(Cross-posted from The COFAR Blog)
Alleged state credit card misuse and other financial irregularities at the Life Focus Center of Charlestown are the latest in a series of mini-scandals involving human service contractors to the Department of Developmental Services and other state agencies.
A few months ago, we learned of financial improprieties at the Merrimack Special Education Collaborative. Also during the past year, we heard about the Northeast Center for Youth and Families. And then there was Adlife Healthcare and the Greater Lawrence Community Action Council.
The problem is that in uncovering all of these mini-scandals, the state’s auditing agencies and the media seem to be focusing on the trees and overlooking the larger problem of the forest. The approach has been decidedly piecemeal — the steady release of individual audits of individual vendors, with the details of the previous audit forgotten as soon as the next one is issued.
As we’ve maintained many times, the state has a serious problem in monitoring its $2.6 billion human services contracting system. A more systematic approach to dealing with it is needed than we’ve seen so far. While state legislators appear to be interested in cracking down on welfare recipients who use electronic benefit or EBT cards, there seems to be no such impetus to examine the widespread potential for corruption by human services contractors.
To be fair, two state lawmakers, Reps. Kevin Kuros and Sheila Harrington, last year called for legislative hearings following the Merrimack Collaborative and Greater Lawrence Community Action Council audits. This, however, led The Nonprofit Quarterly’s investigative writer Rick Cohen to suggest that there needs to be a wider investigation:
into why the Commonwealth of Massachusetts is so deficient in its oversight of state-subsidized nonprofits that years of dysfunction and misspending could go unnoticed.
Do you suppose these hearings have yet been scheduled, by the way? The answer would be no, according to an aide to Harrington.
State Auditor Suzanne Bump last September asked for legislation that would give her agency authority to subpoena records of nonprofits that contract with the state. But it isn’t clear whether Bump or Attorney General Martha Coakley, whose office is investigating the Adlife Healthcare case, are taking as broad a view of the nonprofit monitoring problem as we think they should.
The Life Focus of Charlestown audit by Bump’s office illustrates problems that crop up over and over again in the vendor system. In her March 7 report on the company, Bump stated that the audit identified $129,982 in unallowable expenses related to state-funded contracts and $1.1 million in undocumented employee compensation expenses.
Among the specific problems alleged in the audit:
- For 114 days in which Life Focus billed DDS $239,969, there were no block schedules or other records to substantiate these billings.
- During fiscal years 2009 and 2010, the company’s executive director and deputy director charged 1,291 expenses totaling $123,173 against the company’s corporate credit cards. A total of $28,436 in credit card expenses were questionable in that they were either inadequately documented or did not appear to be directly related to program activities.
- Hundreds of thousands of dollars were spent on consulting services done by family members of company staff without competitive bidding or signed contracts.
Interestingly, a defense used by Life Focus to the audit findings was that none of these alleged problems was identified in a previous DDS licensure survey of the company. In fact, an October 21, 2010 DDS licensure report for the Life Focus Center called the Center “a viable and thriving community resource,” and cited the organization for only minor problems in its operations.
However, in our view, that clean bill of health that the DDS license staff gave Life Focus may say more about the inability of the state to monitor its vendors adequately than it does about this particular company. Moreover, it was apparently only after Bump’s audit was released that DDS started to crack down on the vendor.
The Boston Herald reported that DDS Commissioner Elin Howe sent a March 27 letter to the Life Focus Center’s Board of Directors, expressing “significant concerns” about Bump’s audit findings and the reportedly continuing unchecked use by John Millerick, the executive director, of the company credit card. This is apparently the second letter Howe has written to the Board in the wake of the audit.
Howe and DDS have yet to show much concern over the larger problem of oversight of all of the department’s vendors.
Meanwhile, while Life Focus’s Board chairman resigned in the wake of Bump’s audit, The Herald also reported that the company had hired Rasky Baerlein Strategic Communications, a PR firm, to protect the company’s image. Whether the state pays for that cost or not, it’s money that will not be going toward direct care services.
and I live within the zone and am very aware of MEC and GLCAC.
It’s lift a rock, find a slimey thing. It’s everywhere and when you look you find it. It’s disgraceful that these things are sometimes only found by the media, never by a stae agency
I think it was only as part of the DiMasi trial that people asked “why is Richard McDonough getting a pension?” and they looked into MEC.
This is money that should be going to the people it was intended to help. Waste and fraud are wrong and can’t be tolerated in this era of tight state money.
I do not know why more legislators are not calling for change.
Why aren’t more legislators calling for change? I think the main reason is the state’s human services contracting system is the elephant in the room. It’s big, it’s well-funded, it contributes to the very lawmakers who would be holding the hearings.
People on welfare make a much easier target if you’re a legislator looking to make a name for yourself as a champion of the taxpayer. Another relatively easy target is state employees — the Probation Dept. comes to mind. Not that there aren’t valid reasons to investigate both of those things. But there is a reason they get investigated frequently by the Legislature and media and the contractors don’t.
First great post. And I do agree that the press and politician’s looking for a quick PR hit ignore this problem. But the Probation Dept., like many, many other state agencies dole out millions to service providers (I believe it’s called Community Services) in which there is little oversite. In addition, the Probation Dept is one of those critical, but unheralded, agencies sitting at the crossroads of human services and criminal justice–an intersection many people in the social safety net find themselves. A professional probation department is essential in turin around or improving the lives of thousands in the state. That is a cost many fail to acknowledge.
I think what bothers me the most about the legislature is the show they put on. All the reported hand wringing and the extreme anxst oiuaand the moaning and groaning
hit button too soon.
My thought was these legislature should be pursuing those that commit fraud and misuse funds intended for the disabled. Perhaps they wouldn’t need to cut budgets. An added bonus is we would be spared the annual wringing of the hands and their purported angst of having to make these cuts because there wasn’t anything else they could do.
By me is the GLCAC, which gets $29M of its $30M budget from the state. They provide the money for many programs, Head Start, heating assistance, etc,etc.
The local paper followed the 85 year old Exec. Director around and found he was going to the Elks at lunch time and spending the rest of the day there. He made $147K.
When the paper went looking for him everyone at the office covered for him. Evidence showed that he had been following this same routine for at least 3 years.
Further investigation showed that one of the board member’s wives ran a program (through which she collected a salary) some other people had relatives employed, not a huge thing. The Mayor Lantigua’s girlfriend (who he lived with) got heating assitance, despite a combined income of $150K or so.
There was a big to-do and demands for the board and the rest of management, etc to resign. The board partially resigned, the Exec Dir resigned but they quickly got new members, hired a temp “troubled agency turnaround director and pretty much put their affairs in order.
What didn’t make the papers was an attempt to grab control of the agency by Mayor Lantigua and his ally Sen. Barry Finegold. What is the prize? The top brass, were all in the 100K+ range, so some sweet rewards for the in crowd.
The current board was the old boy network, dating back maybe 20 years.
I can’t not beleive that this kind of thinking is what provides a cloak to these agencies, and the only thing that blew it off this time was some really outrageous behavior.
Isn’t that, well, collusion—when others know what’s going on and yet look the other way?
It seems that Commissioner Howe is expressing concern now only because she has to. If the DDS licensure review didn’t uncover at least some of this information, then Commissioner Howe isn’t doing her job!
Let’s hope for more of this trickle-up auditing!
Probation Department that would provide better oversight of the service providers it uses. While you may be absolutely right about that, the department’s ability to manage contracts was not a focus of the Globe’s expose and other media coverage of the agency.
Instead, the media focus has been solely on the Probation Department’s hiring of allegedly unqualified personnel based on recommendations from lawmakers who control the agency’s purse strings. There’s certainly a potential connection between the hiring of qualified personnel by a state agency and the agency’s ability to manage contractors adequately. But that is a connection the media didn’t explore. I think it would have been interesting had the media done so.
One detail that David Kassell and his chorus above, have missed is that it was DDS who brought the Life Focus fiscal mismanagement to the Statue Auditor nearly two years ago in 2010, noting the State Auditor had broader investigatory powers. This has been confirmed by the State Auditor. The licensure review is not a fiscal audit, but a program examination for health and safety. Fiscal mismanagement is wrong and when it occurs must be examined by those with the strongest investigatory authority. That is what appears to be the case in this situation. Further action by DDS & EOHHS to sever ties with Life Focus have been a turn in the right direction, coordinated with fiscal irregularity issues confirmed by the Auditor.