Larkin Center board president details financial woes that led to its closure
By Janelle Walker For Sun-Times Media October 29, 2013 6:44PM
The 117-year-old Larkin Center, whose main facility was at 1212 Larkin Ave. in Elgin, experienced severe financial problems related to insurance, the unstable economy and other factors, its board president said. | Sun-Times Media file
Updated: December 1, 2013 8:29AM
ELGIN — When 18 months of negotiations to merge the Elgin-based Larkin Center social service agency with Chicago-based Lawrence Hall Youth Services broke down on Oct. 10, it was over one topic, said board president June Wooten.
That issue concerned insurance that nonprofit boards and directors such as the Larkin Center’s must have, Wooten said Tuesday, following a Kane County Board emergency meeting held specifically to address Larkin Center finances.
The board voted to give the 117-year-old Elgin agency $20,000 from Riverboat Grant funds — money needed to pay office staff during the closing transition. Fifteen of the 24 Kane County Board members attended. Fourteen voted in favor of the request, and one, Deborah Allan of Elgin, voted present.
The Larkin Center announced it was closing its doors on Oct. 16, citing financial difficulty.
At the request of the Illinois Department of Children and Family Services, Lawrence Hall also agreed to take over four of the group homes for children with emotional and behavioral problems, as well as the therapeutic Rakow Center school that the Larkin Center had been operating.
Elgin’s Ecker Center for Mental Health is taking over counseling and housing programs for adults that also were offered at the Larkin Center.
The Larkin Center had been struggling financially for several years, Wooten said Tuesday, and entered into negotiations with Lawrence Hall to help stave off closing.
That is part of the reason the organization didn’t make a direct appeal to the community for its help, she added.
“We weren’t sure how it would play out” with the proposed merger, she said. “We didn’t want to take money, then have someone else in charge of it.”
There were several reasons the agency began struggling financially, and then it was hit with a double-whammy in the past year — a kitchen fire at one of the youth group homes and a hole in the roof at another, Wooten said.
Children had to be moved to other locations while repairs were made, reducing the number of children they could house.
DCFS said last week the Larkin Center was licensed to house 42 children in the group homes. Just 35 children were receiving services as of the official closing on Oct. 18.
Then, on top of the loss of beds, the cost for board insurance became fiscally unrealistic, she said.
The old insurance policy cost the Larkin Center $9,000 a year for $5 million in coverage.
In comparison, Lawrence Hall was paying $12,000 a year for $10 million in coverage.
The new quote offered to the Larkin Center board was for just $2 million in coverage, at a cost of $23,000 a year, Wooten said.
The Larkin Center’s annual budget ran about $8 million each year, but the organization had debts of just over $2 million, she added.
The $20,000 approved by the county board Tuesday protects the Larkin Center board members from having to pay costs stemming from the shutdown out of their own, personal pockets, she added.
“If not for this money, the board members would be responsible for the full amount” of paying office staff to stay on while working through closing down, Wooten said.
Those costs include the accounts receivable, payroll, controller, therapists, public relations, office support, information technology, human resources and other staff members — one to two weeks of pay for those positions.
The insurance policy would not pay for those costs, she added.
With the Larkin Center’s current financial situation, there was no insurance the organization could afford, Wooten said.
Other factors weighing on the center was the still-unstable U.S. economy, a loss of donors, a restriction from the state as to how long children could remain in the group homes, and the loss of a staff member, she added.
There was a time when the Larkin Center did have funds in reserve to cover costs — funds to pay bills while waiting for state payments and other income to come in.
But as the economy soured, those funds declined and had to be used to cover costs, she said.
However, the Larkin Center never missed a mortgage payment on any of its buildings, she said, and while payroll was at times a few days late, employees did get paid.
Still, the name Larkin Center will go away now that the Ecker Center and Lawrence Hall have taken over services, she noted.
She encouraged residents who supported the Larkin Center and its programs over the years to turn that support over to the other agencies.
“You can support Lawrence Hall and support the Ecker Center,” she said. “The community can continue to support the programs and the agencies.”