SAN ANTONIO – The city of San Antonio placed Catholic Charities in “high risk” status and withheld more than $2,000 in funding after a review of the local nonprofit uncovered a list of concerns, according to an internal memo obtained by the KSAT 12 Defenders.
The memo announcing the decision, written by Assistant City Manager Dr. Colleen Bridger on July 23, was sent to city leadership, including the mayor and city council, a day after the Defenders revealed a long list of accounting problems hampering the charitable arm of the archdiocese.
A review in late May of Catholic Charities by the city’s Department of Human Services, which provides oversight of the charity’s programs that receive funding from the city, found several problems with those contracts.
The issues included the nonprofit being unable to provide source documents for payroll, health insurance, workers compensation and office supplies.
The charity was also unable to provide documentation to the city proving that its internal financial recordkeeping had been properly compared with bank records.
The fiscal review resulted in the city withholding $2,067.95 from Catholic Charities because of a lack of supporting documentation and because some of the expenses fell outside the contract period, according to Bridger’s memo.
“What that means is that before we pay them anything, we review 100 percent of all their documentation and all of their receipts,” said Bridger, describing the charity’s high risk status with the city.
“So we can reconcile everything to the penny before we cut them a check.”
Bridger said city officials noticed a “pattern of problems,” primarily in the charity’s documentation.
When asked by the Defenders what could potentially happen if Catholic Charities’ issues continued, Bridger said, “We’re not going to continue indefinitely finding the same problem over and over and continue to fund any organization.”
Bridger added that there is no status beyond “high risk” status.
City records show Catholic Charities was forced to submit a corrective action plan to the city on July 19, months after the Defenders began looking into its troubled finances.
To date, the city has awarded Catholic Charities more than $235,000 in funding and in-kind donations this fiscal year.
A tax form for the charity covering June 2017 to July 2018 shows it claiming more than $12 million in revenues before expenses.
The charity remains a critical partner in the operation of the city’s migrant resource center.
“I don’t have any comment for you.”
Bridger’s pointed comments on Catholic Charities came weeks after she said publicly that she had been made aware of concerns with the nonprofit’s finances before adding, “We have given funding to Catholic Charities for years and have had no challenges with them.”
The statement came during a July 22 press conference inside Travis Park Church about federal reimbursements for organizations providing assistance to migrants.
Catholic Charities CEO Antonio Fernandez was listed as a speaker at the event but did not show up.
Catholic Charities’ spokeswoman Christina Higgs appeared in Fernandez’s place, but refused to answer more than a dozen questions from the Defenders before saying, “I don’t have any comment for you.”
Questions about transparency
Bexar County budget records confirm that it has awarded Catholic Charities more than $267,000 this fiscal year.
But when county officials were asked to provide all correspondence with the nonprofit regarding its past two audits, they handed over a single email: a copy of the charity’s 2018 audit received by a county community development specialist hours before the Defenders’ initial report on July 22.
Officials with Catholic Charities have not said what prompted the audit to be sent to the county at that time, several months after it was finalized last year.
Texas Attorney General places a hold on funds
Records provided by a source from Catholic Charities confirm that the state last year placed a financial hold on funds from a victim assistance grant, after officials from the Texas Attorney General’s Office were unable to get the charity to hand over a copy of its 2017 audit for several months.
The September 2018 letter, sent by the deputy chief of the AG’s Grant Administration Division, said its staff had made multiple attempts by both telephone and email to get a copy of the audit.
Since Catholic Charities was not responsive, the AG placed a hold on its funding in May 2018.
A spokesman for Attorney General Ken Paxton said this week via an email to the Defenders that the AG eventually received the audit.
The spokesman said the report “showed that the potential risk that public funds could be mismanaged had substantially increased; however, we have now provided corrective feedback based on those reports and the remaining previously-awarded funds have now been released to Catholic Charities of San Antonio.”
Issues with the Governor’s Office
In 2016, Catholic Charities of San Antonio was awarded a $215,000 grant from the Texas Governor’s Office to provide assistance and counseling to crime victims.
But by November 2016, the funds were put on hold by the state, according to a spokesperson for the governor’s office. The spokesperson told the Defenders that Catholic Charities was not submitting required productivity reports.
Sources who spoke with the Defenders on the condition of anonymity said staff from the governor’s office became extremely frustrated because their calls to the nonprofit were not being returned.
By January 2018, according to documents and the governor’s office spokesperson, most of the money -- $201,000 -- had still not been used by the charity and it was notified that the money might be reallocated.
Later that month, the charity’s board of directors passed a resolution recognizing that “in the event of loss or misuse of the Office of the Governor funds” that the funds would be returned in full, according to a copy of the signed resolution obtained by the Defenders.
One month later, in February 2018, Fernandez wrote a letter to the Office of the Governor. In it, he apologized multiple times and blamed the issue on staff turnover and difficulties in hiring a chief financial officer.
Fernandez also claimed in the letter that services were provided to victims over the two-year period and that they were now ready to turn in any expenditures for reimbursement.
The governor’s office spokesperson told the Defenders that, ultimately, Catholic Charities got to keep the grant for that period of time.
Fernandez did not respond to a request to be interviewed for this story.
Instead, Higgs released the following statement:
In May, the City of San Antonio placed Catholic Charities in 'high risk' status following a financial audit. Catholic Charities promptly responded with a corrective action plan, which the City accepted, and is currently in compliance. The City of San Antonio stands behind their commitment to partner with Catholic Charities. In response to a request for comment on this situation by KSAT, Dr. Colleen Bridger, assistant city manager, said that 'documentation challenges are not unusual among non-profits and Catholic Charities is an important partner in our work.' As Catholic Charities has previously stated, past audits have identified some areas of the organization in which financial controls could be strengthened, and staff continues to work diligently to ensure compliance and improve accounting and reporting procedures. Catholic Charities continues to be transparent in addressing concerns to funders and welcomes audit feedback to efficiently and effectively serve the people of San Antonio.
The Defenders reviewed transcripts and recordings of their interviews with Dr. Bridger and found she made no such statement.
Bridger said Thursday through a city spokeswoman that she was comfortable with that quote being attributed to her.
Troubling audits, lack of required background checks
Catholic Charities’ 2018 audit was the second in a row that found policies “not consistent with accounting principles generally accepted in the United States of America.”
The findings included checks over $2,500 processed without the required two signatures, a new bank account opened but not reflected in the general ledger accounts, missing support documentation for credit card purchases and the value of in-kind donations being consistently exaggerated.
The results of the audit have caused at least one program partner to deny a request for funding from the agency.
The Texas Veterans Commission in January rejected Catholic Charities’ request for funds from a general assistance grant, citing material weakness in the charity’s audit.
The commission had awarded Catholic Charities $300,000 for both the 2017-2018 and 2018-2019 grant terms.
The same audit revealed that more than 50 paid volunteers in the nonprofit’s foster grandparent program did not have their backgrounds properly screened prior to working with children.