Kansas City, Mo. ? The city’s largest educator of low-income preschoolers has relinquished its $18 million federal Head Start grant after audits revealed the agency was millions of dollars in debt, officials said Friday.

Without the Head Start component of its $28 million budget, KCMC Child Development Corp. — which also provides nutrition, day care and summer school with other funding — will probably have to close, the agency’s board chairman said.

KCMC has been under fire since reports surfaced last year that its then-executive director received more than $800,000 in salary and bonuses over three years.

“It was the hope of all the board members that we would be able to save the organization,” the Rev. Ervin Sims Jr., who chairs the KCMC board that was installed this spring, said Friday. “They had to deal with the reality that there was too much debt, and we were put in too late to be able to save it.”

The agency notified federal officials late Thursday of the board’s decision to give up the grant, which covered the fiscal year that ends next June 30.

While the federal government searches for a long-term replacement, Denver-based Community Development Institute will take over the education of 2,700 low-income preschoolers.

Windy Hill, associate commissioner of the Head Start Bureau in the federal Department of Health and Human Services, said the Christmas holiday would give the interim provider a chance to get new management in place.

“We think if there is a disruption, it will be minimal,” Hill said Friday from Washington.

Sims said he expected that the new Head Start grant recipient also would take over the nutrition, day-care and summer-school programs KCMC operates.

The Kansas City Star reported in mid-2003 that KCMC executive director Dwayne Crompton received more than $800,000 in salary and bonuses over three years, making him the best-paid Head Start director known to federal officials.

Crompton’s compensation package included a $600-a-month Mercedes sport utility vehicle lease paid for a time with Head Start funds.

The Department of Health and Human Services determined in January 2004 that Crompton — who stepped down April 1 — had been overpaid, and ordered the agency to pay back $455,992 of his salary and benefits. Subsequent audits also revealed KCMC violated Head Start procedures by paying prior year expenses with current year funds.

In total, the agency owed Head Start $1.2 million. And Sims said Friday that KCMC officials were told recently the total amount owed could grow — possibly by another $1 million — as the government review continues.

KCMC also owes money to the Kansas City School District, which operates Head Start centers for the agency. At one point in 2003, KCMC was about $1.5 million behind in payments to the district. The Star reported the agency later repaid all but $147,000 largely by taking out a loan.

On Friday, however, the school district issued a statement saying KCMC was nearly $800,000 behind in payments for services provided in April and May.

Additionally, Sims said KCMC owes $3 million to Bank of America, which loaned the agency money for construction. He said $1 million of the total is due immediately, and the agency is in default on the remainder of the money.