The Braille Monitor                                                                                               March, 2002

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Trouble in the West Virginia Business Enterprise Program

From the Editor: The following article first appeared in the Friday, January 4, 2002, edition of the Charleston Gazette. West Virginia is one of the last states to conduct its Randolph-Sheppard Program through a nominee agency. The Society for the Blind, according to NFB of West Virginia President Ed McDonald, is a creature of the state agency, and its sole responsibility is to manage the vending program. Here is the story of mismanagement and paternalism gone astray:

                                                   

Rehab Pays Back Taxes, Penalties

by Fanny Seiler

A state agency has paid $525,000 in back state and federal taxes because it was fiscally responsible for a non-profit group that manages the financial affairs of blind vendors operating concession stands in public buildings.

State officials say the money paid by the Division of Vocational Rehabilitation included interest and penalties on unpaid state sales taxes and Social Security matching taxes owed by the Society for the Blind over the last three to four years.

Two people, former Society for the Blind director David Naylor and Mary Hill, were fired in November, according to assistant division director Penney Hall. The two had been working for about the last year in the division's accounting section. Naylor had been the director for about five years.

Hall said the taxes weren't paid "because the Society didn't have the funds." Naylor didn't let the division know that the Society's problems were that bad, she said.

The thirty-three blind vendors around the state collect the sales taxes at their concession stands. They turn all the money they take in on sales, including taxes, to the Society, which pays them a salary in turn. The division didn't know the taxes hadn't been paid, Hall said, until the Internal Revenue Service sent a notice in early 2001 that it intended to levy certain assets. At the time the Society owed the U.S. Treasury $154,325.93.

That amount was paid last March, along with $268,954 in sales taxes to the state Tax Division. Hall said the overall total paid was $525,000. Having to take the money out of this year's budget and having to come up with money to give its employees a pay raise next fiscal year has left the division facing a financial crisis, Hall said.

She said the division would ask the Legislature for a $269,000 supplemental appropriation for the remainder of this fiscal year, which ends June 30. The division will also ask for a $382,000 increase for next fiscal year to give pay raises, she said.

Ted Shanklin, director of the Legislature's Post-Audit Division, said his agency has been trying to reconstruct financial records for the Society for more than six months. Shanklin is assisting the Legislature's Commission on Special Investigations.

In the meantime the Society's board commissioned the accounting firm of Suttle & Stalnaker to do a fiscal management review. The firm issued a large report that identified quite a few deficiencies on internal control, one state official said.

Hall said the report couldn't be made public, but the division has been looking at ways to change the Society's program. "The current way the program is set up is not working very efficiently," she said.

The Society was set up under the federal Randolph-Sheppard Act, which intended for the blind vendors to run their own concessions as a small business after they received training, Hall said. Instead, the blind vendors have become employees of the Society after they are trained.

Hall said a training site at the division's Rehabilitation Center in Institute is going to be closed temporarily because it is losing several thousand dollars yearly. She said another training site exists at the Kanawha County Courthouse.

The division is also looking at how the blind vendors receive the goods they sell, and whether an existing warehouse through which the items are received is better than having the items purchased directly from suppliers. Hall said the division is also exploring whether blind vendors should run their own business in the future, with existing vendors given the option to own their own business or remain on salary.

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