By David Farmer,Staff Writer

LEWISTON – Maine’s progressive movement has lost two of its key institutional players.

The Maine Citizen Leadership Fund, beleaguered by debt and philosophical differences among its directors and staff, has closed its doors.

Its close cousin, the political action committee Dirigo Alliance, is dissolving.

Dirigo Alliance organized in 1987 as a progressive coalition with the goal of electing like-minded leaders to state government.

At a board of directors’ meeting Wednesday night, the decision was made to shut down the PAC.

“We’re going through a difficult transition right now and it seemed better to end it,” said Marjorie Phyfe, who was chairwoman of the alliance. “But we remain a coalition of organizations committed to a progressive movement in Maine.”

Begun in 1990 as a nonprofit offshoot of the Dirigo Alliance, MCLF focused its efforts on developing progressive public policy, activist training and grassroots organizing.

The group is credited for its role in pushing the state to adopt the Maine Clean Election Act, which provides public financing for state office seekers and limits campaign spending, and successfully defended court challenges to the Maine Rx program.

The group was also active in the fight against the Palesky Tax Cap, a ballot measure that was defeated by voters in 2004.

Last year, it advocated for comprehensive tax reform, offering a blueprint that would have broadened the sales tax base in order to reduce the burden on property taxpayers. The plan was unable to gain traction in the Legislature, where more incremental steps – increased funding for education and the spending caps that were part of L.D. 1, for example – won passage.

Much of MCLF’s staff was dismissed last fall when a new executive director, Joanne D’Arcangelo, was hired to head both the MCLF and the Dirigo Alliance. Before taking the job, D’Arcangelo was the chief of staff for Speaker of the House John Richardson, D-Brunswick.

According to Frank O’Hara, secretary of the MCLF board of directors, D’Arcangelo resigned from the two organizations last week.

Efforts to reach D’Arcangelo Thursday through third parties were unsuccessful.

“We’re out of dough,” O’Hara said Thursday. “We’re trying to work through a debt situation.”

The MCLF has been struggling to overcome a large debt since last year, O’Hara said.

The organization was about $130,000 in the hole and has been able to reduce that amount to about $40,000, O’Hara said.

The efforts to move further, however, stalled when former staff members threatened to sue the organization over money they say they are owed, O’Hara said.

“We had to work in a bare-bones kind of way to pay off these obligations,” O’Hara said.

“It’s a small community that funds these types of organizations,” O’Hara said. “When those funders heard about the potential lawsuit, the funding dried up.”

According to O’Hara, the small political organization had always been run informally, with staffers putting off paychecks and expenses until funding became available.

D’Arcangelo “wasn’t aware of the size of the debt when she agreed to take the job,” O’Hara said. “Neither was the board, for that matter.”

MCLF directors are considering several legal options, including bankruptcy, O’Hara said. “The organization is gone for the time being.”

Longtime MCLF Executive Director Arn Pearson, who was forced out in November, disagreed with O’Hara’s characterization that the board didn’t know what was happening.

“That may be true for the new director,” Pearson said. “But the board was well aware of what the situation was and voted on everything we did. It’s the steps that they took following the transition that turned this from a cash flow crisis into a financial crisis.”

Pearson said that while he was executive director, he capped any debt the organization was willing to accept at $30,000, about 10 percent of grants that were expected at the end of the year.

“The figure of $130,000 of debt is not accurate. In fact, it’s wildly inaccurate about the debt when I left,” Pearson said. “I don’t know what liability they took on after I left when they fired the staff. … No way we were $130,000 in debt.”

Bo Yerxa, the president of the MCLF board of directors, initially declined comment about the situation, but agreed to talk out of concern that Pearson and other former staffers were being wrongly maligned. While Yerxa said he didn’t have records in front of him, he thought the $130,000 figure was a stretch.

“There was more debt than we understood as a board and certainly more debt than Arn understood,” Yerxa said.

He blamed the shortfall on the changed schedules from two groups that made grants to MCLF. When they changed their timetable, he said, it created a cash flow problem.

“Any effort to portray the former staff as the direct cause of these problems is self-serving and borderline revisionism,” Yerxa said. “While the story is complex, I believe that the majority of the Maine Citizen Leadership Fund board will agree with me that Arn Pearson’s tenure as executive director was marked by good leadership, resourcefulness, professionalism and ethical behavior that showed due care toward the affairs of the corporation.”

Rob Brown, who was part of the staff and was fired by D’Arcangelo, also backed up his former boss, saying that the board of directors was fully aware of the financial moves that were being made.

“Mr. Pearson took an organization that had a couple of employees and turned it into an organization with a $500,000 budget and a national reputation,” Brown said. “He turned MCLF into what it is. Six months later, look at where it is now.”

The problems at MCLF, however, go deeper than the group’s checkbook.

As reported by the Portland Phoenix in January, a civil war broke out between the leadership of the MCLF and the Dirigo Alliance. Ultimately, the decision was made last summer to create a combined executive director position for both groups. That decision was not unanimous and there were a number of clashes about the change.

“There’s disagreement in the progressive movement,” O’Hara said. “There were some philosophical issues going on at the same time.”

Some people prefer to work inside the system, O’Hara said, while others want to advocate from the outside.

But, O’Hara said, if the money had been there, he thinks the other issues could have been worked out.

Pearson, who had been with MCLF for four years as its policy director and five as executive director, tried for the job, but was rebuffed in favor of D’Arcangelo, a political mover and shaker who has been involved with the Maine Women’s Lobby and Planned Parenthood before going to work for Democrats about five years ago.

One of D’Arcangelo’s first decisions was to build her own staff, which meant firing much of the old one, O’Hara said. “It’s a small organization. The director needs to be able to have a staff that they’re comfortable with.”

The staff, he said, was loyal to Pearson, a fact that was borne out by Brown.

“The process (to find a new executive director) lacked transparency and accountability,” Brown said Thursday. “It wasn’t credible.”

The board, Brown said, asked Pearson to apply for the job, but then extended the deadline for applications to make sure that D’Arcangelo could be considered.

“It was pretty apparent at that point that the fix was in,” Brown said.

“We were a nonprofit and nonpartisan group,” Brown said, “and we took that seriously. There were others who were more partisan than we were willing to be.”

For the Dirigo Alliance, the end came not because of financial strain, but because of a potential legal fight. Fearful that the group could be dragged into the MCLF situation with its former employees, the board voted to dissolve.

“We’re solvent right now,” Phyfe said. “But anybody can sue you over anything, and the potential for a costly fight was too much. We’re not guilty of what they could sue us for. They weren’t our employees.”