Lackey was still under Lancaster's direction — like an unexplained $150,000 line of credit he took out and borrowed against. Lancaster and other JWB staffers said they were unaware of the loan until the audit came out.
• Troubling information was still emerging Wednesday.
Ruth Goltl, Pinellas Core Management Services' chief financial officer, declined to comment about the audit report that she lent $35,000 to the agency. (Her husband, Rick, works in plant operations at the St. Petersburg Times.)
But Marcie Biddleman, a consultant Lancaster hired last month to "put PCMS back on track," said Goltl told her Tuesday that the loan covered payroll over a July Fourth weekend, when banks were closed.
After the Times pressed for the exact date of the loan, Biddleman found an e-mail from Goltl to her bank, authorizing the transfer. It was dated Sept. 30, 2008, the last day of the services' fiscal year, when books should balance.
Lackey recruited his own three-person board, which had its first meeting in June 2008.
Elise Minkoff, an orange grove owner and developer, is president. She also was appointed by Gov. Charlie Crist to the JWB board, so she has oversight responsibility for both agencies.
Learning that Goltl's e-mail pegs the $35,000 transfer to the end of the 2007-08 fiscal year "shakes my confidence about just about everything that was brought forward by Mr. Lackey to the (PCMS) board," Minkoff said.
• The audit criticized the service for not documenting expenses for a computer and technology training program funded by the Eckerd Family Foundation.
Lackey hired Donna Welch to help run that program. She is a former advertising sales assistant for the Times and the wife of County Commissioner Ken Welch, who sits on the JWB board as the commission's representative.
Welch says he received assurances from Lancaster and Lackey that the hiring of his wife represented no conflict of interest because her $29,504 salary came entirely from Eckerd grant money, not JWB money.
"We went the extra mile in making sure that she would never take a paid position in a job or program that was funded by JWB," Welch said. "Donna's been active in youth and faith-based programs for many years, and has had opportunities to work for at least one JWB funded agency, which she declined to avoid a conflict for me as a board member."
Lancaster says she can't remember conversations with Welch about the hiring of his wife, "but I'm sure he did tell me. He has a much better memory than I do."
Welch said he did not inform fellow JWB board members or the public about the arrangement because there was a clear line of separation between JWB money and Eckerd money.
Though the arrangement gave Lackey the power to fire his wife, Welch recently took strong positions against Lackey's behavior.
For example, religious leaders in St. Petersburg's Childs Park neighborhood recently complained to Welch that Lackey was trying to shut down their after-school reading programs.
Welch took those complaints to Lancaster and suggested at the last JWB board meeting that it was time to consider ways to serve children at the neighborhood level that would not send the dollars through the service.
How the dollars flow
The Juvenile Welfare Board of Pinellas County funnels property tax dollars to many programs that improve the lives of children and their families. A critical audit released last week involves only dollars that flow through Pinellas Core Management Services, or PCMS, a not-for-profit organization the JWB set up to oversee some of its smallest programs. The Eckerd Family Foundation also gives money to the service to fund computer training in some churches and a mosque in St. Petersburg and in some neighborhood family centers. Donna Welch, a Core Management Services employee, coordinated the Eckerd technology program and was paid solely from Eckerd grant money. Her husband, County Commissioner Ken Welch, sits on the JWB board of directors.
Juvenile Welfare Board
(Funded by Pinellas County property taxes)
Eckerd Family Foundation
Pinellas Core Management Services
(Oversees and supports smaller JWB programs)
• Big Brothers/Big Sisters
• Healthy Families Pinellas
• Coordinated Child Care
Five Childs Park churches and one mosque
Neighborhood family centers (tutoring, counseling, technology training and other programs)
About $47 million in 2008-09
About $4.7 million in 2008-09
About $2 million over six years
Funding from Juvenile Welfare Board
Funding from Eckerd Family Foundation