The closure of a men’s homeless shelter in Bismarck follows financial management problems at Ruth Meiers Hospitality House that includes owing more than $200,000 in back taxes, wage claims from employees and a loss of funding sources due to a lack of compliance.
The Ruth Meiers board of directors decided in late April to sell the facility at 305 N. 23rd St., with the men’s emergency shelter losing the organization more than $125,000 each year, said board President Rae Ann Kelsch.
“Ruth Meiers’ overall financial position made it impossible to continue this annual loss,” Kelsch said in an emailed response to questions from the Bismarck Tribune.
Ruth Meiers Hospitality House, a nonprofit that began in 1987, has a mission to provide meals, temporary housing and supportive services to the homeless or those at risk of being homeless.
Documents show the decision to sell the emergency shelter came the same month that several employees complained to the North Dakota Department of Labor that Ruth Meiers withheld money from their paychecks for retirement but didn’t deposit the funds into their accounts.
The decision also came as debt to the Internal Revenue Service continued to grow after Ruth Meiers fell behind on payroll tax deposits going back to 2014. A May 25 audit showed a total balance owed to the IRS of $270,588 in unpaid taxes, penalties and interest.
An employee was responsible for failing to make timely tax payments and did not notify the Ruth Meiers director and board members about notices from the IRS, according to Kelsch.
Current taxes have been paid since the board became aware of the issue, Kelsch said, but ongoing revenue shortfalls have prevented Ruth Meiers from being able to pay off the back taxes and penalties.
“Therefore the board made the decision to liquidate the 23rd Street building,” she said.
Several employees filed complaints with the North Dakota Department of Labor and Human Rights stating that Ruth Meiers Hospitality House did not deposit retirement deductions into their accounts, according to documents obtained from the department.
In some cases, the retirement contributions that were not deposited dated back to 2015. Employees also reported that they did not receive matching dollars to their retirement accounts that was supposed to be part of their compensation.
In late April, Ruth Meiers management arranged for bank wire transfers to reimburse employees for the retirement funds plus compensation for interest they would have earned, according to documents from the Department of Labor.
Other employees also filed wage complaints regarding accrued vacation time they were not compensated for after they left Ruth Meiers, the documents show.
In all, Ruth Meiers Hospitality House paid more than $28,350 to resolve the Department of Labor complaints, said Kathy Kulsea, human rights director for the department. All claims have been resolved, she said.
Kelsch declined to comment on what led to the wage complaints, saying the organization doesn’t comment on individual employee matters.
Jaclyn Hall, who was executive director of Ruth Meiers Hospitality House at the time of the complaints, resigned on April 20, according to Kelsch.
Hall submitted a letter of resignation and made certain requests in the letter, Kelsch said. The board determined it could not meet Hall’s requests and agreed to “relieve Ms. Hall of her duties,” Kelsch said, calling it a mutual decision.
Hall declined to comment during a phone call and didn't reply to a follow-up phone message.
An independent audit showed no evidence of misappropriation of funds by anyone with Ruth Meiers management, Kelsch said.
Loss of funding sources
Publicly available financial documents for Ruth Meiers Hospitality House show increasing debt and declining cash flows.
The Missouri Slope Areawide United Way no longer provides funding to Ruth Meiers, according to Ruth Meiers Hospitality House's budget and United Way’s tax documents.
United Way gave significant grants to Ruth Meiers through fiscal year 2013, supporting the agency with $145,250 that year, larger than any other grant awarded that year.
In 2014, the United Way funding fell to $14,522 and stopped after that, documents show.
Jena Gullo, executive director for MSA United Way, said she can’t comment about a specific organization’s funding.
“When United Way has concerns of inaccurate reporting of data or organizational mismanagement, we directly address it with an entity's board of directors,” Gullo said. “If issues are not resolved in a satisfactory manner, United Way funding is discontinued. Our reporting process holds agencies accountable and allows us to be in front of issues so that we are the best stewards of donor dollars.”
Kelsch said Ruth Meiers management made concerted efforts to work with United Way and reestablish a relationship.
At one time, Ruth Meiers received federal funding from U.S. Housing and Urban Development, most recently $40,000 in 2011, according to the North Dakota Coalition of Homeless People, which administers the funding for HUD’s Continuum of Care program.
Michael Carbone, former executive director for the coalition, said compliance issues with the program’s requirements were discovered and HUD was willing to work with Ruth Meiers on a corrective action plan.
Rather than get in compliance, Hall chose not to renew the grant and instead seek other funding, Carbone said.
Ruth Meiers Interim Executive Director Steve Neu said the sale of the men’s emergency shelter will put the agency in a better financial position.
“We’re working on getting caught up on several areas,” Neu said.
Other areas of Ruth Meiers operation were subsidizing the cost of the shelter, he said. One challenge was that residents of the emergency shelter were asked to pay $2 per night, but most people didn’t pay, Neu said.
The Ruth Meiers board accepted a bid from Heartview Foundation for the facility and the closing date is still pending. The building also housed 25 affordable apartments.
With the sale of the building, Ruth Meiers Hospitality House is planning to focus more on its transitional living program at 1100 E. Boulevard Ave., which is serving more people and seeing greater growth, Neu said. In fiscal year 2016, a total of 734 men, women and children were served by the transitional program while 564 men were served in the emergency shelter.
“The transitional program is a far greater program, it provides a much greater benefit to people coming from homelessness or even at risk of homelessness than the emergency shelter does,” Neu said.
After the sale of the 23rd Street property, Ruth Meiers will continue to provide more than 125 transitional living beds and 85 affordable apartment units, Kelsch said.
Meanwhile, the United Way, the Missouri Valley Coalition for Homeless People and other groups continue to work toward a solution to provide emergency shelter this winter.