Hermandad Regains Lost State Funding

Hermandad Mexicana Nacional, the embattled Latino rights group, has won back most of $2.1 million in state education funding it had lost in February. But its financial records are being examined by the IRS, and the long-term financial outlook for the nonprofit is still up in the air.

After a march on the state Capitol two weeks ago, including four busloads of elderly legal immigrants who had benefited from the group’s citizenship classes, Hermandad officials were notified Tuesday night that they will receive $1.8 million of the desperately needed funds.

“I walked until my feet felt like turtles,” Stella Cantu said of the march. Cantu, who oversees Hermandad’s classes to prepare immigrants for citizenship tests, said: “We just thank God that our prayers have been answered.”

State education officials said they were unaware of the march. They said the funds had been restored because Hermandad finally completed a long overdue audit last month, and several other conditions required by a state auditor had been met. The audit results were unavailable Thursday. But Gabriel Cortina, deputy superintendent of the state Department of Education, said the organization would be “closely monitored” to make sure it continued to meet state conditions.

Hermandad leaders could not be reached for comment.

Hermandad reported a $220,000 deficit last year and owes approximately $100,000 in back wages to employees. A payment of about $150,000 is due in July to a state health agency that helped provide financing for an outpatient health clinic. The clinic opened May 5 in south Los Angeles.

Cortina said part of Hermandad’s fiscal woes could have stemmed from the state not having paid it for hundreds of classes it taught.

“Hermandad continued to serve students and provide services after we told them we would not give them any money,” Cortina said. “Unfortunately for Hermandad, and unfortunately for their constituencies, this dragged on for three-fourths of a year. I would assume they met financial difficulties because we did not pay them.”

But Cortina said the state had no choice but to withhold the funding because Hermandad had not filed federally required audits for two years. The state’s on-site review last December of Hermandad’s classes and bookkeeping found numerous problems. The state auditor said that in addition to workers not being paid for months, Hermandad owed hundreds of thousands of dollars in federal taxes and state unemployment benefits and that it was liable for huge loan repayments.

IRS auditors have been examining the nonprofit group’s records for more than a week, a Hermandad employee said. IRS officials could not be reached for comment. They have said they could neither confirm nor deny that they were investigating any organization, including Hermandad.

State education officials in December ordered Hermandad to make several changes. In addition to completing long overdue audits for 1994 and 1995, Hermandad was required to consolidate books that were kept separately in Santa Ana, North Hollywood and Los Angeles, to present a detailed plan of how it planned to resolve debt, to ensure continuous monitoring of classes, to take proper attendance at the classes and to provide a hard copy of its books, rather than computer records.

County, state and federal investigators are trying to determine whether Hermandad illegally helped register noncitizens as voters in its Santa Ana classes last year, some of whom cast ballots in last November’s election. State education officials have consistently maintained that the withholding of funds had nothing to do with the investigations.

Cortina said Hermandad officials signed an affidavit April 28 agreeing to the state auditor’s conditions and promising to maintain its tax-exempt status.

“If an organization loses its tax-exempt status, our contract with them stops immediately,” Cortina said.

Hermandad lost its state tax exemption last November, but the Legal Center, which receives the lion’s share of grants and other funds for the nonprofit, filed necessary paperwork after being warned it was at risk.

Whatever the future holds, Hermandad staffers in the Los Angeles and North Hollywood offices who have not received full pay for months were prepared to be overjoyed once the state education money finally reaches them.

“I see a large steak on a plate in front of me,” one employee said.