Behind the Numbers: Rebecca Huss, CFO of Greater East Texas Community Action Program

0:00Hello everyone and welcome to the Fortell podcast and today I'm joined by Rebecca Huss the CFO of Greater East Texas Community Action Program. Rebecca oversees the finances behind an organization delivering Head Start, energy assistance, weatherization, and a bunch of other critical services across East Texas. So I'm really interested to hear her perspective on what it takes to actually financially and operationally make all these things actually work. So Rebecca, thanks so much for for joining me. >> Yeah, it's a pleasure. And um you were telling me it's pretty hot in Texas right now, right? >> Yes. Yes, it's very hot. Over 100 degrees every day and no rain where I'm at. So >> yeah, serious stuff. But I wanted to start with something that I think lots of people think about when they're thinking about nonprofits or government, which is when you look at kind of a dollar of government funding coming into your organization. So how how much of that dollar is actually available to help a family and how much you know goes into actually you know consumed into actually administering those those

1:03dollars as well. How does it all work? >> So I can't speak for every community action agency but for us the our administrative costs are quite low. I would say we probably only spend about 10% in overhead and maybe about another 15 to 20% in operational costs that are related directly to the programs that we that we operate, >> right? Because 10% sounds pretty low actually, right? Because it's like I mean you guys, you know, you're not the biggest agency in Texas, but you're certainly, you know, helping a bunch of people across a bunch of different programs as well, right? >> Yes. Yes, we we do have quite a large footprint. We cover 31 counties across East Texas. So, we do serve quite a lot of people and I think we do it pretty well with the amount of staff that we have and the dollars that we receive. >> Yeah. What What's the biggest program that you administer? >> So, it's it's actually between it kind of bounces back and forth year to year between energy assistance and head

2:06start. >> Yeah. Yeah. And so energy assistance is you know you guys call it Cap in other parts of the country it's called LI heap right so it's is it it's just crazy busy in January January is like peak craziness and then you know February March maybe and then you might have another peak maybe in the summer months around you know when it's super hot but how do you like okay let me ask a basic question how do you get paid do you get paid once you've administered the benefit or do you is as in a reimbursement or do you get a bunch of money up front. How does it work in Texas? >> So, it depends on the funding source. Um, our Head Start grants are passed directly from the feds. So, we can go in and draw down funds. We're allowed to advance funds 72 hours in advance of expense. We actually don't do that. We actually do it reimbursement only. That way, we ensure that we don't hold on to funds any longer than we're supposed to. with our grants that are passed through the state of Texas. We go in and we do a monthly report to them. We reconcile

3:10internally to make sure that our performance matches our expenses and then we go in and do a monthly expenditure report to them. And we're allowed to do an advancement of funds on that report as well as report current expenditure. So it kind of trs up each month based on what we put in. >> Okay, I get it. And so maybe I'll give you a scenario. So, I was in Pennsylvania recently, right? So, so not Texas, but they were explaining to me that they had to have a load of different bank accounts for different types of programs in their specific organization, which sounded like a nightmare from my perspective. I think they had like 16 different bank accounts. But what what it was getting to is like how difficult is it financially to run an organization where funding is often restricted to very specific programs. So, it's all about your setup and your planning that you do ahead of time really as to the difficulty. I would say that if you don't have the robust system in place where you can look at your costs appropriately and separate them out, it's probably pretty difficult. You may need 16 bank accounts, but if you are able to separate them out with the

4:13appropriate software, it may be a bit easier. >> Okay. But how do you like how do you think about that? Because you know I mean for example when we when we bill someone sometimes they're trying to find the money across various different programs for example right but is the bit that's interesting is because you have to give money for specific program so let's say someone's coming in and they need CP but actually you know they're they've got kids and they could have be eligible Head Start as well right so an agency needs to think about them as like one person not just funding streams right >> yes and as see as community action agencies we're blessed us to have CSBG where we can kind of utilize that those dollars for intake where the ser services are shared amongst the programs. And because we have those CSBG dollars, which is actually what makes us a community action agency in the first place, we can kind of holistically cover that person and figure out where we need to direct them to like which programs they need to go to. >> Wow. Okay. No, that's great. So you almost have like one intake, you know,

5:17you're you're kind of asking all the questions at when someone comes into the office or when someone's on the phone. >> That's not always the case. Um we do actually allow people to go directly to just the program that they're wanting to go to, but we do internally share as an individuals apply for multiple services. They check that box off and we do internal referrals to make sure that they get where they need to go regardless of which department they apply within. Okay. So, and then tell me this, right? And you can be, you know, no one will listen to this, so you can be honest. What is the most frustrating thing about your job? >> I would say the most frustrating thing is that there is always always always something new popping up and that I love new and I love challenging. So, don't get me wrong on that one, but it's that we always have a monitor knocking on our door saying, "Hey, we need to look at your books. We You didn't plan it. You didn't know they were coming, but they showed up anyways." and you might have been in the middle of your annual audit when that happened. Or perhaps you were in the middle of some departmental

6:19turnover when that happened. Or perhaps you were in the middle of a Head Start building that got flooded and you're trying to deal with that. And you just never know. It's like someone is always looking at what we do and making sure that we're doing it the right way. And even though we can expect a lot of that that comes through the door, a lot of it's unexpected as well. And so just dealing with all of the pieces of that, just keeping it all lined out is quite frustrating sometimes because you planned that you were going to have a regular 40-hour week this week and then all of a sudden you're not because monitors have requested to come in two weeks or whatever. >> I got it. I got it. And this is so just for people who don't understand this, this is this is essentially the government, your funders who are coming to say we need to look at exactly everything that you're doing to make sure you're doing it in the right way. Yes. Yes. We are looked at upside and downside and left and right. Just about one a month, I think. So, >> one a month. And is it normally program specific? >> It it is. Sometimes it's of course we

7:22have our agencywide audit because we're required to do that because we're have over a million dollars in federal funding. But other than that one, it could be program specific. They could if it's coming say from the state of Texas, they could be wanting to look at all of the grants that they give us. Right. >> It just kind of depends on the funding source. >> Okay. And if you were redesigning like federal funding for community action from scratch in Texas today, how would you think about it differently? >> That's a loaded question. I do say I can say for sure that I do appreciate the way that Head Start handles their direct to the grantees rather than being a p having pass through agencies. I I appreciate that a lot more because our access to cash is a bit easier. We still have to justify it. We're still held to, you know, making sure that we're the pro the payments that were made to us are proper and all of that. It's just that we can access our cash a little bit faster and the people we communicate with are directly in line with the federal government. So, there's no

8:24middleman kind of adding rules or telling us what to do. And so I would say I would just call for a bit more alignment with the way that the grants function. >> Yeah. And what you're talking about there like a pass through is like the money starting somewhere. It's going through someone else's hands. They're almost like two sets of administrators then and therefore it's getting to you with much more complexity. Right. >> Yes. because the feds have the OM regulations and then programmatic regulations and then we're also held to whatever regulations Texas layers on top of that. So we're we're held to all of that and we must ensure that we are compliant with all of it and so just having that streamline would be extremely helpful I think for all of us. >> Yeah, I can see that. I can see that. I mean whenever I go through Texas though, everyone has freedoms bumper stickers, right? So, I'm hop Yeah, >> I think every state does and I think our state does quite well communicating with us and working with us to make sure that we have what we need um that we're

9:28trained. They do a really good job. It's just it's another layer that we have to deal with before we have the dollars in our hand to serve the people at the end of the day. >> Oh, yeah. I get that. Now, one of the things you talked about was sort of software systems and and ways to administer it. So how do you think about technology like both for your job and also to kind of for as an ROI for the for the rest of the agency? >> So we have accounting softwares of course and then we utilize spreadsheets and things like that. I I am beginning to look a little bit differently at technology as far as the AI component goes because yeah the analysis that can be done and how quickly it can be done as far as that aspect of things goes. I mean I think what we have in place it works well. I think that everything functions smoothly or as smooth as we can make it for the dollar that we pay for it is extremely valuable because we've shopped around and everything we have is, you know, pretty a pretty great value. But again, I'm beginning to look

10:32a little bit closer at what we can upgrade or change to because it's coming. I mean that that expectation to be able to do that analysis quickly is coming down the pike to where we want to stay on top of it. >> Yeah, for sure. I mean because when when I saw you in Frisco, I know we only talked for like 2 minutes, but the thing that we were talking about and we're interested in this whole debate, right? It's like so you know our particular thing is you know we're interested in voice AI, we're interested in like taking phone calls and you know there's a real concern about that taking jobs as well, right? So there's there's there's this kind of double-edged sword especially in community action. So, but I think from what you're talking about, you know, you're looking at efficiency throughout an organization as a CFO, that's an it's a slightly different use case and a different thing you're bigger thing you're thinking about. >> Yes. Yeah. Definitely thinking about efficiency and not necessarily taking jobs, but you know, if you become more efficient in an area, you can assign that person to help you grow something else rather than letting go of them. So, there's that that possibility as well. >> Yeah. And now what are the costs that

11:37you know when you talk to funders they're kind of surprised at the stuff that you do. So like what what are the costs or what are the things that your teams are doing that are quite invisible to a fun for example? >> I think it takes a lot more manh hours than the funding sources realize from an accounting perspective. I know that they see they see CC they see the Head Start staff who are in the classrooms working with the kids. And don't get me wrong, their jobs are so much harder. They see the people screening applications. They understand what they're doing, but I think they underestimate the manpower that it takes to do financial operations in a a nonprofit, especially when we're monitored and audit audited the way that we are because not everybody understands what you're doing. Not everyone is an accountant. Not everybody gets it when they walk in the door. It takes quite a lot of writing out explanations to make people understand what you're doing. It takes quite a lot of showing them how you reconciled this or that and just going back over your work and reexplaining it. Um, and I think that that's something that not not only the

12:39funding sources don't realize, but I think a lot of people who are outside of accounting don't really quite realize what we go through. >> I can see that. And and talking about like, you know, the relationship between the executive director and the CFO is really important, right? And, you know, there everyone comes as different shapes and sizes. you know, um I just got off the phone with one of our customers in Tennessee and their executive director is a really big creative thinker who I know occasionally, you know, may struggle with some of the conversations that they're having with with their team because they want to do so much so many things, right? How how do you think about that? How do you navigate that relationship? >> So, our executive director is just extremely supportive of everything. So if I come at her with ideas, she's generally just she's like, "Okay, tell me tell me the good, tell me the bad, tell me what what could come of this." And if you can explain your way through it, she's generally tries to be as supportive as she can be to help us implement change or maybe not implement change depending on how she's feeling about, [cough] excuse me, feeling about

13:43what we're doing. And I think she's just quite supportive of of her admin team. Everybody on our team knows that she'll stand behind us no matter what. As long as we're trying to help serve people at the end of the day. >> Yeah. Yeah. I see that. I see that. What about for someone who's thinking about Let me ask a different question. So given the changes that we just talked about, where do you see let's say if we project out 10 years, how do you think you'll be serving your community in different ways? I definitely think that we're just going to keep leaning into less paper, less direct contact with people to get those pro types of processes done. I I definitely see I know a lot of agencies are probably already there. We're not there yet, but and our executive director does firmly believe that we're a community action agency and we need to be there in the community so that people can see us. We need to be visible. So, I'm not saying that that component of things is going to go away, but I do think that across the network, we're going to see more streamline of processes overall. Things are going to begin to flow together a

14:47little bit better because the technology is going to become more readily available to do so. >> Yeah, I can see that. And just going back to your point about monitoring. So like how much of your job is really financial management and how much of it is managing compliance and proving the money is spent correctly if you had to like divvy up the amount of time. >> Um I would say that it varies from year to year and even day to day and month to month of course. But I think it would it say I would say it varies from year to year because sometimes we may have every program walk in our door wanting to see what we're doing and sometimes it may only be two and sometimes it may be one and it just kind of depends on that. And so my job as the CFO is 100% oversight of everything that's going on financially. So mine is always going to be reviewing the monitoring. Mine's always going to be reviewing new things that new rules that come up so that compliance can happen. You know, making sure that we stay compliant, making sure that we understand and are interpreting those rules so that we either can or

15:50can't do something and a big emphasis on can. But um like for example, right now we're under a big lift with OM changes coming down the pike and we're under we actually have a huge notice of proposed rule making for Head Start that's coming down the pike. And those are things that are gonna I'm going to have to really spend a lot of time digging in and interpreting and making sure that we are staying in compliance or that we are making the appropriate changes for that. And so that's a heavy lift this time, but next year we may have that all implemented and I may be focused more on how can we grow the capital of the agency. You know, it just kind of varies from year to year. >> Oh, I see that. I see that. And maybe maybe talking about that. So you know when when a change is happening I mean you know when there's a different funding requirement how do you maybe could you give us an example of when you know there was a there was a challenge with let's say a shutdown or you know something was going on and you were then having to figure out how you were going to forecast financially. >> Yes. So recently we did have a couple government shutdowns. one that lasted quite a long time and we were trying to

16:53figure out how we were going to finance our Head Start operations and thankfully we already had those plans in place. We knew what we were going to do because we knew that it could be a possibility. It's happened before and it can happen again. So navigating that is all about planning ahead. I would say making sure that you consider maybe not the absolute worst, but at least find a middle ground of bad and figure out how you're going to cover yourself in that event that that happens. Yeah. But okay, let me ask tangibly. How much surplus do you keep for that kind of scenario? >> So until recently, we had not actually had much surplus. We did rely quite a lot on having a line of credit to back us up financially. We have started to build up our reserves a little bit. So that's good. But we are nearly we're 92 to 97% federally funded which means we have to justify how every single dollar is spent, right? So we don't get to keep it. So unless we have time outside of that to do fundraising to get non a non-restricted or we just have somebody

17:58super nice walk in the door that's like, "Hey, here's a million dollars." We don't really have that laying around for the most part. So that's something we really have to work at as community action agencies, not just us, but everybody. That's typical of what you'd see is that we focus so hard on trying to serve under those programs that are passed through the feds that we don't necessarily have the time to build the capital that we need to cover us in the event of emergency. But luckily, we have those financial resources readily available enough that we can reach for them if we need them. >> Yeah. Okay. No, that's fantastic. And what about just a little bit of advice for someone who was thinking about getting into community action less on the program side maybe more from the accounting finance side? >> More from the accounting and finance side. >> Yeah. >> So that's I mean that's easy for me now. It's something that gets in your blood and that's just a weird thing we say but it really is true. I actually came from the oil field and I took quite a large cut in pay to come here because my life was not balanced. It was I don't want to

19:02say miserable, but it was not great as far as work life balance and things like that. And I came here and I've almost been here for 10 years now. So, that kind of can speak for itself. And I walked in the door and I was not the CFO when I walked in and was not making the kind of money that I was making in the oil, but walked in the door and I'm blessed. Everything has been great with that. And again, that opportunity for if you want to be an accountant and you don't want to be not going to say you don't want to be held to the same CPA standards because we truly are still held to that here. We we still have to have the same professionalism and the same level of knowledge, but just that your work life balance is going to be a lot better than it would be if you were going to say work for one of the big four accounting firms or even take an adventure and go work, you know, say in the oil field like I did. >> I got you. I got you. Well, Re, thanks so much for coming on. We really appreciate it, especially all the work you're doing down in Texas. And yeah, we'll we'll keep in touch. And but thanks so much for coming on the

20:04podcast.