It's not the first time the Economic Opportunity Council of San Francisco, which runs child development programs and other efforts to fight the effects of poverty, has run into trouble. In 1998, the agency had to relinquish control of a publicly funded preschool program for low-income children after it was criticized by federal officials for not communicating with parents and enrolling too few children.

 

The latest problems, identified by San Francisco officials as well as the state Department of Community Services, include spending as much as $542,000 in state money on disallowed items. That includes the $8,300 Cache Creek Casino retreat, $2,300 spent on water, buying $700 worth of coffee and shelling out $460 for facial tissue.

 

The state concluded that the 40-year-old nonprofit has financial management problems, needs organizational reform and has no feasible plan to improve these issues.

 

Officials at the nonprofit did not return calls seeking comment Tuesday.

 

Inspector General Laura Chick warned Tuesday that the group, which is slated to receive $159,000 in stimulus funds to help low-income people weatherize their homes, may not be able to complete that work.

 

In a letter to state Superintendent Jack O'Connell, Chick noted that the nonprofit is set to receive $2.9 million from the Department of Education this year for the child development program. Chick said the new report raises concerns with that program.

 

"This issue now rests with the federal government to determine if the state is required to not only continue to fund this agency but also to give it recovery dollars," Chick said in a statement.

 

San Francisco officials also raised concerns about the nonprofit this year. In August, mayor's office director Dwayne Jones sent a letter to the executive director, Nathaniel Mason, and board chairwoman, Hazel King, informing them the city was undertaking a management audit and other oversight measures. The letter details a litany of problems, including losing a child on a field trip and leaving a child locked in a facility after staff members closed for the night. Additionally, as in 1998, the nonprofit has not enrolled enough children in its child development programs, putting funding for the group's other city programs at risk.

 

The Economic Opportunity Council has been ordered to provide monthly status reports to the state and by Dec. 1 create a plan detailing how it will address the changes and reforms needed.