"I think part of what happened is we had income for the building and income for the Pride Center, but the two were being reported as the same income," said Netto. "There was a fair amount of money spent, but it also [required] a fair amount of management focus."
Netto said he was asked to rejoin the board to "help clean things up" this year, following an "internal struggle" that included former member Allen Miller calling for a review of Pride executive director Valerie Larabee.
"The way money was managed there from my perspective was questionable at best," said Miller, though not "nefarious."
Larabee did not return phone calls and email messages seeking comment Tuesday, but Netto said he stands behind her. The board did not always give her adequate guidance, he added.
"I have concluded to this point there are no actions of malfeasance," he said. "There were errors in judgment about how to handle a couple of problems ... she is not perfect, but she is a good leader and her heart is in the right place."
When Netto looked at the organization's financial records, he found that expenditures exceed revenues, especially after the notification two weeks ago that two grants totaling $125,000 will not be renewed.
Netto decided to lay off two people: Director of Operations Joe Gonzales and Charles Lynn Frost, who headed an aid program for elderly lesbian, gay, bisexual and transgender (LGBT) people.
The SAGE program (Services and Advocacy for G[LBT] Elders) usually cares for people who are childless and have been rejected by extended family.
"These are very vulnerable people. They have huge needs physical, internal, emotional, spiritual," said Frost, a prominent member of the city's LGBT community and the actor who portrays the character Sister Dottie Dixon. "I've really worked very hard to develop viable programming for them."
He was laid off on Monday.
The SAGE program was originally funded by a grant from a private donor, but that money was later switched to funding general Pride operations, which Netto said was consistent with the nature of the gift.
Frost said he was told at a staff meeting last week that the organization would run out of money in February. Netto disputed that, saying Pride has $300,000 to $400,000 in the bank and is expecting a $100,000 infusion in January.
"If J.P. Morgan doesn't get any income between now and February, they'll shut down too," Netto said. Pride will continue providing the SAGE program using volunteer support, he said.
Following the layoffs, Pride now has 12 employees. They offer social programs, mental health counseling, and community events. Netto said the Pride Festival won't be affected.
"Utah Pride is on solid financial footing because we have taken appropriate action. We have the solid support of our major donors and we don't expect that to change. We expect to learn from this and come out stronger," he said.
The board is now choosing an outside expert to conduct a review of the organization, including the performance of the board and Larabee. Over the last nine years, she built Pride from a three-person group to one that reported nearly $2 million in revenue to the Internal Revenue Service last year. Employee salaries and benefits added up to just over $706,000 that year; Larabee made an $80,000 salary.
But accounting practices didn't necessarily keep up with that growth, and over the last year there has been "a little confusion" in the accounting system coupled with turnover in that area, Netto said.
"All organizations that are dependent upon donations are suffering right now. They're just not getting the kind of support that they have in the past," said another former board member, Billie Gay Larson. "A lot of people just don't realize how many lives they've saved, how many lives they've changed."