Fresno Economic Opportunities Commission board members made it clear at Monday’s board meeting that they are tightening their focus on the agency’s finances, which are still struggling to recover after years of unchecked deficit spending.

Board members made a point of asking why their agenda packet did not include the written report presented by the principal of the agency’s charter school, SOUL (School of Unlimited Learning), including the school’s first-ever proposed teacher salary range, and why the annual audit report was relegated to the consent agenda instead of the discussion agenda.

Commission Chair Oliver Baines agreed and told SOUL Principal Efrem Varnado, “Culturally, we just need to do things a little different.”

Assemblymember Joaquin Arambula said the entire commission needs to remain involved in overseeing the agency’s finances, not just members of the audit committee.

“So I’m wanting to make sure, as our board chair has talked about a need for a culture change, that we’re evaluating the expenses to make sure that they’re more in line with our revenues,” he said.

Related Story: New Fresno EOC Chief: ‘We Have to Eliminate Bleeding Programs’

Huge Deficit Developed

The agency’s troubled finances first became publicly apparent late last year when Arambula replaced his mother, Amy, on the commission and then wrote a letter telling his fellow commissioners that the agency had depleted its reserves funds, later reported as $8 million, and was “hemorrhaging” money. The board put then-CEO Emilia Reyes on administrative leave in November and voted in December not to renew her contract.

Fresno EOC is one of the nation’s oldest community action agencies and was created by President Lyndon Johnson’s War on Poverty. It manages a number of social services and programs including Head Start, the Local Conservation Corps, and Women Infants and Children (WIC).

The 2024 audit conducted by Hudson and Company Inc. and discussed at Monday’s meeting examined specific programs as well as the agency’s overall budget and found no examples of deficiency or noncompliance. The audit reported that expenses exceeded revenues and support by nearly $4.1 million in 2024.

A new detail concerning the agency’s troubled finances surfaced during the audit report. Fresno EOC transferred $3 million from its employee health insurance reserve to provide additional income in 2024.

But with the loss of reserves, this year agency officials made the rounds at Fresno banks seeking a $5 million bailout loan. Only one bank out of eight agreed to the loan —Self-Help Federal Credit Union, which interim deputy CEO Salam Nalia and other Fresno EOC officials had supported in the bank’s start-up years ago. Former interim CEO Brian Angus told commissioners the loan was necessary to keep the agency’s doors open.

Related Story: Fresno EOC Spending Depleted $8 Million Reserve. Agency Needed $5 Million Loan ...

Forensic Audit Still Underway

Arambula previously called for a forensic audit of 2024 separate from the audit conducted by Hudson Company. The agency hired Wipfli LLC in February.

Nalia told GV Wire after the meeting that he expects a draft of the forensic audit completed by November.

Nalia’s role assisting new CEO Steven R. Lewis will continue for another two years, Lewis said during his CEO remarks.

That will give the agency time to recruit and hire a new chief financial officer and a chief operating officer, he said.

In the meantime, the agency is employing Charter Impact, a nonprofit that provides financial services to nonprofits. Charter Impact reported that the agency’s deficit through the end of July totaled about $650,000. Much of that is due to overspending in Food Services, where the deficit through the end of July totaled $550,566.

“2025 is expected to be the third straight year of deficits for Food Services. Its deficit represents a significant majority of the overall Agency projected deficit for the year. Efforts are underway to determine long term viability of the program,” the Charter Impact report said.