Santa Clara County wants to strengthen oversight of the nonprofit that administers its senior nutrition program after learning that the organization routinely dips into its meals budget to cover overhead costs.

Sourcewise has annually transferred $500,000 to $800,000 from its food budget to cover other senior services, according to records. The county demanded answers about the practice, but, for the past year, has had trouble getting Sourcewise to cooperate.

On Tuesday, the Board of Supervisors will discuss the conflict, which may lead to a new audit of the organization. It was a Harvey M. Rose Management audit in 2014 that brought some of these issues to light.

In most of California, local governments receive funding for seniors under the Older Americans Act—a law passed in 1965—by way of the state's Department of Aging. In Silicon Valley, the money goes to Sourcewise, which then disburses it to the county and various nonprofits. It’s an odd arrangement that dates back to the 1970s.

Because a private nonprofit controls the funding, the county has very limited authority over how it’s managed. This has been a source of frustration for Supervisor Joe Simitian for some time, he said.

“When we see public funds that are designated for nutrition being used for other purposes, that raises some obvious concerns about what’s happening here,” Simitian told San Jose Inside.

In a letter to Sourcewise last August, county Executive Jeff Smith admonished the nonprofit for its lack of transparency.

“Although this relationship goes back 40 years, it has somehow recently become challenging,” Sourcewise attorney Rona Layton acknowledged in response to Smith’s concerns. “I am hoping that I can provide you with information that may assist the county and Sourcewise in repairing the relationship.”

The county mistakenly believes that it has authority over the federal funds, Layton added.

“The reason for the transferability of funds is obvious: needs will vary greatly from service area to service area …,” she wrote. “As long as the amount transferred does not exceed 30 percent (which has only happened on one occasion), Sourcewise’s transfer of funds … is absolutely lawful and up to the sole discretion of Sourcewise.”

Layton suggested that the unusual the relationship between Sourcewise and the county may have led to some confusion.

“It is Sourcewise that is the funder and the county that is the vendor,” she wrote, “not the other way around.”

Smith wasn’t having it.

“I am disappointed with Sourcewise’s response and continued inaction,” he replied in a Sept. 9 letter to the nonprofit’s CEO, Stephen Schmoll. “The legal analysis provided does not address the concern that Sourcewise conduct its affairs in an open and collaborative manner. Sourcewise’s position is contrary to the values required to effectively partner with others, including the county, to serve the senior community.”

Sourcewise manages both delivered and group meals for the county. In the 2014-15 fiscal year, the group spent roughly $8.5 million on group and home-delivered meals for low-income seniors.

Cash for the program comes from federal money disbursed through the state’s Department of Aging. About $150,000 in private donations went toward the South Bay’s program last year, according to the county.

In the past fiscal year, the county’s Meals and Wheels received a little more than $1 million in federal funding. But the money ran out a month before the end of the fiscal year, in May 2015, forcing the county to dip into its general fund.

The county offered Sourcewise $191,000 in matching funds to pay for meals in the current fiscal year, but the nonprofit declined the offer because, according to a letter to the county, it raised enough of its own money.

Simitian said the county isn’t the only entity to take issue with Sourcewise. Other nonprofits have expressed concerns about the way the organization is managed, he said, but they’ve been too afraid to speak up and risk losing future funding.

“It’s not clear to me what we should do,” Simitian said, noting that he wants to hear his colleagues weigh in Tuesday. “Should this be referred to the civil grand jury? Should we re-designate some other entity? Are we just going to let it go? Ultimately, you know, these are public funds and this is for folks who need our help.”

Patricia Gardner, head of the Silicon Valley Council of nonprofits applauded the county for taking a closer look at Sourcewise.

“Good stewardship along with an open transparent public process of public funding is a key to good government,” she wrote in an Aug. 12 letter to the board. “Joint prioritization of services, funding and needs assessments is a goal to strive for as we move forward from this audit review. The lack of participation by Sourcewise in the audit of all governmental funding for the purposes of serving seniors in Santa Clara County demonstrates a veil of secrecy that is disheartening for our community.”

Sourcewise spokeswoman Aneliza Del Pinal said the contention stems from confusion about the nonprofit's role.

“I feel that this is a misunderstanding more than anything,” she told San Jose Inside.“We definitely are happy with the service the county provides, especially for our nutrition services.”

More from the Santa Clara County Board of Supervisors agenda for February 9, 2016:

• A Buddhist monk and his following want to build a temple in San Jose’s Evergreen hills, but neighbors have appealed their land-use permit. Critics of the project say the temple, which held unpermitted gatherings for years before the county shut it down, is too noisy. The monk counters that his followers just want a place to pray. Stephen Colbert referenced the dispute in his late show monologue last month. “A community in San Jose, California, is complaining that a local Buddhist temple is too noisy,” he said. “It makes sense. Just imagine the sound of all those one hands clapping.” Supervisors will have the final say, deciding whether to side with the NIMBYs or the Planning Commission, which approved the project last fall.

• Supervisors will approve which questions to include on a poll to gauge voters’ willingness to approve a new sales tax.

• After a decade of steady decline, the number of new HIV diagnoses in this county actually increased by 20 percent in 2013 and 2014, particularly among Latino men. Supervisor Ken Yeager, who convinced the county to form the AIDS Task Force 30 years ago, wants to launch a regional public health initiative aimed at reducing HIV transmission, deaths and stigma. The “Getting to Zero” campaign is modeled after a similar effort in San Francisco.

• Despite a host of issues with Rural/Metro, the county plans to extend its contract the ambulance provider for another three years. The county will also reduce fees owed by Rural/Metro to the county by $1.75 million, which will push ambulance rates for patients up another 10 percent.

WHAT: Board of Supervisors meets
WHEN: 9am Tuesday
WHERE: County Government Center, 70 W. Hedding St., San Jose
INFO: Clerk of the Board, 408.299.5001