Kidd Led City Year To Money Shortage

The organization the controversial Assistant Dean of Public Service Judith H. Kidd fiscally managed before coming to Harvard had significant cash flow problems, according to a published newspaper account.

City Year, a model national service program, has acknowledged it did not pay its bills in the first part of fiscal year 1996, shortly after Kidd left her post as the Acting Co-Chief Operating Officer (COO).

According to Kidd's resume, the Acting COO "is responsible for all operations of City Year, Inc. including finance and administration, fundraising, federal grants, strategic planning, and the Board of Directors."

Kidd assumed the position in 1994, after serving for two years as the Vice President for Development.

City Year is a non-profit organization that seeks to bring people aged 17 to 23 together from different ethnic and economic backgrounds to perform community service.

City Year and Kidd say that the U.S. government program responsi -ble for partially funding City Year did not pay on time, forcing City Year to be delinquent.

They say that the Corporation for National Service released the funds for the AmeriCorps programs six months behind schedule in January 1996.

They say it was this unanticipated delay, which affected half of City Year's $15 million operating budget, that rendered City Year unable to pay its vendors in full for that half year.

Kidd contends that as a growing non-profit in its seventh year, City Year was simply unable to maintain a cash reserve.

"A healthy organization should not be in the position where it doesn't have reserve credit to fall back on," said Kidd. "But City Year is a young, immature organization."

But business school professors said that growing businesses needed to anticipate these costs and plan for them.

"It would be imprudent for anyone running a small business not to consider the idea of running out of cash," said Amarnath V. Bhide, an associate professor of business administration.

The questions that have surfaced about Kidd at City Year concern PBHA leaders, although they seem confident that a summer agreement limits her powers.

The recent summer compromise between the College and PBHA created a new position of PBHA Executive Agent, reporting to the newly-created PBHA board on programmatic issues and to Kidd on issues of financial and administrative oversight.

"PBHA as a non-profit corporation has fiscal controls that depend only on its internal governance and accounting staff," said PBHA treasurer Roy E. Bahat '98. "Judith Kidd is not the first and final word on PBHA's fund management."

The recent controversy, reported by the Boston Globe on August 18, is only one of many surrounding Kidd since her appointment as Assistant Dean For Public Service by Dean of the College Harry R. Lewis '68.

Kidd was one of four finalists for the position, and was chosen over the strong objections of all the students on the search committee, who preferred incumbent PBH executive director Greg Johnson '72.

The students' major objection was that her background was almost exclusively in banking and fundraising.

The allegations surrounding City Year surfaced in a page one Boston Globe story that said City Year "is beset by fiscal mismanagement."

Many City Year managers and volunteers objected vigorously to the Globe's portrayal of the program, saying the government funding restrictions were unclear and that a professional financial officer was hired in 1995.

According to the Globe, City Year rushed to expand and in the process did not follow through on the mundane work of logging time sheets and keeping financially sound records in the early 1990s.

The Globe cited two financial problems with City Year in addition to its fiscal year 1996 money shortage problem.

First, City Year's inability to document $2 million in federal funds was identified in a 1993 Corporation for National Services audit of City Year.

Second, in violation of federal regulations, City Year used money that was ear-marked for post-service awards for its graduates and used it for running City Year's own national service program.

The government disputed $602,895 in spending and ultimately forgave part of the amount. But City Year was forced to repay $250,000.

These problems originated mainly from a Bush-era organization grant given before Kidd's tenure.

The Globe article implied that City Year may have grown too fast, without implementing adequate financial controls.

During Kidd's tenure as Vice President for Development from 1992 to 1994, the operating budget doubled from $7 million to $15 million.

City Year ran into its money shortage right after Kidd left her position as acting COO.

President of City Year Michael H. Brown '83-'84 said that Kidd did not want the added responsibility of the position.

"She agreed to step up to take more responsibility, but permanently it was not something she wanted to do," said Brown.

In July 1995, Kidd officially divorced herself from administrative duties at which time administration over finances returned to the jurisdiction of President and founder Michael Brown and Broughton.

Andrew S. Chang contributed to the reporting of this story.

They say that the Corporation for National Service released the funds for the AmeriCorps programs six months behind schedule in January 1996.

They say it was this unanticipated delay, which affected half of City Year's $15 million operating budget, that rendered City Year unable to pay its vendors in full for that half year.

Kidd contends that as a growing non-profit in its seventh year, City Year was simply unable to maintain a cash reserve.

"A healthy organization should not be in the position where it doesn't have reserve credit to fall back on," said Kidd. "But City Year is a young, immature organization."

But business school professors said that growing businesses needed to anticipate these costs and plan for them.

"It would be imprudent for anyone running a small business not to consider the idea of running out of cash," said Amarnath V. Bhide, an associate professor of business administration.

The questions that have surfaced about Kidd at City Year concern PBHA leaders, although they seem confident that a summer agreement limits her powers.

The recent summer compromise between the College and PBHA created a new position of PBHA Executive Agent, reporting to the newly-created PBHA board on programmatic issues and to Kidd on issues of financial and administrative oversight.

"PBHA as a non-profit corporation has fiscal controls that depend only on its internal governance and accounting staff," said PBHA treasurer Roy E. Bahat '98. "Judith Kidd is not the first and final word on PBHA's fund management."

The recent controversy, reported by the Boston Globe on August 18, is only one of many surrounding Kidd since her appointment as Assistant Dean For Public Service by Dean of the College Harry R. Lewis '68.

Kidd was one of four finalists for the position, and was chosen over the strong objections of all the students on the search committee, who preferred incumbent PBH executive director Greg Johnson '72.

The students' major objection was that her background was almost exclusively in banking and fundraising.

The allegations surrounding City Year surfaced in a page one Boston Globe story that said City Year "is beset by fiscal mismanagement."

Many City Year managers and volunteers objected vigorously to the Globe's portrayal of the program, saying the government funding restrictions were unclear and that a professional financial officer was hired in 1995.

According to the Globe, City Year rushed to expand and in the process did not follow through on the mundane work of logging time sheets and keeping financially sound records in the early 1990s.

The Globe cited two financial problems with City Year in addition to its fiscal year 1996 money shortage problem.

First, City Year's inability to document $2 million in federal funds was identified in a 1993 Corporation for National Services audit of City Year.

Second, in violation of federal regulations, City Year used money that was ear-marked for post-service awards for its graduates and used it for running City Year's own national service program.

The government disputed $602,895 in spending and ultimately forgave part of the amount. But City Year was forced to repay $250,000.

These problems originated mainly from a Bush-era organization grant given before Kidd's tenure.

The Globe article implied that City Year may have grown too fast, without implementing adequate financial controls.

During Kidd's tenure as Vice President for Development from 1992 to 1994, the operating budget doubled from $7 million to $15 million.

City Year ran into its money shortage right after Kidd left her position as acting COO.

President of City Year Michael H. Brown '83-'84 said that Kidd did not want the added responsibility of the position.

"She agreed to step up to take more responsibility, but permanently it was not something she wanted to do," said Brown.

In July 1995, Kidd officially divorced herself from administrative duties at which time administration over finances returned to the jurisdiction of President and founder Michael Brown and Broughton.

Andrew S. Chang contributed to the reporting of this story.