(Cross-posted from the COFAR blog)
An editorial in today’s Boston Globe begins to get at an expensive and pervasive state problem — the relative lack of oversight of the state’s nonprofit human services contracting system.
The editorial calls for more power to the State Auditor and Inspector General to investigate financial practices in this system. It refers specifically to recent allegations by State Auditor Suzanne Bump and Inspector General Gregory Sullivan of financial abuses by the Merrimack Special Education Collaborative and a related nonprofit, the Merrimack Education Center. The nonprofit, the editorial notes, is subject to “far less scrutiny” than the public collaborative, and therefore has been able to “hide” millions of dollars in extra salaries, bonuses, and pensions, according to the Globe.
But the editorial expands its focus beyond just special education. Here’s the key statement in the editorial in this respect:
Massachusetts law is generous to private contractors who take state money, whether they are nonprofit or for-profit. While government agencies are subject to full financial scrubs, private subcontractors are largely outside the purview of the government’s watchdog officials, State Auditor Suzanne Bump and Inspector General Gregory Sullivan.
As much as we like to criticize government for its lack of transparency (and believe me, we’re having our problems with DDS right now in that regard), at least government agencies operate somewhat within the reach of watchdog agencies and within the public purview via the Public Records Law.
But nonprofit and for-profit contractors are largely exempt from the Public Records Law and their records are even beyond the reach of the Inspector General’s subpoena power, for instance. Nonprofits are required to file financial information with the state’s Operational Services Divsion and the Attorney General’s Public Charities Division. But, as we’ve pointed out, the information filed with those two entities doesn’t always match up. And the information available is quite limited.
Yet, it’s not as if these contractors are concerned solely with the private and for-profit sectors in which they like to be categorized. In Massachusetts, they receive billions in state and federal human services dollars every year. The Department of Developmental Services alone contracts with hundreds of such contractors to run thousands of group homes and day programs and provide other services.
We have called on Bump and Sullivan to expand their probe of the special education system to include the entire DDS contracting system. One of the things we’d like to see investigated is what we see as an expensive and risky lease program that DDS has entered into with private contractors to develop group homes around the state. There are numerous other opportunities out there for investigation as well.
For a charity to participate on COMMECC (the United-Way like donation program for state employees), the organization must provide a percentage for administration expense derived from the Federal 990 tax return.
No such requirement for a state contract.
publicly available at – the AG’s office. These organizations are also required to have a an independent audit letter stating their financial information is materially correct.
Many of he controls are there and just need enough staff to ensure compliance. Most non-profits including schools are incorporated by well intentioned folks with a cause. Often they spend their energy focusing on the program side and neglect the financial requirements or the 2nd generation of directors may be less committed to the organization.
I audited a Boston Schools records in the 90’s that led to a 134 count indictment. To accomplish proper oversight as Deb suggests is needed. It would save tax dollars in the long run, but in the short term would require for the Commonwealth to invest more in staff.
Suzanne Bump is doing an outstanding job!!!
No exceptions. The temptations are too great for a guarenteed percentage of human beings without oversight.
In fact, that is analogous to why I am certain that having the legislature and executive subject to appropriate open meeting laws (not crazyness, Christopher) would save we the taxpayer money.
Up in my neck of the woods Suzanne Bump just issued a scathing report about the Merrimack Education Collaborative.
Sure, I think open meeting laws are a good idea. I just have a few issues with THE Open Meeting Law that is currently on the books.
we have the right to know.”
SEIU 615
It’s a cliché, but sunlight is the best disinfectant. Awarding contracts between government and private industry with no option to audit creates a shell game where taxpayers lose.