CHAMPAIGN – The 45-year-old Urban League of Champaign County closed its doors Friday.

The closure comes on the heels of mounting financial problems, state and federal investigations and a soon-to-be-released audit for fiscal 2006-2007, according to a press release from the organization late Friday night.

"From a financial standpoint, it was a very simple decision. There was no alternative. From an emotional perspective and a loss to the community, it was an incredibly difficult decision," said interim Executive Director Sandra Jones.

The agency has debt of about $850,000, and an annual budget of about $1 million.

Urban League staff were informed of the closure earlier this week.

"It's actually a done deal at this point," Jones said on Friday night.

Jones, who said last month that she was unaware of any formal investigations of the league, confirmed Friday that state and federal authorities are both investigating the agency.

"One of them I just heard about today," she said, declining to specify which departments are involved. The release referred to possible "fraud and theft." Jones declined to elaborate.

"The only thing I can say is that the Urban League board is cooperating fully," she said. "We believe that there are explanations for things that we're aware of."

The agency's problems began in 2006, when the state removed two grant programs worth $3 million. That eliminated 60 percent of the league's then-$5 million budget and resulted in the layoffs of 14 employees.

The Urban League, which once had 60 employees, has dwindled down to a total of nine. The organization has also sold off property and reduced staff and programs.

The upcoming audit "represented the second year the (Urban League) received notice of serious problems with debt obligations against available reserve balances from existing grants," according to the press release. "It is clear that the following audit for 2007-2008 would show the same result. Because of the complicated circumstances, ongoing investigations and financial shortfalls, the board of directors unanimously concurs that transferring programs, staff and equipment to others is in the best interest of those served in our broader community."

As part of the closure, some grant programs have been transferred to other agencies; the Digital Divide program will relocate to Parkland College, and the computer lab will be open to the public again shortly.

In addition, "as part of the Development Corporation's housing programs, a credit counseling program was operated and funded by the National Urban League. The various housing entities are being transferred to appropriate financial organizations with no adverse effects on tenants or homeowners," according to the press release. "Tenants have been informed of the changes, and staff remains in place part-time to assure smooth transitions."

The Urban League had a cash loss of $850,000 following the loss of energy assistance and home-weatherization programs. The loss required officials to trace all grant expenditures for several years.

A review found that these funds were used for other purposes and appear to be "comingled in order to meet the operational needs without regard to the specific terms of the funders in some cases."

Reports appeared to have been prepared and submitted to grantors without the appropriate documentation to support the data submitted, the release said.

"This has resulted in the board voluntarily cooperating with investigating bodies at both the state and federal level as the possibility of fraud and theft is investigated with appropriate parties," the release said. "The board is unable to comment further about any ongoing investigations."

The committee of past Urban League presidents has worked for the past year to provide historical information in an effort to create a written historical account of the agency. A tribute celebrating the significance and accomplishments of the Urban League is still planned for 2009.