It took only five years for the Fresno Economic Opportunities Commission, one of the nation’s oldest anti-poverty organizations, to impoverish itself, interim Chief Executive Officer Brian Angus told the commissioners this week.

Angus’ presentation at Monday’s board meeting revealed publicly for the first time the extent of the agency’s over-spending and precarious financial situation.

Five years ago, the Fresno EOC had healthy reserves in excess of $8 million, but years of deficit spending chewed up those reserves. This year the agency had to take out a $5 million loan to cover unpaid bills and obligations while undertaking belt-tightening measures designed to end the deficit spending, Angus said.

Fresno EOC operates programs like Head Start, the Local Conservation Corps, WIC, the energy assistance LIHEAP program, and recycling, food services and transit programs.

Only one bank — Self-Help Federal Credit Union in southeast Fresno, whose founders had a long history with Angus and the interim deputy CEO, Salam Nalia — was willing to front the money. Seven other banks took a look at Fresno EOC’s books and declined to provide the loan, Angus told the commissioners.

“We were borderline being out of business, folks,” he said. “Borderline selling off stuff and closing down.”

Commissioners Ignored Growing Deficit

Even though the growing deficit spending was being reported to the commissioners as early as May 2022, the first red flag to surface publicly was when Assemblymember Joaquin Arambula replaced his mother, Amy Arambula, on the Board of Commissioners in October.

Arambula, a five-term Fresno Democrat representing the 31st Assembly District, wrote an open letter in November to his fellow commissioners that questioned the depletion of the agency’s reserves and its spending.

He called for a forensic audit, which the board later voted to conduct but only for 2024.

“I am alarmed by what I learned in preparation for my first meeting on October 21 — the agency is hemorrhaging money,” Arambula wrote, adding that he was “greatly concerned that agency leaders have not acted as responsible stewards of the taxpayers’ money.”

Arambula’s spotlight on the agency’s troubled finances promoted the commission to put CEO Emilia Reyes on administrative leave in November and then vote in December not to renew her contract. She had been hired in 2019 to replace Angus as CEO.

A financial report provided to the commissioners in December for the agency’s finances through September showed a $3.3 million deficit. According to agency officials, the deficit was primarily because of an inability to renegotiate multi-year agreements for Food Services and the Local Conservation Corps to cover rising costs of transportation, utilities, and goods and foods.

An ‘Egocentric Culture’

Angus did not mention Reyes by name at Monday’s commission meeting, but he indirectly referred to her administration as an “egocentric culture.”

“The past five years I don’t think anybody cared about the revenue stream coming in, and if you don’t worry about how much money is coming in, it doesn’t matter how much money is going out,” he said. “I mean, you think about that. If somebody said to you, ‘don’t worry about how much you make this week, just spend whatever you want.’ That’s basically what happened.”

Angus said the spending included keeping 25 food services employees on the payroll last summer, even after Fresno EOC lost food services contracts for Head Start and schools and had no revenues to pay them. The agency also was providing three months’ severance to laid-off employees and spent $85,000 on employee gifts, T-shirts, and jackets in 2024, he said.

Spending Cuts Underway

The trimming thus far includes laying off 32 administrative staffers. They include chief operating officer Michelle Tutunjian, a longtime agency employee who briefly served as acting CEO after Reyes was put on leave, and the chief of staff.

Angus said that cuts made on “optional” spending in administration have totaled $780,455 thus far and included even the food served to commissioners and staffers at board meetings.

The Jan. 27 board meeting was the last one to feature a full menu. Commissioners and staffers could partake of two main dishes: Mediterranean chicken topped with artichoke, tomato, roasted garlic, and olives or grilled cauliflower steaks with chimichurri sauce and sauteed cherry tomatoes; side dishes of roasted potatoes, seasonal vegetables, green salad and dinner rolls; a dessert of cannoli. To-go boxes were provided as well.

At the Feb. 24 meeting there was no menu but instead the back counter held a tray of store-bought cookies and bottles of water.

Arambula told GV Wire on Tuesday that recent changes to rein in spending are steps in the right direction.

“I am still awaiting the results of the forensic audit. I do believe that, through the first quarter of this fiscal year, the organization is on sounder ground,” he said in an emailed statement.

Getting Back to Basics

Angus told the commissioners that the agency’s restructuring is continuing, including putting a renewed focus on growth, development, and sustainability.

“The fact of the matter is we are a grant-driven organization,” he said. “And because we’re a grant-driven organization we have to have a major grant department who is producing and putting out grants every month, and that’s how we sustain a $110 million organization.”

Fresno EOC also is an “entrepreneurial” organization that needs to show profits in its food services, transit, and recycling operations, Angus said. Food services and transits, which has had some of the biggest deficits, are now expected to break even or show a profit this year.

Angus showed the commissioners a video from nearly a decade ago touting how innovation had been woven into the agency’s DNA and led to meaningful and transformational change in the past.

“And that’s what we want to get back to,” he said.

The Fresno EOC, founded in 1965, was created during President Lyndon B. Johnson’s War on Poverty.

The goal of the Economic Opportunity Act of 1964 was to obtain equality of opportunity in education, employment, health, and living conditions for every American. The act created 900 Community Action Agencies, including Fresno EOC.