Centers in Crisis

Shock. Disbelief. Disappointment. Frustration. Anger. Cynicism. Sadness.

All were in large supply among supporters of the Jewish Community Centers of Greater Los Angeles (JCCGLA) during a round of public meetings held this week to break the news of the JCC financial crisis. Parents and other JCC members expressed their dismay over the news that JCCGLA is planning to close five of seven JCCs by June 30, 2002, in order to pay off a $3 million loan.

On Dec. 3, about 100 JCC supporters gathered at the Silverlake-Los Feliz JCC, where executives from JCCGLA and longtime benefactor, The Jewish Federation of Greater Los Angeles, discussed the details and repercussions of JCCGLA’s current financial crisis, and their plans to ameliorate it. The Silverlake-Los Feliz JCC was just the first stop in a series of advisory meetings held over three days and consisting of a panel that included JCCGLA Executive Vice President Nina Lieberman Giladi, Federation President John Fishel and various JCC board members. In addition to this Bates Avenue location, in the heart of Los Feliz, advisory meetings were held at North Valley JCC and Valley Cities JCC on Dec. 4, and the Westside JCC and Bay Cities JCC on Dec. 5. All of these venues on this advisory tour face closure.

The major announcements made at the advisory meetings were:

• Existing JCC Early Childhood Education and After School Care serving some 900 children will remain in effect at all centers offering such programs through June 30, 2002.
• After June 30, the Westside JCC, Silverlake-Los Feliz JCC, Bay Cities JCC, Valley Cities JCC and North Valley JCC are scheduled to close.
• All programming outside of children’s services will be terminated as of Dec. 31, 2001.
• The Federation, in an arrangement with JCCGLA brass, will help the network of local community centers secure a loan from a lending institution to pay off the $3 million debt by putting the above five JCC properties up as collateral. These moneys are in addition to the Federation’s normal annual allocation of $3.2 million.
• The Federation will allocate an emergency sum of $901,000 to enable the JCCs to continue its children’s services at Centers through the end of June.
• Only four JCCGLA entities will stay in business: West Valley JCC, Conejo Valley JCC, the Shalom Institute and the Zimmer Children’s Museum.

The closure of the five JCCs follows this summer’s termination of after-school care programs at Bay Cities JCC and Silverlake-Los Feliz JCC, and the JCCs relinquishing of the reins of Venice boardwalk’s Israel Levin Senior Adult Center and its SOVA program to Federation agency Jewish Family Service.

The announcements come as a big blow to Los Angeles’ Jewish community at a time when morale is already low due to a hurting economy and the recent spate of gruesome terrorism that has hit both America and Israel. The situation is dire for the centers, which operate on a $14 million budget and now faces a $3 million deficit.

Giladi confirmed that 50 people within the JCCGLA system, including center directors, teachers, athletics personnel, and other staff have received their pink slips.

"The very good news is that we’ve been moving closely with The Jewish Federation in order to address problems — our priority is how to meet the needs of the children," said Giladi, referring to the Federation’s $901,000 relief package. "We had to work fast and furious to have The Federation help us and not compromise the child care."

However, members in attendance at the Silverlake-Los Feliz center, many of them young parents with babies, were not heartened to learn that the majority of JCCGLA’s centers and programs would be shut down.

What started out as a very controlled situation, featuring a representative asking the panel prearranged questions on behalf of Silverlake parents, quickly devolved into heated debate between members and panelists. Members expressed frustration and anger over the lack of communication and the failure of both JCCGLA and The Federation to involve JCC constituents until the eleventh hour.

Silverlake parents wanted to know how the JCCGLA’s finances could have gone so sour so quickly. According to a JCC source, the JCC uses The Federation’s own auditor, PriceWaterhouseCoopers, at The Federation’s insistence.

David Djivre, a member of the JCC board for 27 years, defended the actions and intentions of JCCGLA and Federation administrators from the podium: "I have the history that no one in this room has. I did not personally know of the deficit. This deficit was accrued over a long, long period of time."

"I give [JCCGLA administrators] a lot of credit for saying, Look, we recognize there’s a problem," Fishel added. "We’re all trying to find a solution together."

"We have a bankruptcy lawyer" to sort out the JCC’s finances, added Randy Myer, JCCGLA’s board vice president.

At present, there is no ongoing official investigation into JCCGLA’s fiscal history, but Giladi promised the members that "we’re going to need to look back" and determine factors "after we get through this crisis in the next couple of weeks." She added that children’s care programming would absolutely continue through the end of June and that weekly meetings would be held with Silverlake-Los Feliz Center Director Ruthie Shavit, who replaced Pamela Boro a few weeks ago.

Fishel assured members that all facilities would absolutely remain open until the end of June, and urged parents to devise their own "creative solutions." "I would encourage this group over the next seven months to sit down and look at its options. Don’t wait until June before engaging us in this discussion. There’s obviously a lot of brain power in this room. If there is the will on the part of the people tonight to look how to organize as a grass-roots body and take control of the facility, why not? You have nothing to lose!"

"The fact that we’re out here to communicate with all of you is a sign that we want to keep the dialogue going," Fishel continued. "Let’s keep the lines open. Let’s see where this goes."

Reacting to the news, JCC parents and supporters have already undertaken efforts to deal with the crisis.

Former Federation Planning and Allocations research coordinator Pini Herman, now a principal of Phillips and Herman Demographic Research, started a Web site (www.savethejcc.org) on Dec. 1 to inform, galvanize and consolidate efforts. At press time, an ad-hoc meeting for concerned JCC members was scheduled for Dec. 5 at the Westside JCC as a result of the flood of e-mails Herman’s site received.

"There have been discussions for people to help. Maybe they’ll be some incredible angels to come along," said Giladi, in an effort to assuage upset Silverlake parents.

Giladi and Fishel explained that the situation is grave, and that JCCGLA needed The Federation to step in to secure a loan against the agency’s security assets. Those assets, the centers themselves, will likely be sold off in order to raise the money to pay off JCCGLA’s debt.

Emotions ran high among members, many of whom felt as if they had been left in the dark by JCCGLA administration and shut out of the troubleshooting process.

"By mortgaging our building, you mortgage on our entire future. We could’ve become involved in this a long time ago," said a mother, drawing enthusiastic applause from the audience.

"They wait until the last minute to discuss this with us," said another parent.

"We’re sorry you if you feel that you were excluded from the process," Giladi said. The audience volleyed back a chorus of "We were!"

The advisory meetings were the latest round in what appears to be an ongoing communication gulf between JCCGLA’s central board and its constituents. Last year, JCC members clashed with executives over the Westside JCC’s administration, poor facilities and slow-moving building renovation process. This past summer, parents from Silverlake-Los Feliz JCC and Bay Cities JCC tried but failed to revive after-school care at their respective centers after being surprised with notice that the program would be terminated come September.

At the Silverlake-Los Feliz meeting, Giladi mentioned that JCCGLA’s woes were the product of years of "mismanagement" that preceded her term as the organization’s executive vice president. However, Fishel downplayed this aspect.

"It’s not mismanagement when a group of people with good Jewish values are trying to assure the viability of services in a rapidly changing community," Fishel said, adding that The Federation has an "obligation" to try and rescue the JCC system, "but I’m a very pragmatic person and I realize that the JCC’s have spent the last 10 years trying to play catch-up."

A parent asked whether The Federation could waive JCCGLA’s $3 million debt.

"I wish I could," said Fishel, who went on to explain that The Federation "can not dip into the limited corpus" of moneys reserved to fund agencies and social services, such as Jewish Family Service and Jewish Vocational Service, for the 2002 calendar year. Adding to The Federation’s woes are a number of other factors — its ongoing goal to raise another $5 million to complete this year’s campaign goal, recent lay-offs and tightening of resources in the aftermath of a post-Sept. 11 slowing economy (see sidebar).

Giladi and Fishel were reluctant to detail the causes of JCCGLA’s crisis, which, by their account unraveled in mid-October when officials discovered that JCCGLA was operating in the red on a $1.8 million deficit. That number has since swelled to $3 million.

"This is a very sad situation," Fishel said. "I don’t have any answer."

This comment did not satisfy members, who wanted to know what led to the financial fiasco and why they weren’t notified of it when it was developing.

"It’s very complicated," Fishel told the audience.

"It’s not complicated," shouted out an audience member. "Just tell us."

Giladi insisted that the situation came as a complete surprise, to which parents began shouting out, "Why?"

Giladi alluded to problems created by "the chief financial officer of 22 years." Insiders told The Journal that Gayle Floyd, JCCGLA’s former CFO, was fired last month in the wake of the financial revelations. Both Federation spokesman Craig Prizant and JCCGLA crisis consultant David Novak said officials could not openly discuss Floyd because of legal issues surrounding her departure.

"We were surprised that only in October we found the position it’s in," said Giladi.

With the help of their post-Floyd hire, crisis management consultant Roni Fischer, Giladi said that "we will now get our books in order where they know dollar for dollar what’s happening. Our agency knows very well what money is coming in and what our expenses will be."

It was Fischer who determined a $180,000 shortfall for the month of November.

"It is probably true that a long time ago the JCC board should have recognized that the decrease in allocations each year could no longer support the services," Fishel said, citing "the last year and a half" as particularly problematic for the agency. In nonprofit organizations such as the JCC and The Federation, lay board members are charged with ultimate responsibility for fiduciary oversight.

Some JCC members present at Silverlake-Los Feliz and other meetings charged that the latest developments are part of a larger, long-in-the-works agenda to use moneys reaped from the sale of the centers to apply toward other means, such as a proposed $40 million Brentwood facility.

Silverlake-Los Feliz parents pointed out that about a year and a half ago, the JCCGLA’s central board began stripping away at the participatory powers of individual centers.

At the Westside JCC advisory meeting, Fishel responded to this suspicion: "No properties have been purchased in Brentwood or anywhere else, for that matter."Both Fishel and Federation Chairman Todd Morgan have stated that plans for the Brentwood facility were shelved several months ago because of the sluggish economy.

The Silverlake-Los Feliz members, which included lawyers and business people, had no shortage of troubleshooting ideas. One audience member suggested turning to The Federation’s philanthropic arm, Jewish Community Foundation of Greater Los Angeles, for financial assistance. Fishel explained, "It isn’t their money. They just hold it and invest it."

Supporters at Silverlake-Los Feliz and Westside also came armed with Internal Revenue Service documents detailing the six-figure salaries of top JCC officials. Giladi said she offered to take a salary cut as part of the restructuring.

But it is unclear that the restructuring will leave Giladi with any position at all. "You have to give that woman a lot of credit," one insider said. "She’s basically stepping up to the plate, dealing with these long-term problems, and she’s probably restructuring herself out of a job."

Holding his baby in his arms, John Carogozian blasted the Silverlake-Los Feliz panel for closing down the centers. He accused administrators of throwing out the baby of Jewish continuity with the bath water: "For many secular Jews, this is the only opportunity they have to be exposed to Jewish life. We may not see it in one year, or five years, but 10 or 15 years from now, that’s when you’ll all see the mistake of what I’ve been hearing all evening."

Towards the end of the Silverlake-Los Feliz meeting, Layne Murphy, former Silverlake-Los Feliz board’s vice president of membership, urged the panel "to be open with numbers of our community during this critical crisis or else it will engender an enormous amount of hostility if the community is not involved."

The tension, dismay and outrage among JCC membership that pervaded the Silverlake-Los Feliz JCC was evident at every facility on the panel’s advisory tour, including the packed house at the Westside JCC’s advisory meeting on Wednesday morning, where center-users lined up with questions to pitch at Giladi, Fishel, and JCCGLA board members Michael Kaminsky and incoming JCC/GLA President Marty Jannol. Addressing the question regarding the status of donations that were earmarked for Westside JCC’s building campaign, Giladi replied that JCCGLA would examine the direction of the $4 million in pledges and $1 million in capital, amassed over a two-and-a-half year period toward the renovation of the now impermanent center, once the current crisis was sorted out. According to Westside JCC members present, there was absolutely no reference to the status of the building campaign or related donations in the JCCGLA cover letter informing parents of the current crisis.

Fishel added that attorneys were currently looking into whether or not the Westside Jewish Center Apartments, a complex for seniors, would be part of the property used as JCCGLA collateral.

Giladi and Fishel invited Westside members to raise money toward preserving their center, which many members interpreted as a hollow gesture.

"We need a commitment that you’re not going to sell this building as collateral," Westside parent Amy Raff replied.

"You can’t go and sell our building underneath us," another Westside JCC mother cried.

"This is a horrible, painful experience," Giladi said. "It’s taking a terrific toll on all of us. It is incumbent upon all of us to make sure the JCC is a fiscally viable agency. It’s our responsibility to the community."