COUNTY PROVIDES MILLION DOLLAR BAILOUT TO YOUTH UPRISING

This is the Executive Summary, Conclusion, Findings and Recommendations only. For the entire report go to:   2016 – 2017 Final Report

EXECUTIVE SUMMARY

Youth UpRising is a nonprofit organization providing services to high-risk youth in Oakland’s Castlemont neighborhood. In May 2016, in response to a fiscal crisis at Youth UpRising, the Alameda County Board of Supervisors appropriated $1 million to rescue this community-based organization (CBO). Because of the size of this bailout, the Grand Jury decided to investigate county oversight of Youth UpRising and (1) determine whether the county should have discovered Youth UpRising’s financial problems earlier, and (2) whether there still are structural problems in the county/Youth UpRising relationship that need to be addressed.

During its investigation, the Grand Jury learned that Youth UpRising undertook two new major programs that resulted in changes in the composition and responsibilities of the leadership  team,  and  experienced turnover in  the  organization’s   financial  staff.    

The organization also received additional grant funds and incurred additional expenses in connection with new programs, but failed to implement adequate accounting and financial controls to keep money for each program separate. There was disagreement among members of the organization’s board of     directors     about     transparency    and leadership issues, and members resigned from the board.  As a result of these and other factors, the financial condition of Youth UpRising deteriorated. Many of the issues facing Youth UpRising went undetected by its largest funder:  the County of Alameda.

Following its investigation, the Grand Jury concluded that the county’s close relationship with Youth UpRising resulted in this CBO being treated differently than other CBOs that receive county dollars. While a member of the Board of Supervisors has been on the board at Youth UpRising, the Grand Jury learned that his presence provided little to no

Youth UpRising is located next to Castlemont High School in Oakland, California. It is a nonprofit registered with the California attorney general’s office. Youth UpRising’s IRS Form 990s (financial disclosure forms) show public support for the period July 1, 2011, through June 30, 2015, was approximately $26.63 million.

Over the years, Youth UpRising has received many accolades for its impact on high-risk youth in Oakland’s Castlemont community. Its stated mission is to “transform East Oakland into a healthy and economically robust community by developing the leadership of youth and young adults and improving the systems that impact them

CONCLUSION

Alameda County has funded Youth UpRising’s administrative and building expenses since 2005, and over the years has significantly expanded its support with additional contracts from other county departments. Public investments like these deserve robust oversight to ensure that services are being delivered and public funds are spent properly. After completing its investigation, the Grand Jury concludes that the county’s oversight of Youth UpRising was inadequate, fragmented, and failed to uncover Youth UpRising’s financial and governance problems.

In    2016,    Youth    UpRising    amassed    a$2 million operating shortfall due to leadership issues and poor financial controls. The organization and its CEO had invested significant time and resources on new projects aimed at addressing issues of affordable housing, workforce development and opened two charter schools in the Castlemont neighborhood of east Oakland. Leadership issues, staff turnover and board turmoil plagued the organization, culminating in the financial crisis.

Yet the county – Youth UpRising’s primary funding source – had little to no knowledge of any of these issues. The Alameda County supervisor who served on the Youth UpRising board of directors rarely attended board meetings, thus providing little oversight for the county’s investment. Further, the county agencies that contracted with Youth UpRising did not coordinate their oversight of the organization, and the county Health Care Services Agency, which held the core contract with Youth UpRising, had very little information about Youth UpRising’s new projects, comingling of funds, and leadership challenges. Finally, the county had no indication that it was cross-subsidizing Youth UpRising’s new projects when it provided the $1 million bailout in the summer of 2016.

While the county did hire an outside auditor to determine whether Youth UpRising’s financial problems were temporary and accurately reported, the county did not make the auditor’s recommendations a condition of the county providing the bailout funds. As the county HCSA embedded new reporting measures into the core contract with Youth UpRising after the bailout, it should have taken further steps to coordinate county oversight with other departments; assigned the contract’s oversight to a contract administrator rather than giving Youth UpRising special treatment; and even reconsidered the county’s limited role in the management of the organization. The county is an essential partner with this key community organization, and its oversight of the organization should be commensurate with its financial support.

FINDINGS

Finding 17-12:

The County of Alameda has not provided sufficient oversight of Youth UpRising to ensure that services are being provided and the public’s funds are being properly used.

Finding 17-13:

The County of Alameda’s standard contract administration process and procedures were not used to manage the relationship between the county and Youth UpRising.

Finding 17-14:

The Board of Supervisors approved the “bailout” of Youth UpRising without adequate review.

Finding 17-15:

Alameda County’s REACH program offers similar services to those provided by Youth UpRising at a similar operational cost. The county is able to provide comprehensive oversight and fiscal management to the REACH program, but has been unable to provide the same oversight to Youth UpRising.

Finding 17-16:

Fragmented oversight of Youth UpRising contributed to the county’s failure to identify the root causes of Youth UpRising’s financial problems.

RECOMMENDATIONS

Recommendation 17-9:

Alameda County must perform a detailed review of the current financial status of Youth UpRising and ensure adequate financial controls and management are put in place.

Recommendation 17-10:

Alameda County Health Care Services Agency must assign a contract administrator to manage Youth UpRising’s contract going forward, and the HCSA must coordinate its oversight with other county agencies that contract with Youth UpRising.

Recommendation 17-11:

Alameda County must evaluate the benefits of continuing to support Youth UpRising as an independent community-based organization when a county-run model might provide improved oversight and control.

RESPONSES REQUIRED

Alameda County Board of Supervisors:

Findings 17-12 through 17-16

Recommendations 17-9 through 17-11

Alameda County Health Care Services Agency:

Finding 17-12 through 17-16

Recommendations 17-9 through 17-11