12-county service agency shutting down

Southwest Arkansas Development says it’s broke, has no hope of new funding

The board of directors of the Southwest Arkansas Development Council Inc. has announced that the organization is closing.

Services have stopped, and a handful of employees will remain on the job temporarily to take care of some remaining obligations, such as working with vendors on payments, officials said.

The nonprofit community action agency has employed 166 people across 12 counties — Miller, Hempstead, Nevada, Lafayette, Little River, Howard, Sevier, Dallas, Calhoun, Union, Ouachita and Columbia. It has provided 48 years of service to elderly and low-income residents of southwest Arkansas.

“The emotional decision to close the agency was reached with great difficulty, following years of declining revenues and steadily increasing operating costs,” said Dick Tallman, chairman of the board of directors, in a statement.

“Despite tremendous effort and the dedication of its long serving staff to save the agency — which included reductions in force, outsourcing of operations, and multiple cost-saving initiatives — we simply did not have enough revenue to continue to operate.”

A news release from the council stated that multiple contacts with Arkansas legislators did not result in financial assistance.

While each legislator contacted is aware of the circumstances affecting the agency, each indicated that no state funding is available to alleviate the agency’s financial crisis, the council said it was told.

Contactwith the governor’s office similarly yielded no financial assistance for the agency, the council said.

The organization has faced numerous challenges for about a decade, including the loss of several major programs.

“The loss of Southwest Arkansas’ Head Start Early Education Program, as well as the Department of Energy’s Weatherization Program several years ago, were primary among the causes of the agency’s ultimate closure,” said Executive Director James McPhaul.

“Coupled with changes to payment methods in its Medicaid-funded Non-Emergency Medical Transportation program, as well as increasing competition from for-profit entities in its Home Health Program, the agency could no longer afford to operate.”

Hired by the board of directors in August 2015, McPhaul began work at the agency at a time when it had no cash reserves, significant accounts payable and declining revenue.

“A very difficult situation at best, and a Herculean task at worst. We tried everything possible with very limited resources,” said McPhaul. “Unfunded, governmentally mandated minimum-wage increases also were a significant cost driver for us. With no offsetting increases in our revenue stream, we found that we were unable to meet our ongoing responsibilities to our suppliers on a timely basis.”

In an effort to curb losses associated with the operation of the agency’s 17 senior-citizen centers, the board of directors directed McPhaul to terminate the agency’s contract with the Area Agency on Aging of Southwest Arkansas in October.

Despite this cost-saving initiative, “our revenues continued to decline to the point where continued operations were unsustainable,” McPhaul said.

He said that some employees will remain to gradually shut down operations, consolidating all of the council’s remaining assets for eventual sale and disposition.

“It is important to note that [Southwest Arkansas Development Council Inc.] will eventually meet all of its current financial obligations,” said McPhaul. “However, this is a process that will take time to dispose of the Agency’s assets and collect all of its remaining accounts receivable.”

He also said that “all vendors will be contacted individually” to discuss account settlements.