Local Charity Closes Amid Questions of Mismanagement

Kevin Killeen

ST. LOUIS–(KMOX)–A federally-funded, non-profit social service agency in St. Louis that provided help for about 100-thousand poor people here annually has closed its doors — amid questions of mismanagement and misspent funds. 

“Well, I’ll tell you what.  We have what I would simply call a bookkeeping error,” said Ruth Smith, the President and CEO of the Human Development Corporation. 

HDC Board President Charles Barge says the size of the budget shortfall is “close to $1 million.”

The entire staff of some 80 employees, including Smith, has been laid off and the agency headquartered at 929 North Spring Avenue is expecting a state auditor to review the books “sometime next week.”

The Missouri Department of Social Services, which funnels federal grant money to HDC and oversees the agency, tells KMOX an audit is “ongoing.” 

“Our concern is the people who need to be served, and we’re going to ensure they receive services,” said Department of Social Services spokesman Seth Bundy.

When asked if his department suspects any criminal wrongdoing,  Bundy said he won’t speculate before the audit results are known. 

Sitting behind her desk in the now vacant building,  Smith was asked what she can say to assure the public that there was no wrongdoing. 

“That the Human Development Corporation has not stole a dime and I personally have not done anything out of the ordinary,” Smith said.

Smith, a longtime employee and former comptroller at HDC,  has an annual salary of $139,500.   She estimated that the total amount spent annually on salaries was around $1.2 million, when HDC had some 110 employees.

“We didn’t just pull salaries out of the air,” Smith said, “They did a comparability scale in the area, and that’s how our salaries were designed.”

Smith brought up a media report, which claimed that her longtime companion had a lucrative contract with the agency to do maintainance work.

“There was an article in the Whirl, a scandalous paper, saying that I had given my significant other a $10,000 a month contract.  That’s not true.”

Explaining what went wrong at HDC, both Smith and Barge point to a drop off in federal stimulus funding, coupled with borrowing from other grant programs to try to keep the client services and staff levels consistent.

 “There was no stealing or padding salaries,” Barge said, “What has happened is we have people (employees) with the stimulus money, when it ran out in January we thought we were going to receive more and kept people on in March we should’ve let them go in January. ”

Smith described the practice of borrowing money from one grant program to fund another program as “nothing unusual .”  img 29391 Local Charity Closes Amid Questions of Mismanagement

“We’re no different than city hall, the state and everybody else,” Smith said, “Everybody is doing this.  They have a pot of money here, and they have pot of money here, just like they’re accusing the governor now… So our funding was stopped and we had these invoices to pay and we couldn’t pay them, because the money stopped flowing in.”

Among the programs left short — one in which the state gives federal grants to HDC to help the poor pay their utility bills.   A letter sent from the Missouri Department of Social Services to HDC in late August warned:

“We believe there may be in excess of $650,000 of LIHEAP benefit commitments which have been made and not yet paid.”  In other words, HDC had received the money to help the poor pay their electric bill, but had not given the money to Ameren as intended.

Ameren is working with customers in the program to avoid disconnections. 

HDC also managed federally-funded programs to help the poor with job development and food vouchers.  It’s not clear how those in need will be affected by the HDC collapse.

Copyright KMOX


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