Questions raised for years about Community Action's spending

Prominent DFL politicians are rushing to sever ties with a well-known Minneapolis nonprofit after a state audit found it misspent hundreds of thousands of dollars in public money.

But it's not the first time red flags have been raised about financial irregularities at Community Action of Minneapolis.

In 1997, Barb Goodwin first saw the budget for Community Action and was taken aback by some of its expenses.

"Spas and massages, and a very high salary for the time," recalled Goodwin, a state senator who worked then as legislative affairs director for the Minnesota Association of Public Employees. "We took that budget and showed it to the directors of the energy assistance program. We showed it to legislators. And nobody did anything about it."

In 2012, the Office of the Legislative Auditor found the organization had given more than $1.3 million in federal home energy assistance to households that weren't eligible for it. Community Action was fined $100,000.

Last month, a state Department of Human Services audit found the organization had overcharged state and federal grant programs for more than $600,000 of administrative costs. It found $226,679 in "unallowable" expenses for travel, food, alcohol, spas, golf and pay bonuses for its employees and executives.

Goodwin noted that audit looked at just two recent grants, "but if somebody took the time to go back further, they'd see millions of dollars that were misspent." That's money that "comes out of the pocket of low-income people. That comes out of job training. That comes out of energy assistance. And yet they could frivolously spend this money," she added. "I have a real hard time with that."

Goodwin blames the alleged excesses on the organization's long-serving leader, president and chief executive Bill Davis.

He's led the group since its inception in the early 1990s. Davis is a well-known leader in the Minneapolis African-American community and once served as president of the local NAACP.

The latest audit found the organization covered questionable expenses for Davis, including airfare to the Bahamas and a $36,000 personal car loan, which was approved by the organization's board. The most recent tax filings available online show he earned more than $250,000 in total compensation from Community Action in 2011.

Davis didn't return phone calls seeking comment.

The state is weighing its legal options for dealing with the organization, which receives millions of dollars in state and federal grants, said Minnesota Human Services Commissioner Lucinda Jesson.

"I think this internal audit did a good job of describing what the problems were," she said. "We'll now take serious action to address them."

The fallout from the audit continues.

Goodwin has called for criminal charges against Davis. This week, U.S. Rep. Keith Ellison and state Sen. Jeff Hayden, both Democrats, resigned from the organization's board.

State Sen. David Hann said his Republican caucus wants an investigation into whether Hayden used his office for personal gain.

"We believe there's a justifiable issue here that the ethics committee needs to deal with," Hann said.

In a statement today, Hayden acknowledged he attended a retreat flagged in the audit but said he paid his own way. His wife, who serves on the board in his stead, had her expenses covered, though.

The politicians on the board — all DFLers — say they had little direct involvement with Community Action of Minneapolis. They each appointed surrogates who actually attended the meetings and cast the votes.

Minneapolis City Council President Barbara Johnson, who had three different designees represent her on the board over the last eight years, said she questions whether it makes sense to have politicians serving as honorary board members.

"That's a responsibility that is really hard to fulfill when you have the time constraints that are involved with a job like representing 30,000 people," Johnson added.

Johnson no longer has a representative on the board, but she urged current members to force Davis to resign as CEO. The board holds an emergency meeting tonight.

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