Photo by: Charu Sudan Kasturi

(From L to R) Celeste Garcia, Arelis Melo, Maria Contreras and Juana Hidalgo, workers at La Familia Unida day care center, in their staff room in Washington Heights.

Workers at a Washington Heights day care center serving more than 100 children are threatening to strike and are preparing to sue one of northern Manhattan’s largest non-profit organizations for not paying their salaries on time.

The 19 workers of La Familia Unida, a city-funded day care center run by the 24-year-old Alianza Dominicana, have not been paid regularly since April 2010, but instead have received back wages in dribbles.

Documents show that while the workers received some back wages on Sept. 15, they still haven’t been paid for the last three pay periods – equivalent to a month and a half.

“I’ve had enough,” says Juana Hidalgo, one of the workers, who says that when Alianza earlier this year fell five pay periods behind, she had to take an $8,000 loan to pay her bills. “We’ve tried our best to stay because we also have a responsibility to the kids. But I need to pay my bills.” Hidalgo takes home just over $1,000 after taxes per pay period.

The current crisis threatens to directly hurt dozens of low income families who depend on the organization’s child care services, and raises larger questions about the city’s role in monitoring agencies that receive funding from the Administration of Children’s Services.

Promises, but no pay

In a statement in response to queries, the Alianza’s acting Executive Director Maria Hernandez confirmed that the organization was struggling to pay workers on time, acknowledging “that the agency has faced challenges over the past year.”

Hernandez has also sent emails to all workers, thanking them. “You have tolerated Alianza’s financial challenges with tremendous strain on your part,” she wrote in an email to employees on August 28, in which she also referred to a Department of Investigation probe into the organization’s finances last year.

But while it has praised its workers, Alianza hasn’t kept even its most recent commitments to them. The Alianza’s official statement promised to pay all back wages by September 25. The date came and went; the wages never arrived for the workers.

Alianza Dominicana received $8,893,592 in grants from the city in 2009-10, out of its total revenue of $14,712,972 for the year, its financial statement shows. The non-profit organization made net earnings of $2,967,706 that year.

But the city suspended funding for the organization last year after the Department of Investigation began a probe into the non-profit organization’s finances over corruption allegations against its then executive director, Moises Perez.

DOI finds ‘self-dealing’

The investigation looked into allegations that Perez had invested in a fund – linked to a Board member – that issued loans to struggling organizations. The Alianza, it was alleged, turned to this very fund for a loan, financially benefiting Perez and two other Board members, Nasry Michelen and Walid Michelen, who had also invested in this loan fund.

The Department of Investigation found the allegations correct.

It concluded that Perez earned $5,878.40 as interest on his $150,000 investment from the loan – though Perez had earlier told investigators he made no money from the scheme, the findings of the Department of Investigation say. No charges were brought against him, but Perez was forced to quit.

In June this year, however, the Administration for Children’s Services (ACS) resumed its funding to the Alianza for La Familia Unida, Michael Fagan, a spokesman for the city’s childcare agency says.

“There were issues with their contract,” Fagan says, “but the contract has now been registered and funding resumed.”

Fagan also confirms that the resumed funding was “retrospective” and included payments for the period that funding was stopped, raising questions about the Alianza’s inability to now pay workers on time.

Lawsuit threatened

Hernandez did not respond to specific queries on why the Alianza – now in receipt of city funds, and armed even earlier with nearly $3 million in net revenue earnings from the 2009-10 financial year – is unable to pay its workers on time.

Luz Santiago, field services director at DC 1707, the union representing the workers, says what was upsetting the workers most was what she called the “opacity of the Alianza.”

“They clearly have the money,” she says. “Then why can’t they treat the workers respectfully and tell them what the problem really is: What are they hiding?”

The union will help the workers sue Alianza for defaulting on paying them on time, as required under their contract, unless the deadlock breaks soon, Santiago says.

But the crisis isn’t only about the workers.

Kids could suffer

The center serves 109 children, including 77 who are fully subsidized by the city and 32 whose parents pay for the services, according to the Alianza’s financial statements for 2008-09 and 2009-10. If the center were to shut down, the parents of these children would need to look for alternative day care services.

That won’t be easy.

ACS, in a 2005 report titled “Rethinking Child Care” concluded that the city was able to provide affordable day care to only 30 percent of eligible children, leaving the others on a waiting list.

The Washington Heights and Inwood neighborhoods, which La Familia Unida caters to, have median incomes of $39,090 compared to $54,554 for the city, and consist largely of precisely the low-income working families that city-funded day care services are meant for.

Even if La Familia Unida survives, and the workers stay, things won’t be satisfactory unless the women in charge of taking care of his child get paid on time, said Roberto Perec, as he picked up his 4-year-old son from the day care center.

“These workers are dealing with little children who demand and need their full attention,” Perec said. “I don’t want my child to be with people who are preoccupied all the time about how they will pay their next bill.”

Luisa Almanzar, one of the workers, had to vacate her apartment and move into her sister’s basement, unable to pay any rent to her landlord for months because she wasn’t receiving pay. “Living like this is so embarrassing,” Almanzar says.

Long-term problems

Since it was founded in 1987, the Alianza has grown into a pillar of the community in Washington Heights, offering services that capture many of the key needs of the majority low-income, working residents here. It offers programs on tackling drug and alcohol abuse, housing problems, domestic violence and day care. The Alianza runs programs focused on keeping at-risk children in school by offering cultural services and tutoring. The non-profit group also offers a counseling program called H.O.P.E for HIV/AIDS patients.

But despite net revenue of over $9 million just between 2007 and 2010, the DOI investigation found that Alianza’s finances had been troubled since 2001, before Moises Perez and others on the Alianza Board indulged in what investigators dubbed “self-dealing.”

The problems “were attributable in part to poor fiscal management, improper billing practices and Alianza’s failure to act promptly in response to the known deficiencies of its CFO,” the 2010 DOI findings concluded, referring to a chief financial officer who managed the organization’s funds till 2006.

For some of the workers, like Arelis Melo, however, the crisis is now no longer just about payments. “I grew up in the neighborhood hearing such wonderful things about the Alianza, and I’ve always respected the organization,” Melo says. “But now, I’ve lost much of that respect.”