It's probation for the YMCA | Modesto Bee

The YMCA of Stanislaus County is on probation for failing to meet national standards, an official with YMCA of the USA confirmed Monday.

The unit fell out of good standing for failing to submit annual audits as required, Phil McGovern, chief executive officer of the YMCA of Stanislaus County, acknowledged in an e-mail.

Last week, McGovern and the YMCA's board members revealed plans to sell the McHenry Avenue building in Modesto in hopes of erasing $2.5 million in debt. They also hope to replenish some $366,000 taken from endowment fund capital in violation of national standards.

The Stanislaus group is one of 60 out of 960 YMCA units nationally, or 6.2 percent, to be placed on probation for failing to pay dues, certify the executive director or submit reports, Fred Hauser, YMCA of the USA's director of certification and membership standards, said Monday from Chicago.

YMCA leaders in November confirmed that they had not produced an audited financial statement -- required by the national organization and a basic element on most grant applications -- in two years. A third was due earlier this year.

"We have more pressing priorities for our financial resources," McGovern said in Monday's e-mail.

He confirmed that the YMCA receives no grants other than one from the United Way of Stanislaus, which used to demand audited financial statements.

The United Way's chief marketing officer, Steve Smith, oversaw a relaxing of United Way standards for paying its partner agencies, including the YMCA, where he worked as chief executive officer until November. Smith was paid $98,903 in salary and benefits for the year preceding April 2007, according to YMCA tax forms made public this year.

Karen Servas, whom Smith replaced at the YMCA's helm in 2002, posted a comment on modbee.com critical of United Way CEO Tom Ciccarelli and YMCA leaders of the past few years.

"I am just sickened," she wrote, accusing board members of "lack of action and evasive techniques (that) have broken (the) trust that so many generations of Y 'triangle-heads' were able to build. Who wants to donate to an organization that hasn't had an audit since '04?"

'Erases 50 years of progress'

Asked to elaborate Monday, Servas said she never imagined when leaving six years ago that the YMCA would be forced to sell its gym, two swimming pools, offices and workout rooms. "This erases 50 years of progress," she said.

"It's OK to say you made a mistake, or even, 'We made a mistake and didn't know it, and here's where we are (financially).' Nobody knows how to help them because we don't know where they are," Servas continued. "I think people would help if they thought they could trust them. That's what upset me, and that's why I wrote what I wrote."

Cicarelli did not post comments on the matter on modbee.com, as previously reported.

National regulations require annual audits for units with gross revenue of at least $1 million. The YMCA of Stanislaus County reported receiving $1.86 million in the year preceding April.

"Risk factors" listed in the YMCA of the USA's Policies and Procedures Manual include membership decline, lack of financial statements and borrowing from endowment fund principal, all of which have plagued the local unit, leaders acknowledged last year. The national organization compares risk factors to medical "conditions and behaviors that could lead to a person being at risk for heart disease."

McGovern wrote last week in an e-mail that endowment principal, bequeathed by deceased community leaders, would be replenished when the McHenry Avenue building is sold. Under Smith, leaders had drained all but $42,000 of $408,000 in supposedly untouchable endowment fund principal.

McGovern wrote that the YMCA will continue to operate Camp Jack Hazard, child care and after-school programs, family programs and fun nights, Adventure Guides, sports and playground camps, soccer, tee ball and Junior Giants programs, all of which are operated away from the 44-year-old McHenry Avenue headquarters.

Selling the 64,000-square-foot building "will take the YMCA of Stanislaus County back to its roots," McGovern wrote in a press release.

A review of the YMCA's latest tax form shows spending decreases from the year before in three of the group's four core services, including a 32 percent drop in teen programs. But total expenses rose 8 percent.

Also, the group's fund balance, or difference between assets and liabilities, ran into the red last year for the first time in at least a decade, plunging from a record $1.15 million in 2000 to $15,519 on the negative side as of April 1, 2007.

Hauser, of the national organization, said: "As you consider your balance sheet, sometimes you have to liquidate assets to make the organization whole. That appears to be happening (in Stanislaus County)."

That's not unheard of among the 960 YMCA units, Hauser said, though decertification -- forcing a unit to close -- has happened just twice in 15 years. Regulations that went into effect Jan. 1 require the national committee on membership standards to recommend termination if a unit remains on probation three years, he said.

Bee staff writer Garth Stapley can be reached at gstapley@modbee.com or 578-2390.