What happened at SSNK? Director says unexplained “big hole” in finances prompted decision to close

By Mark Hansel
NKyTribune managing editor

Northern Kentucky officials are scrambling to fill the void created Monday when Senior Services of Northern Kentucky (SSNK) announced it will discontinue all services by the end of the week.

Officials are also looking for a better explanation as to why the organization gave no indication it was in trouble and some suggest a detailed audit might provide answers.

County judges-executive, city mayors and service providers were blindsided by the announcement during the meeting at the Boone County Public Library Main Branch in Burlington.

The Northern Kentucky Tribune was the only media outlet present at the meeting, which was noticed as confidential, and was permitted to attend.

Despite the short notice from SSNK, officials huddled with Lisa Cooper, director of the Northern Kentucky Area Development District (NKADD) after the meeting and came up with a plan to continue services in the short-term.

The NKADD will provide stopgap administration services for 10 senior centers in eight counties, the Meals on Wheels service and other programs operated by SSNK.

Campbell County Judge-executive Steve Pendery said the search will begin immediately to identify organizations that can fill the role SSNK had served.

“On the expense side, frequently there are contests out there to decide who the providers are,” Pendery said. “We know who the alternative providers are and we already know what their programs are, what their prices are, so this can all really happen smoothly, especially given the leadership of the (NKADD).”

Kenton County Judge Executive Kris Knochelmann added that the region is fortunate to have an Area Development District that is willing and able to step in to ensure services will continue.

Officials will work together in the coming months in an effort to continue most of the services provided by SSNK without interruption and develop a permanent transition plan by the first of the year.

What is not clear is how SSNK, which has provided services to the region’s seniors as a nonprofit organization since 1965, reached this point seemingly without warning.

The organization’s current financial status was not provided at the meeting, but clearly the disclosure of the most recent fiscal year report on June 30 was a tipping point.

Some service providers at Monday’s meeting said SSNK violated its contracts by failing to provide a 30-day-notice of plans to discontinue service.

Leonard Eppel of Financial Resource Associates, a consultant for SSNK who was hired to evaluate its finances one month ago, said SSNK simply could not keep going for another 30 days.

“The organization is running out of money,” he said.

Florence Mayor Diane Whalen said SSNK knew it was in trouble when it hired Eppel.

“If they knew to hire a firm to evaluate 30 days ago, a 30-day heads up would have been nice for the people in this room,” Whalen said.

The municipalities that provide funding for SSNK approved fiscal year budgets on July 1, with no indication from SSNK that it was in such dire financial straits.

Whalen spoke for many when she asked why the organization had not made a case for more funding during the budget period.

The explanation from SSNK Executive Director Jay Van Winkle raised more questions than it answered.

“The board found out, when they got the year-end statement on June 30, that the hole was much larger than it had ever been,” Van Winkle said. “Why that happened we’re unsure, but it was a bigger hole than they could possibly ever find the money to fill the gap. In all honesty, the board wanted to keep going for a period of transitioning, but our advice collectively was you can’t move forward incurring expenses that you can’t pay.”

SSNK’s financial record keeping is done internally and Thomas P. Rawe is listed as the organization’s finance director on its tax forms and its website.

The organization is audited annually, but a standard audit does not look for inaccuracies that might identify the “bigger hole” Van Winkle could not explain.

Whalen suggested a more intense audit that might more closely scrutinize how the funds have been distributed over the years could provide that answer.

“They don’t audit for fraud,” Whalen said. “Your statement in front of every audit says that.”

Whalen knows of what she speaks.

Former Florence finance director Ron Epling, now deceased, bilked the city out of roughly $4 million over a 15-year period beginning in 1988.

While there is no indication of any wrongdoing at SSNK, Whalen said it certainly wouldn’t hurt to take a closer look at the organization’s books.

According to its 2014 Internal Revenue Service 990 financial forms, SSNK received $564,760 in contributions in 2013 and $1,394,852 in government grants.

The organization had income $2,553,150 and expenses of $2,717,968, a deficit of $164,818. In 2013, SSNK reported a deficit of $32,153.

The organization’s current financial picture is unclear, but Eppel said the shortfall in funding is significant and is not something that can be easily overcome.

“It is the responsibility of the organization to operate within its means and it has not done so for some time,” Eppel said. “The problems are, whatever funding the organization has received over time it is inadequate to pay for the costs that have risen or continued for the services it has provided.”

Eppel said shedding some services and some additional funding, which he estimated at between $130,000 and $190,000 per month, could have delayed the decision to cease operations. It was unlikely, however, that a long-term solution under the current structure of SSNK was available.

Faced with that scenario, officials decided the best option was to allow SSNK to fold and focus on a transition plan.

Employees of SSNK were notified of the organization’s decision to cease operations prior to Monday’s meeting with stakeholders.

Asked if SSNK would file bankruptcy, Eppel said there were not enough assets remaining to justify such an action.

SSNK representatives met with vendors after the stakeholder meeting to inform them of its decision and explain their options. The Tribune did not attend that meeting and vendors declined to comment afterwards.

A notice posted on the SSSNK website Monday provided the following information:

Senior Services of Northern Kentucky no longer has the financial wherewithal to continue operations. Upon careful deliberation and explorations of options and with guidance from outside consultants and Council the Board of Directors of Senior Services of Northern Kentucky has voted to discontinue service including transportation, meals, ombudsman, and the operation of senior centers.
A heartfelt thank you to the many volunteers, donors, and caring staff who have supported senior independence and dignity through Senior Services.
If you have questions please direct them to our hotline 405.259.SSNK (7765) or email us at ssnkhelpline@gmail.com