SACRAMENTO -- Parents of over 200 day care and preschool students at four campuses run by the National Human Development Foundation were scrambling to find spots after it announced it would be ceasing operations after Friday.
The foundation has provided day care, preschool and development services for low-income families for over 40 years.
But during a random audit five years ago bookkeeping errors were found that the foundation did not dispute.
It entered into a correction plan that was approved by the Department of Education with no penalties.
Foundation officials say another department unit initiated another audit for earlier years that found that some students weren’t eligible for subsidies given by the preschool, something the foundation disputed.
After losing an appeal, it was required to repay over $2.5 million, something the nonprofit, which gets is revenue solely from state and federal funding, could not afford.
Tuesday it notified parents and staff that its last day would be Friday.
Acting Executive Director Steward Smith said there was no intended wrongdoing.
"Nobody’s hiding money. Nobody has a secret bank account. Nobody is buying cars," Smith said.
He said auditors didn’t dive deeply enough into documents showing that the students in question did qualify for low-income assistance.
Parents say the department should have come to an accommodation to ensure that the preschool remained open because their parents now have few, if any, alternatives to low-cost day care.
"We want to know how it came to this, that something could not be worked out,” said Angelique Thomas, vice president of the preschool’s parents association.
The Department of Education did not respond to inquiries regarding the audit or its findings, nor about the campus closures.