The Department of Health and Human Services is threatening to strip a nearly $2 million federal poverty fighting grant from the Las Vegas Urban League.

State officials say the move is based on the nonprofit organization’s failure to fulfill its responsibilities while the Urban League has called it a “foregone conclusion,” saying that individuals within the department have made it clear that they no longer want to work with the group.

Department officials, at a public hearing on Thursday, detailed the reasons why they believe that the Urban League’s status as a Community Action Agency (CAA) — the name for a public or private nonprofit organization that receives federal Community Services Block Grant funding to provide comprehensive services to low-income people with the overall goal of reducing poverty — should be terminated. The department cited the nonprofit’s failure to comply with the board structure required of such an agency, its non-compliance with certain grant conditions outlined by the department almost a year ago and its voluntary relinquishment of the agency designation last fall as the basis for terminating the grant designation.

But the representatives from the Urban League said at the hearing that the organization is now in compliance with the required board structure, has agreed to all of the grant conditions and only agreed to voluntarily give up its status as a CAA because officials within the department made it clear that they no longer wanted to work with the organization.

“The only reason we were willing to voluntarily relinquish the designation was because it was clear to us that DHHS, not as an agency but individuals within the agency, no longer wanted to work with me in particular and the organization as a whole and that was the only reason we reached the conversation in the first place,” said the Urban League’s CEO and president Kevin Hooks.

An attorney for the Urban League also said the department’s decision seemed to be a “foregone conclusion," noting that the state has already named a successor organization, the Economic Opportunity Board.

The Urban League currently receives $1.9 million annually in federal Community Services Block Grant funding and $27 million from other federal and state funding, for a total of $29 million in grant funds out of $32 million in revenues managed by the agency. The nonprofit, which has held the CAA designation since 2006, is one of 11 such agencies across the state and the only one of its kind in Clark County.

It’s up to the officer who presided over the hearing to make the determination whether to terminate the designation within the next five working days. The Urban League then has 30 days to appeal the decision to the federal government.

The state, in an April letter, notified the Urban League that the organization could either voluntarily relinquish its designation or the state would proceed with the public hearing to terminate it. In the letter, the state said that the Urban League’s history as a CAA has been “challenging” for both the nonprofit and the state throughout the 12 years it has held the designation.

“DHHS has spent considerable resources and technical assistance over this time-period to bring the agency into full compliance with the requirements, goals, and expectations for an impactful agency to address the needs of low-income residents in Clark County,” the letter said.

Specifically, state said that its findings, recommendations and conditions related to the program between 2015 and 2017 have “largely not been acted on.” In June, the state listed out a number of grant conditions the Urban League would be required to meet if they wanted to continue receiving funding for the current fiscal year, such as using required software to account for how grant funds are being spent, ensuring that the CAA program is operated agency-wide as required by the grant and not relegated to one unit within the organization and implementing benchmarks for the Urban League’s CEO.

The state also said that the Urban League needed to expand its programs to serve the entire community, including, specifically, the Latino community. (As a whole, the National Urban League specifically focuses on African-American civil rights, parity and economic self-reliance.)

The grant condition document also highlighted an ongoing issue over the structure of the Urban League board and difficulties meeting the board requirements outlined under the terms of the federal grant and the requirements mandated by the National Urban League.

In June, the state gave the Urban League three options: to accept the grant conditions, to voluntarily relinquish its status or to decline to work on the grant conditions and allow the department to move forward with either a quality improvement plan or toward termination. A month later, the Urban League largely accepted the grant conditions, while contesting a few others, such as that the Urban League doesn’t operate the program agency wide.

But they hit a snag in September when the National Urban League sent a letter to the local Urban League, notifying them that their plans to change the board structure would violate their terms of affiliation with the national organization. In October, the Urban League sent a letter to the state stating that they would voluntarily give up their CAA designation.

“Pursuant to our recent conversation, it is our understanding that the Nevada Department of Health and Human Services desires to sever support of the Community Services Block Grant Program for the Las Vegas Urban League Community Action Agency,” the letter said. “We understand that this decision is based on the National Urban League’s ruling regarding LVUL’s board structure, with which DHHS disagrees, and not related to compliance issues … if it is the will of the State of Nevada through DHHS to sever LVUL CAA, then we will agree to voluntarily do so pursuant to a mutually agreed upon separation agreement.”

At the Thursday hearing, Hooks noted that the Urban League had offered to relinquish its designation only if a separation agreement was reached and highlighted the back and forth between the state over that agreement — and how much money the state should pay the Urban League under it — over the past few months. (The Urban League asked for $471,000 for transition costs, including $120,000 for rebranding and $30,000 in attorneys fees.)

On May 4, the Urban League wrote a letter to the department notifying it of the organization’s intention to continue with the CAA designation, saying that it had resolved the issues with the National Urban League over the board structure and that it had responded to the department’s letter of grant conditions and asked the Thursday hearing to be canceled, a request the department denied.

“We have continued to operate as a Community Action Agency serving the community because what's most important to us and will continue to be most important to us is uninterrupted services to those that we serve,” Hooks said. “That is critical to us which is why at this point we feel like the only way to ensure that does not happen is for us to maintain the Community Action Agency designation.”

However, the state says that the grant conditions are no longer an issue after the Urban League communicated its desire to relinquish its CAA status and told the state that it was discontinuing its response to the grant conditions in November.

"The SFY18 Grant Conditions that were agreed upon became irrelevant once the voluntary relinquishment was submitted," said Community Services Block Grant program administrator Crystal Johnson in an email.

Hooks, in an interview after the hearing, said that the CAA funding represents about 4.5 percent of the Urban League’s overall revenue and the loss of the designation would result in a staff cut and a loss of some of the organization’s training programs.

“That money is so important to amplify the work that we do,” Hooks said.