Why might this be a problem? Because the state Operational Services Division (OSD) depends on the information in the UFRs to determine how much in state funds to apply to that compensation. By regulation, state funds going towards an indivdual contractor executive's compensation are capped at $143,986 a year, according to OSD.
Take the May Institute, for instance. According to its UFR, the nonprofit contractor took in roughly $105 million in revenues in 2009, of which about 66 percent came from the Department of Developmental Services and a variety of other government agencies in Massachusetts. About 79 percent of the total revenues came from all government sources.
As of April 8, 2011, the online UFR states that Walter Christian, the May Institute CEO, made $509,798 in salary and other compensation in the year ending June 30, 2009. Based on that number and on information from OSD, we calculate that OSD would have been required to “disallow” about $366,000 of that total compensation, meaning that amount would have to come from other sources than the State of Massachusetts.
However, the IRS Form 990 for the May Institute for the same 2009 fiscal year lists Christian's total compensation as $1.087 million. That's a difference of more than half a million dollars between Christian's compensation as listed on the state's UFR and on the IRS 990 form. If Christian really earned $1.087 million in compensation, we calculate that the state should have disallowed more than $940,000 of it, not just $366,000 of it.
All of this suggests that based on the 2009 UFR, the commonwealth may mistakenly think that more than half a million dollars in potential state funds went into direct care or other operations at the May Institute, when it really went toward Christian's compensation.
I would note that the UFR website stated as of April 8, 2011, that the latest online version of the May Institute 2009 UFR had been submitted by the contractor on March 22, 2010, more than a year ago, and still hadn't been reviewed by OSD. A previous version of the UFR had been submitted in December 2009. The website stated that there were “no issues pending” regarding that version.
On March 21, I submitted a written question to OSD about the discrepancy in the listing of Christian's compensation on the UFR and Form 990, and followed up with a phone call and an email on April 5, saying I was preparing a blog post about the issue. I still haven't received a response.
An OSD official told me in the April 5 phone conversation that he had been too busy to get an answer to my question (and a few related questions about the UFR) and was going on vacation the following week. He said he didn't know when he would be able to get the answers.
It's not just with Christian's compensation that there are discrepancies between the UFRs and the Form 990s, however. The May Institute UFR lists only Christian and one other executive as making over the $143,986 compensation threshold, above which compensation must come from sources other than the state. The Form 990 lists a total of 13 employees of the May Institute as making over that threshold amount. The discrepancy in listed compensation between the two forms was $3.4 million.
For Vinfen, the 2009 Form 990 listed a total of 10 employees as making over the threshold compensation for a total of $2.2 million, whereas the UFR lists a total of only four employees making only $997,000 — a difference of $1.2 million.
The UFR website stated as of April 8, 2011, that the latest online version of the Vinfen 2009 UFR had been submitted by the contractor on December 10, 2010, and was found by OSD to be “deficient.” No further information was provided.
For Seven Hills, the 2009 Form 990 lists four employees making over the threshold, for a total of $1.2 million in compensation, compared with the UFR, which lists only two employees making a total of $816,000. That's a difference of $385,000.
The latest online version of the Seven Hills 2009 UFR was submitted to OSD on April 21, 2010. The OSD website stated that there were “no issues pending.”
Last month, The Globe published a letter I wrote on behalf of COFAR, suggesting that Governor Patrick scrutinize the salaries of human services contractors as part of an overall crackdown he had announced on salaries in the state's independent agencies.
In response, Michael Weekes, president of the Providers' Council, accused me of attempting to “smear the leaders” of the human services sector and of “making scurrilous attacks that distort the facts and mislead taxpayers.” Weekes said my concern over executive compensation was “moot” because state law caps the amount of state funds that can be applied to executive compensation. He added that my “real concern” should be over the low pay of direct-care workers in the human services contract system, many of whom only make $12 an hour and have gone three years with no increase.
I agree with Weekes that we should be concerned over the low pay to those direct care workers. That's exactly why we're asking these questions about the salaries of executives making as much as $1 million or more a year, and whether those executives' salaries may be soaking up state funds that should be going to the direct care workers.
There is no “smear” in stated facts. Mr. Weekes’ comment sounds a bit defensive, an attempt to re-direct attention away from the pay inequities. He does not dispute the stated salaries of the executives, nor the stated salaries of the direct care workers. There is a huge gap. That is our ” real concern.” There is only so much money in the pot to care for the developmentally disabled. If executives are skimming all the cream, direct care workers are left with skim milk.
of the thousands of developmentally disabled persons currently on the Massachusetts waiting list for services. Oh, oops!
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p>I agree with you Ed–Mr. Weekes sounds a little nervous that this glaring inequity has come to light.
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p>Besides, what has he done to address the plight of the direct care workers?
This is pretty complicated stuff. So my questions might be “stupid” but if the time period of both reports (UFR and IRS)are the same, which they seem to be (year ending June 30)why would there be any differences in the amount of compensation? Just like why would one report list one or two making more than the threshold and the 990 list more. Does the IRS have a different threshold to be considered highly compensated? I have no idea but it certainly makes me wonder what the story is.
between the UFR and IRS forms. I was comparing the number of employees listed on both the UFR and IRS forms for these companies who make over the state’s threshold amount of $143,986. Maybe there’s a simple explanation for the differences, but so far OSD hasn’t provided it.
If one was to look at the statics, then 10-12 dollars an hour is slightly above “fair wage” for an “entry level” human services worker.
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p>The problem is not the rate of pay for the direct care workers it is the standard or lack there of for hiring direct care workers. In many cases a High School diploma is not required. A national CORI check is not required. These are the issues we should be looking at. These are the individuals that are taking care of our “loved ones”
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p>Anyone in HR will attest that a more educated employee is in most cases more reliable, more efficient and better equiped to do the job. Sixteen hours of “MAP” training and a test (by the way you can repeat the test if you fail at least 3 times) is not nearly enough to dispense medications and preform the other duties related with medication. But yet we all sit back and let it happen on a daily basis.
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p>Rather than going after the CEO’s lets focus on raising the bar of care for out loved ones. Lets look at moving the entry level wages from 10-12 to say 14-16 but with that must come at least a High School diploma and an Associates level degree.
As my post notes, there is a relationship between the two. To the extent that the state attempts to limit the amount of funding it applies toward CEO salaries, the implication is that the balance of those funds will go toward direct-care wages and other needed operations. If the state is not accurately tracking the CEO salaries, it is the direct-care workers who will potentially suffer.
If one diner gets 75% of the pie, and there are eleven other diners, I guess all the other eleven get is one bite each.
I took a look at the form 990 to try to understand this a little better. I noticed a couple of things. The form has a section that identifies program objectives and accomplishments and states the expenses and revenues for those programs. The revenues exceed the expenses so it seems the “not-for-profit” is making money on the taxpayer.
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p>I found all of this really interesting and went a step further and took a look at the audited financial statements that were submitted with the Attorney General filings. It was a consolidated statement of the May Institute and all of its affiliates. I noticed in the notes to the statements a section on third party settlements. It seems that for a couple of years there were some issues with whatever it is they file with the statement for payments. I couldn’t tell exactly what but it seems there were some over billings and over payments they are required to pay back. Not a lot of dollars when compared to the hundreds of millions they get but it shows problems in several different years. I could be wrong but a “settlement” infers the amount paid back is less then the amounts questioned.
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to continue (computer glitch)–
The notes to the statements also had a disclosure regarding pension/401(k) type programs that had been instituted. As I read it, and I have absolutely no expertise on this, it seems for executives who had been there for years and years, contributions were made to those plans in recognition of those past years of service. I think one of those contributions was more than $500K (like $700K). Does that happen anywhere else that past service, before the plan ever existed, is recognized by this kind of contribution? It doesn’t in my 401k plan.
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p>I don’t know if any of what I found interesting is of any real consequence, but it makes me wonder.
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Does everyone think that by lowering or capping the wages of CEO’s that the Direct Care Workers are reap the benfits?
The answer to that question is “NO”. BY being in the non-profit end of business many have taken a “Pay Cut”
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p>The only way to increase the wages of direct care workers is to, as I stated before, “raise the bar” or competency. Right now direct care workers are being paid an appropiate wage based on their competency and experience. Most of us have an inflated idea of what we are worth.
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p>It is very simple, and history has proven this since the begining of time, the better educated you are the more money you will make.
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p>For those of you who follow not only the MA issues dealing with ID/DD but also follow the national issues lack of competent workers in human services is if not the number one problem but certainly in the top three.
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p>I also commend the individuals who are highly educated with Masters degrees ect. for getting into the Human Service profession. The several individuals I have talked to have said it never was for the money but for the individuals. Infact, one person told me that on day one of school her professor said “if money is your motivator then get out of my class”. As I said to her, and I will say to everyone else thanks for all you do.
I agree with your point about the pay,education, competency and quality of the direct care workforce. They do a difficult job. A job I know I could never do.
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p>But, can we ignore other aspects of the system. You said it, no one goes into this to get rich so why does a CEO expect or have to make $1M? That CEO makes that at the expense of something else(clients, direct care worker, the taxpayer). So where do you start to make adjustments to that system or what, at least on the surface, appears to be a place that dollars can be re-directed for pay increases, trainings, etc., etc? Seven figure CEO salaries sounds like a really good place to start.
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Why won’t direct care workers reap the benefits if CEO pay is tied to a multiplier of their workers wages? If one thinks about it, the opportunity cost of the state foregoing tax revenue on these non-profits should provide a few mandates.
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p>Personally, I have never seen the empirical support that non-profit, vendor direct care workers are being paid an appropriate wage compared to state operated direct care workers, so if you have it, I’d love to see it. There’s a real wage differential there, which has been identified in a number of reports, most notably Straus. Are state op workers better paid because they’re better educated and trained? And if they are – shouldn’t we be demanding that of the vendor ops? Perhaps if the wages were better, they’s attract a better level of worker?
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p>If the workers aren’t competent, then why aren’t they competent? Who is failing to train them? Why are they being hired in the first place? After all, we keep hearing how wonderful the community system is….if this is one of the top 3 problems, how do familys with loved one’s being evicted from the facilities have any faith in the system?
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p>I’d also like to acknowledge David’s fine article about less than accurate state and federal filings. If the CEO’s are “right” – why are the numbers so different in these filings?
of workers in the human service system. But in addition to providing more education for direct care workers, the state needs to ensure these people will also receive better wages and benefits.
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p>Direct care workers in the state developmental centers are both better trained and make better wages and benefits than their counterparts in the privatized, vendor-run system. They don’t make better wages because they are better trained.
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p>The reason the state has a regulation that caps state funding of CEO salaries for human services contractors is precisely to try to ensure that an adequate level of state funding will go to direct-care workers. I agree, though, that the system isn’t successful in accomplishing that, partly because OSD may not be adequately tracking the CEO salaries and because the system is based on dividing up a more and more limited pie, as AmberPaw notes. What is needed is more funding for the system as a whole.
but HHS is a huge part of the budget (in the billions)and I have to ask myself why its not enough–as everyone here seems to agree, it certainly isn’t the underpaid direct care workforce. Again, high executive salaries appears to be a good starting point to figure that out.
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p>When you get down to it, even though these vendors are “non-profit” its a business. The financial bottom line will always be their most important consideration (not the people they serve)because without the bottom line, there will be no business. I know I am definitely a skeptic, but not all of these executives get into the business for altruistic reasons, its a very lucrative business that will always be in demand. The facility closure policy has turned it into pretty much a growth industry with minimal risk and a guaranteed revenue stream with little to no oversight. It will never be replaced by the next generation of a technology so in a sense it is low risk. So as is the way in any business, the easiest way to achieve a bottom line is to keep the wages of the people who do the work low. And they continue to do that because they can and no one is demanding anything different.
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