County’s Top Taxpayer-Funded Child Care Provider Clams Up over Missing Pension Payments

Gloria Pena retired to become a full-time grandmother—just as she had promised her daughter. The whole family planned around the day, which came July 29, 2016, a few months after Mateo’s birth. The timing felt perfect.

After 90 days of maternity leave, Pena’s daughter, Leticia, wanted to resume her post as associate director of a local nonprofit, and Pena was ready to end three decades of work—the last 10 years as receptionist at the Community Child Care Council of Santa Clara County, called the 4C Council for short. She planned to spend the rest of her days with her growing family. But one part of that dream never fell into place.

“My pension,” Pena says. “I worked all these years to save and I haven’t seen any of it.”

When she announced her retirement last summer, Pena was surprised to learn that she qualified for a supplemental pension as long as she chose to disburse payments from her main account over two decades, rather than taking it as a lump sum. This would bump her collective pension from $50,000 to about $84,400, so she opted for the monthly installments. But six months since her last day on the job at 4Cs, the 67-year-old retiree has yet to receive a single pension check.

“It’s been really draining, emotionally,” she says, anxiety making her voice taut. “I have really bad nights, barely sleeping, thinking about how long my daughter can support the household with me not contributing.”

Apparently, Pena’s not alone in her predicament—although just how many of her former 4Cs colleagues have been affected remains to be seen. Five have been identified so far. But the holdup is only the latest sign of dysfunction at the South Bay’s largest publicly funded nonprofit, which, according to its mission statement on tax documents, provides subsidized child care for more than 5,500 low-income children and resource and referral services for more than 20,000 families.

Employees who have been fighting to unionize for more than 16 months now—an inordinate amount of time for an agency with only 130 on staff—say 4Cs is plagued by widespread incompetence and mismanagement. San Jose Inside’s reporting in September last year confirmed those claims. Persistent struggles to meet enrollment targets and regulatory standards have put some of the 4C Council funding in jeopardy, resulting in canceled contracts and shuttered day care centers.

Ben Menor, who helms the nonprofit’s board of directors, faced allegations of bilking hundreds of thousands of dollars in taxpayer money more than a decade ago and continues to ignore San Jose Inside’s inquiries about 4Cs. All the while, attempts to negotiate a labor contract have been met with retaliatory discipline, intimidation and harassment, current and former employees say.

“That’s not very reassuring,” Pena says. “To think that I can’t access the money I worked for and can’t get any answers from them when I know about all these problems going on behind the scenes.”

Despite receiving roughly $44 million a year in taxpayer money, administrators at the 4C Council remain oddly evasive. Its board of directors either feigns ignorance or admits having little knowledge of the inner workings of the nonprofit. CEO Alfredo Villaseñor defers media inquiries to a private lawyer.

“We are looking into it,” says Allyson Hauck, the fifth attorney 4Cs has hired to negotiate with its union. “What I can tell you is that one of the pension plans is on hold right now and that they’ve hired a firm to make sure there is legal compliance.”

The firm 4Cs hired—San Francisco-based Trucker-Huss, which specializes in employee benefits—declined a request for comment, directing media inquiries back to Hauck. Logan Group Securities, the company that manages 4C Council pensions, has yet to return calls and emails asking for more details about the retirement accounts. Hauck says that only the supplemental pension account has been frozen, but that doesn’t explain why Pena hasn’t been able to access her primary account. A source inside the nonprofit says the main pension account holds something on the order of $12 million while the supplemental has about $1.2 million.

Employees have had no luck finding answers, they tell San Jose Inside. Attorneys only recently began investigating whether the 4C Council adheres to its written personnel policies. It’s another question entirely whether those policies comply with federal laws governing employee benefits. Earlier this week, Pena asked the U.S. Department of Labor to review her case since her former employer has been stonewalling her and other concerned employees. The District Attorney’s Public Integrity Unit has reached out to the union’s attorneys to look into the matter.

“This is our future at stake,” Pena says. “We want answers.”

Employees at 4Cs compare the situation to the high-profile pension scandal at another local nonprofit, the Mexican American Community Services Association (MACSA). In 2012, prosecutors charged MACSA executives with illegally diverting $1 million in pension funds to salaries and other costs. Pena and several of her former co-workers want the 4C Council to open its books in a show of good faith to assuage their fears.

“It’s hard not to assume the worst,” she says. “But that’s where my mind goes, in light of all these other problems.”

The nonprofit’s employees voted to unionize with SEIU Local 521 in August 2015, which is when they began requesting information to negotiate better pay and benefits. Five months later, the nonprofit shared a summary description for one retirement option, a qualified “before-tax” plan that accounts for the lion’s share of the nonprofit’s pension funds. Last August, a full year after union negotiations kicked off, employees discovered that they were eligible for an additional account, a non-qualified “after-tax” plan. But there was no mention of this supplementary pension in the personnel handbook.

“As soon as we realized this disconnect, we began asking questions,” says one employee, who asked to withhold his name for fear of retaliation. “We want to know what kind of retirement we have. When will I be qualified? We asked those questions so many times and they still cannot explain. I’m trying to understand how there’s this disconnect.”

The union has had a bit more success finding answers on behalf of workers. In December, SEIU Local 521 sent a letter to 4C Council attorneys demanding written assurances that no pension funds would be distributed to anyone in management positions at the nonprofit—especially Villaseñor, who’s listed as the sole trustee on at least the primary pension account. Union officials say they’ve already unearthed proof of inaccurate calculations of some workers’ years of service. There are also concerns that the nonprofit failed to notify people about the secondary pension, preventing people from claiming money to which they were potentially entitled.

“Based on what is known at this time, it appears both plans are substantially underfunded and mis-administered in violation of numerous [federal laws],” the union’s Dec. 14 letter reads. The missive continues: “There is an immediate concern that Mr. Villaseñor may make an attempt, with the aid and cooperation of [Kevin Logan, of Logan Securities Group], to remove assets from either or both plans in his own interest.”

The letter accuses Logan of blaming the pension freeze on workers’ decision to unionize, noting that such remarks may constitute a breach of fiduciary duties to act in the best interest of his clients. As a fiduciary, Logan is legally obligated to prevent and solve problems for his clients, says Jean Ackerman, regional director for the San Francisco office of the U.S. Department of Labor’s Employee Benefits Security Administration. As head of the agency that sponsors the retirement plan, Villaseñor is beholden to those same legal mandates.

And yet, employees have fought for months for these answers, and they have doubts that these obligations are being met.

“When I called [Logan], he made it seem like it was the union’s fault that we’re having these problems,” Pena says. “But actually, it’s because of the union that we even found out these problems exist.”

A Jan. 10 memo sent from the 4C Council to its employees downplayed the problem by indicating that very few people are affected by the supplementary pension plan undergoing a legal review. For those who are affected, however, that attitude only adds insult to injury.

Pena’s retirement savings may seem paltry in the scheme of an agency with a $44 million annual budget, she says, but it’s all she has besides family support. Thankfully, her daughter has been able to pick up the slack. The two share a home in San Jose’s East Side with Leticia’s boyfriend and baby, Mateo. But money’s been tight, even with everyone in the household pooling their resources together. When Gloria’s son gave her $300 in cash for Christmas, they used it to pay the PG&E and water bills.

Jennifer Wadsworth is a staff writer for San Jose Inside and Metro Newspaper. Email tips to [email protected] or follow her on Twitter at @jennwadsworth.

19 Comments

  1. I can’t believe that man made that comment! The 4C’s should step up!! The CEO Alfredo Villasenor needs to address this matter and resolve it quickly!! If not, get the television media involved. Leticia, you are an amazing daughter. We should all be so lucky & blessed to have a daughter who can help when unfortunate events arise that are out of our control. May God bless you & your family. I hope your mom gets what is owed to her PLUS INTEREST!! ❤️

  2. Leave it to local government… County or City. Take a typical government function like administrating a pension plan and what do you get — a Mongolian Cluster F**k!

    • This is a non-profit, not government, though they receive government money. Believe me the County and cities know exactly how to administer pension plans. I am proud of SEIU521 for uncovering these bad practices. Non profits should held to the same standards as governments because they receive taxpayer funds.

  3. Please note that the 4Cs of Santa Clara County is NOT affiliated with any other 4Cs organization.

  4. This unethical business practice that impacts the livelihood of this poor retired woman is worth everyone’s attention seeking for justice. Non Profit Organizations, like 4Cs Council, get their funding from government social agencies. With a funding of $44M, 4Cs can definitely defend itself using the millions of tax payers dollars. That said, government agencies MUST stop the flow of cash to 4Cs until matters of big concerns, such as mismanagement, misappropriation of funds and hostile work environment are resolved. Zero flow of fund will definitely paralyze 4Cs from hiring more expensive lawyers purposely to deny legitimate claims.Love it!

  5. I’m usually not in favor of unions but this is one case where I can see the need for it. I worked at a non-profit and management was utterly incompetent. Made me long to go back to the corporate world but I toughed it out until I could retire.

  6. This is a good example of why you should take the money and run if you have that option. Find a good investment counselor to help it grow.

  7. We right wing trolls may have a bone to pick with Josh and Jennifers’ politics but we should ALL be grateful for and acknowledge SJI’s continuing good work in scrutinizing the way our tax dollars are spent and /or misspent in San Jose and Santa Clara County. Who else is out there putting the slightest pressure on the armies of would be opportunists and crooks cashing in on, taking advantage of, and routinely raiding and robbing the most casually guarded treasure this side of the Mississippi?
    Thanks San Jose Inside. Keep up the good work.

  8. God this is horrible the families that are effected all the way around. So many people will loose childcare if they close. Hard working parents who are trying to be self sufficient.They need to clean house and not the employees on the floor, management and board gots to go. Never heard of a Nonprofit who’s Board Members are so elusive to EVERYONE!!!!
    No Contact info anywhere then told
    “I’m sorry we can’t give that information out”

    • > Never heard of a Nonprofit who’s Board Members are so elusive to EVERYONE!!!!
      No Contact info anywhere then told
      “I’m sorry we can’t give that information out”

      Tina:

      The business world has learned over thousands of years that people responsible for handling other people’s money NEED TO BE WATCHED CLOSELY. Conversely, people who like making an easy living like to work in places where no one is watching them closely. So-called “non-profits” are notorious for being poorly supervised, poorly run or run by people who vastly overvalue their services and their competency.

      It’s probably no accident that the Board Members are so “elusive” and made such a botch of things.

    • Tina, this board has been through this before. All are unpaid volunteers.

      Any attorney will recommend all communications be through counsel. The media crucifies the agency because our political climate allows for sixty million spent on buildings and salaries in cities which have zero to single digit poverty. We don’t hear about the sixty million spent on making videos on “how to change a diaper”.

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