Burdened by a $2.7 million financial deficit, the NAACP has dismissed 10 employees and expects to cut the staff at its Northwest Baltimore headquarters by another 10 over the summer.

The Rev. Benjamin F. Chavis Jr., the civil rights group's executive director, said the moves were part of a major reorganization of the NAACP. He contended that the "financial situation did not trigger the reorganization."

However, Dr. Chavis, who became the NAACP's chief executive in April 1993, said:

* The organization's general fund was $900,000 in the red last year, adding to an existing deficit.

* The NAACP's televised Image Awards program had lost nearly $1.5 million over the past four years.

* The civil rights group was socked this year with a $680,000 court judgment that had to be paid in cash.

The staff cuts, all of which involved temporary employees not covered by the NAACP's contract with Local 2202-N of the American Federation of State, Municipal and County Employees (AFSCME), took effect a week ago, Dr. Chavis said. He said the salaries of the affected employees, mostly administrative assistants, ranged from $20,000 to $40,000 a year.

"I'm not through yet," Dr. Chavis said. "There will be other reductions between now and the [NAACP] convention [next month] and some after the convention."

He said that after the downsizing, the National Association for the Advancement of Colored People's former staff of 150 will have been trimmed to 130.

Dr. Chavis would not estimate how much would be saved by the staff cutbacks.

"The goal of the reorganization is not to reduce the deficit," he said. "The goal is to improve our effectiveness and efficiency."

Sandra Almond, chairwoman of the AFSCME local that represents 40 NAACP employees, said no permanent employees were laid off. AFSCME's three-year contract with the NAACP expires June 30, but she said negotiations were progressing smoothly.

"Everybody's upset when it comes to layoffs, but if you're going to do it, do it with temporary services," she said. "Everything seems to be all right with us. We have no problems with Dr. Chavis and management at present."

Dr. Chavis ordered an 8 percent across-the-board raise for NAACP employees in January. While NAACP board sources have questioned the fiscal prudence of the raise, Dr. Chavis defended it as overdue.

The sense of financial crisis at the NAACP developed at a private board of directors meeting last month in South Carolina. The group's treasurer told the board that, by the end of March, the NAACP had accumulated a $2.7 million deficit, a figure Dr. Chavis confirmed yesterday.

The Image Awards, a Hollywood production celebrating African-American achievement that is nationally televised, were blamed for more than half of the accumulated losses.

The show has been in financial trouble since shortly after a national board committee took control of it in 1989 from the NAACP's Beverly Hills-Hollywood branch.

Dr. Chavis said yesterday that he would scrap the Image Awards program next year if he could not make it pay for itself. He said the program that aired this January alone was $600,000 in the red.

The other major financial blow resulted from a November 1993 New York State court decision upholding a $680,000 judgment against the NAACP. The case involved a man injured in an NAACP-owned building in the 1980s, before Dr. Chavis' tenure.

The NAACP mishandled filing insurance claims that might have covered its losses, board sources said.

Some board critics, who asked to remain unidentified, accused Dr. Chavis of compounding the financial woes with careless spending. They cited the still-untallied costs of sending a 14-member delegation to South Africa for Nelson Mandela's inauguration, holding a three-day black leadership summit here this month and leasing two Lincoln Town Cars for the use of top staffers.

The NAACP leader has been criticized from inside and outside the organization for meeting with black radicals and for including the Nation of Islam's Louis Farrakhan in the summit, but it's unclear whether those policies have cost the organization donations.

Dr. Chavis defended his management of the NAACP's $18 million annual budget. He said that, while the NAACP general fund ran a large deficit last year, its Special Contribution Fund -- which includes donations from foundations, corporations and individuals but not membership dues -- was in the black after having a nearly $600,000 deficit in 1992.

"We always made our payroll over the last 12 months, and in terms of paying bills, we're improving our payment," he said. "There is a tradition here of paying bills slow. I'm trying to run the NAACP more like a business. You have to pay bills on time."

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