Jewish Board Inherits $75M in Deals From Doomed FEGS

By JTA June 3, 2015

Another Jewish social service agency has replaced FEGS as New York City’s largest social service group.

The Jewish Board of Family and Children’s Services, or JBFCS, is taking over $75 million worth of government and other contracts formerly filled by the Federation Employment Guidance Services, which shocked many in the nonprofit and Jewish community when it announced in February that it would close.

With the new behavioral health programs transferred from FEGS on June 1, JBFCS will serve 8,000 additional people and have an annual operating budget of approximately $250 million, Crain’s New York reported. FEGS’ operating budget was approximately $250 million.

The state Office of Mental Health and UJA-Federation of New York will help pay for the millions of dollars in expenses necessary to transfer the programs, according to Crain’s. JBFCS will not receive any of FEGS’ property, such as computers and desks.

FEGS, which announced its closing soon after discovering a $19.4 million shortfall, filed for bankruptcy in March. Its former CEO, who earned an annual salary of more than $600,000 and left shortly before the shortfall was discovered, is suing the agency for $1.2 million in deferred compensation.

David Rivel, JBFCS’ CEO, told Crain’s that taking over FEGS’ services will enable it to negotiate better reimbursement rates from managed-care companies

“As we all head toward a world that’s going to be dominated by interactions with managed-care organizations, scale absolutely matters,” Rivel said.

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