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Getting a U.S. Grant--How the System Really Works

August 14, 1989|SARA FRITZ | Times Staff Writer

WASHINGTON — It is a classic case of how Washington works--of how insiders can use their connections to circumvent the bureaucratic procedures that can pose obstacles to those without special access.

At the same time, it demonstrates that political clout is a two-edged sword that can cut surely through bureaucratic red tape but can also turn on the wielder, with painful results.

The tale began in 1987 when Yeshiva Rav Isacshon, a well-regarded private Orthodox Jewish primary school in the Beverly-Fairfax area of Los Angeles, decided to seek federal aid to start a day-care center.

Instead of approaching the faceless Washington bureaucracy directly, the Los Angeles group's first call was to a politically well-connected Brooklyn, N.Y., rabbi named Milton Balkany, who boasted that he met regularly at the White House with then-Chief of Staff Donald T. Regan. Balkany went to Regan on the yeshiva's behalf, and Regan put him in touch with the undersecretary of health and human services.

In a matter of weeks, Oakwood Child Development Center Inc., the corporation that the yeshiva had created to seek federal aid, had won a $1.8-million Department of Health and Human Services grant to buy a building at 555 N. La Brea Ave. and start a day-care center.

Wants Money Returned

Unfortunately for the Los Angeles group, however, what looked at first to be a successful maneuver has turned into a tangled controversy and the government is now demanding its money back. The yeshiva, in turn, has called out even more political clout, including Sen. Pete Wilson (R-Calif.) and several of his congressional colleagues.

At Balkany's urging, Wilson has sponsored a bill, opposed by the Department of Health and Human Services, that would permit the Los Angeles group to use the money in a manner that does not have the government's approval.

Wilson, a candidate for governor, received $2,000 in contributions--the maximum allowable under law--from Balkany and his wife, Sara, during his primary Senate reelection campaign last year. But he says the contributions did not influence his decision to offer the bill.

Yeshiva Rav Isacshon's initial decision to seek federal funds for a day-care center grew out of its effort to expand its own operations, which are located across the street from the La Brea Avenue building. According to local officials, Yeshiva Rav Isacshon has recently been searching for ways to expand.

Rabbi's Explanation

Rabbi Yakov Krause, education director at Yeshiva Rav Isacshon, said in an interview that the school created the Oakwood organization primarily to seek government funding for the day-care center. He said the group contacted Balkany because it needed advice on how to obtain federal funds.

Balkany, an old school friend of Krause, is a conservative Republican who during the last election contributed thousands of dollars to Vice President George Bush's presidential campaign and to 14 GOP Senate candidates. By his own account, Balkany is so well known in Washington that he has been chosen to offer the invocation at an annual dinner honoring the President for the last several years, and he once even declined an invitation to become the rabbi chaplain of the Senate.

It was Balkany's close relationship with Regan that prompted Oakwood to contact him, he said. "The reason that they called me to get involved was because I had, at that time, with the chief of staff in the White House, a meeting every two or three weeks," he said.

When Balkany first talked with Regan in early 1987 about Oakwood's desire for a federal grant, according to the rabbi, Regan summoned a White House car to drive him across town to meet personally with Donald Newman, then undersecretary of the Department of Health and Human Services.

Balkany recalled that department officials instructed Oakwood to hire Robert Brandwein, a Boston consultant, to put together the funding request, and Brandwein received $6,500 for preparing the application.

On Feb. 11, 1987, Oakwood formally applied for a $2.3-million community services block grant. Although the request far exceeded the $500,000 limit that the department had set for such grants, the department awarded Oakwood $1.8 million on an "urgent" basis two weeks later without having an independent review of it or comparing it with other grant applications.

On the day that the Department of Health and Human Services handed over Oakwood's grant check, Balkany recalls, top-level department officials--some of them wearing yarmulkes in his honor--hosted a champagne reception in Newman's office. The rabbi was asked to say a prayer.

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