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The Herald headline and story are wrong

May 26, 2011 4 comments

On Tuesday of this week, The Boston Herald’s readership was treated to a bombshell headline and story, purportedly about government waste due to delays in the closure of the Fernald Developmental Center.

The headline was “$16M to care for 14 people”; and the story went on to imply that the 14 remaining residents of Fernald, whose guardians have filed administrative and court appeals of their transfers from the Center, are each costing taxpayers more than $1 million per year.

The only problem is that the headline and story are wrong.  I just received a letter from Department of Developmental Services Commissioner Elin Howe, confirming our information that the annual cost of caring for the remaining 14 people at Fernald is projected at $8.9 million.  It seems the $16 million is the projected cost of keeping Fernald open throughout the current fiscal year, during which time there have been far more than just 14 people living there.

As of the end of last June (at the start of the current fiscal year), there were some 70 residents left at Fernald, according to our records, and by the end of July, that number was down to about 40.  The adminstration has steadily moved people out, and 14 is the number of residents who remain as of this month.  So, the $16 million cost clearly reflects a higher number of residents than 14.

Moreover, Commissioner Howe stated in her May 25 letter that:

While the costs associated with operating Fernald have dropped following the census (residential population) reduction, the per-person costs have actually increased as the census declines in the final stage of closure.  This has been a typical pattern in previous closures.

In other words, a per-person cost spike is something that occurs in virtually all developmental center closures — it’s not something unique to Fernald because of the appeals filed by the guardians.  There are certainly added costs associated with the delay in closing Fernald, but those costs are something the administration should have anticipated as part of the overall cost of closure.

Nevertheless, the inaccurate claim that $16 million is being  spent on 14 residents was immediately seized upon this week by the Association of Developmental Disabilities Providers, whose members stand to benefit from new state contracts as Fernald and three other developmental centers are closed.  ADDP President Gary Blumenthal decried the alleged $16 million cost as “tremendous” and “excessive,” and implied that the Fernald guardians are responsible for it.

On Wednesday, the Herald’s editorial page picked up on the theme, stating that the alleged $16 million being spent on 14 Fernald residents is taking away from community-based services “and it’s impossible to argue that point.”   It’s especially difficult to argue it when the editorial’s point is based on deliberately misleading and inaccurate information.

The Herald editorial, by the way,  is very carefully worded not to equate the $16 million directly with the 14 residents, although it puts the two numbers as close together in the same paragraph as possible.  And of course the editorial never even bothers to mention our longstanding contention that the costs of operating Fernald and the other developmental centers have been overstated by the administration in comparisons made with the community system.

(I talked at length, by the way, with the Herald reporter about that whole developmental center-versus-community cost issue when she called me the day before her story ran on Tuesday.  None of that made it into print, of course.)

I would also note that Howe stated in her letter that the 95 staff left at Fernald is a projected number after a current round of layoffs is completed.  Howe provided a number of reasons for that apparently high number of remaining staff, and concluded that “all appropriate staff reductions have been or are being  taken and the remaining staff are necessary to meet the remaining residents’ needs.” 

We’re not sure, however, that  it’s the case that DDS has done everything they could to reduce costs lately at Fernald, particularly if — as Stephen Sheehy, the attorney for the remaining residents has pointed out — DDS has failed to take steps to move the remaining residents into one location on the campus.  That is something, according to Sheehy, that the residents would welcome, and which would no doubt save some money.
 
 
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Setting the record straight about Fernald and COFAR

May 24, 2011 2 comments

If any more evidence was needed that the human services providers and the Patrick administration are attempting to tarnish the Fernald Developmental Center’s families in order to discredit the highly successful model of state-run care for the intellectually disabled in Massachusetts, today’s Boston Herald story provides it.

“16M to care for 14 people,” is the headline; and in the story, Gary Blumenthal, president of the Association of Developmental Disabilities Providers, calls the cost “excessive” and blames it on the guardians of the remaining Fernald residents because they are delaying the Center’s closure.  Those guardians have simply exercised their statutory right to file administrative and Superior Court appeals of the transfers of their wards out of Fernald.

Moreover, we’ve just learned that DDS stated in Superior Court earlier this month that the cost of operating Fernald may actually be $9.8 million, not $16 million (more about that below).  Secondly, if, in fact, 95 staff do remain at Fernald for the remaining residents, as the Herald story and DDS say, that is an indication of mismanagement on the part of DDS; it’s not the fault of the guardians.

Meanwhile, in a comment on our previous post on Blue Mass Group about the use of Fernald as a political football, Blumenthal (under the user name, Garyof Sudbury), chides COFAR for encouraging “endless appeals and endless studies” in an effort to keep the developmental centers open.  This is a mischaracterization of COFAR’s role in advocating for adequate care for DDS clients.

Here, to the best of our knowledge, is what is really happening regarding Fernald and the other developmental center closures:

1.  Earlier this month, the administration provided numbers on the cost of operating Fernald that are nearly 40 percent lower than what it is publicly citing to the Herald.  In a comment posted on the COFAR blogsite, Stephen Sheehy, the attorney representing the remaining Fernald residents, states that on May 6,  DDS submitted an affidavit in Middlesex Superior Court that the cost of keeping Fernald open is approximately $9.8 million per year.

DDS Commissioner Elin Howe stated in a conference call last week that the cost of operating Fernald this year was $15.6 million.  The Herald is saying $16 million (and stating, by the way, that was the cost last year when there were far more than 14 people left at Fernald).  So, who knows what the real figure is.

2.  The administration and the ADDP are ignoring COFAR’s longstanding proposals to rightsize the remaining developmental centers in Massachusetts or otherwise operate them more efficiently. 

COFAR and other affiliated organizations have long called for “postage-stamp” arrangements at the developmental campuses that would enable current residents to remain there and receive the same level of care while the rest of the campuses were developed for other uses.  No one is advocating the preservation of  large, outdated buildings on these campuses.  What we do want to preserve is the model of care that currently exists there in the most cost-effective way possible.

The administration has never even wanted to discuss the postage-stamp approach.  They have always viewed the issue in purely binary terms: either we continue to operate all the facilities as they are today, or we close them all and evict all their remaining residents.  There have been no other options even worth considering for them.

3.  The ADDP is deliberately mischaracterizing the history of litigation over Fernald in order to paint COFAR as somehow responsible for the cost of delay in closing Fernald.

Here’s a brief history of that litigation (reprised from my response to GaryofSudbury):

From 1974 to 1993, U.S. District Court Judge Joseph Tauro presided over the landmark Ricci v. Okin consent decree case, which brought about significant improvements in care and services at Fernald and other developmental centers in Massachusetts.

In 2004, the Fernald plaintiffs in the Ricci case (some of whom are COFAR members) urged  Tauro to reopen the case, not to delay Fernald’s closure, which Tauro said he would not do, but to investigate apparent violations of Tauro’s order that transfers out of Fernald must result in equal or better care.  It was the Patrick administration — not COFAR or the Fernald plaintiffs — who then went to court to appeal Tauro’s 2007 ruling in which he found that DDS had engaged in a systemic violation of his order.

In 2008, the U.S. Court of Appeals overturned Tauro’s 2007 ruling.  The Fernald plaintiffs appealed to the U.S. Supreme Court, arguing that the Appeals Court had not given Tauro due deference in their decision. The Supreme Court declined to hear the case.

Since that time, some of the Fernald guardians have exercised their statutory and regulatory rights to file administrative appeals of the transfers of their wards from Fernald, on the grounds that these transfers would not result in improved services.  COFAR has not publicly or privately encouraged or discouraged those appeals.  We fully support the personal decisions that any guardian chooses to make in these cases.

It’s perhaps ironic that if the administration had agreed years ago to consider our proposal to develop cost-effective group homes delivering the current level of care on the current campuses, we could have avoided all the delays and litigation that the providers and the administration are now decrying.

In summary, as we pointed out in our previous post, what we’re now seeing is a campaign by the administration and the providers to use Fernald to discredit a proposed budget amendment that would require an independent cost study before the Templeton, Monson, and Glavin developmental centers could be closed.  The argument being made by the administration and the provders is that this budget amendment would cause delays in the closures of those three facilities, and that soon we will be paying the same high costs to keep those centers open that we’re allegedly paying for Fernald.

This is nonsense.  An independent cost study will simply help us determine whether we’re on the right track fiscally in closing these facilities.  As I hope we’ve shown, we can’t leave it solely up to this administration to provide credible numbers or other information about this matter.

Fernald being used as political football

May 22, 2011 10 comments

The Fernald Developmental Center may be almost closed, but it’s now apparently being used as a political football by the administration and the human service providers who are seeking to close at least three additional state facilities for persons in Massachusetts with intellectual disabilities.

In the past month, both the providers and the administration have cited an allegedly high current operating cost for Fernald as a reason to oppose a cost study prior to closing the Monson, Templeton, and Glavin centers.  Nevermind that Fernald is not even included in a proposed state budget amendment calling for the cost study.  

Moreover, while we haven’t yet seen the Fernald budget numbers the providers and the administration are citing, we understand the reportedly high cost is due to a decision by the administration to maintain an unusually high number of staff at the facility for its 19 remaining residents.   The reason for the high staffing level isn’t clear.  The guardians of those remaining residents have filed administrative appeals of Fernald’s closure.

During the ongoing budget debate in the Legislature, the Department of Developmental Services  and the Association of Developmental Disabilities Providers have been telling legislators that it is costing as much as $917,000 per resident per year to operate Fernald.   As the linked State House News story shows, ADDP President Gary Blumenthal last month cited that Fernald cost figure, which was disclosed by DDS,  in order to discredit a House budget amendment requiring an independent cost study prior to closing Monson, Templeton, and Glavin.

The logic of the administration and the provders appears to go something like this:  “Because we’re spending an unusually high amount this year to keep the Fernald Center open for the remaining residents,  we shouldn’t even waste time studying the cost of closing or maintaining  three other facilities where the costs actually happen to be considerably lower.   The Fernald cost shows we must close all four of these facilities as fast as possible.”

That this tactic has had an impact in the Legislature became clear when a small group of COFAR members met on Wednesday of last week with a staff member of Senator Stephen Brewer, chairman of the Senate Ways and Means Committee, to push for the cost study amendment.   The staffer, without any prompting, mentioned she had heard Fernald was costing $18 million this year to operate.

That afternoon, in a conference call, I asked DDS Commissioner Elin Howe about the reported $18 million cost.  Howe said the cost was closer to $15.6 million, which would translate to a still sky-high figure of $821,000 per person to keep Fernald running this year.  When I asked what the money was being spent on, Howe said the high cost was due to the fact that 95 staff remain at Fernald — a staff-to-resident ratio of 5 to 1.

I was so taken aback by what Howe had just said that I didn’t think to ask her why the administration is maintaining such a high staffing ratio at Fernald.  That ratio appears to be the reverse of the 1 to 3.2 staff-to-resident ratio required under federal regulations for Intermediate Care Facilities.   The next day, at DDS’s request, I submitted a written question to Howe about the situation.  I haven’t yet gotten a response.

Howe, by the way, said that if I wanted to get the same Fernald budget numbers that Blumenthal was citing to the State House News Service and which DDS has apparently provided to legislators, I would have to file a freedom of information request.  I did so the next day.

I then heard that day from Senator Brewer’s office that the high staffing level at Fernald is reportedly due to a court order that has prevented DDS from moving the remaining 19 residents there into one building on the campus.  But we’ve heard from other sources that there may not actually have been any such court order.

Whatever the reason for Fernald’s current operating cost, to introduce Fernald into a debate over whether to even study the cost of operating the Monson, Glavin, and Templeton centers is disingenuous and misleading.  Luckily, Senator Brewer now appears to understand that.  “We know it’s not accurate (to link the alleged Fernald cost to the other three facilities),” the staff member said.

Administration admits to discrepancies in vendor salary info

May 16, 2011 3 comments

Patrick administration officials appear to be admitting we may be on to something when we pointed out the state may be getting different information than the federal government gets about salaries earned by human services contractors in Massachusetts.

In an email sent to us on May 11, Terry McCarthy, director of audit in the state Operational Services Division (OSD), acknowledged there were discrepancies between executive salary information provided to the OSD and to the federal Internal Revenue Service for the same contractors.

McCarthy stated that the OSD will “reexamine the cited (federal and state salary reports) for proper compensation disclosures,”  and will seek explanations from two of the contractors we identfied for apparent discrepancies in their numbers.

At the same time, McCarthy put forward at least three explanations for the discrepancies, none of which fully satisfy our concerns about them.

First, a bit of background.  Concern has mounted around the country about salaries of executives of nonprofits.   In Massachusetts, that concern has largely centered around the pay of executives of hospitals and health insurers, but it has also extended to the hundreds of nonprofit vendors that contract with the state to provide human services to people with disabilities.

The OSD, which oversees the contracts with these vendors, requires them to provide detailed financial reports that disclose, among other things, the salaries made by their executives.  In addition, a state regulation caps the amount of state funding that goes to pay these salaries at $143,986 a year, meaning that sources other than the state would have to fund salaries higher than that amount.

One of the purposes of this regulation capping executive salaries is to ensure that an adequate amount of state funding is put towards wages of direct-care workers.

COFAR examined state Uniform Financial Reports (UFRs), which are filed with the OSD, and Form 990s, which are filed with the IRS,  for the May Institute, Vinfen, and Seven Hills, three of the largest contractors to the Department of Developmental Services.  In each case, the UFRs for the Fiscal Year 2009 listed lower salaries and other compensation for the same executives than did 2009 IRS tax filings for the same firms. 

The UFRs also listed a lower number of executives earning high levels of compensation than were listed on the Form 990s for the same firms.   These discrepancies imply that OSD may be unaware of the total amount of state funding potentially being used to pay salaries of these executives.

In his response, McCarthy acknowledged that the total compensation of four of five identified Vinfen executives appeared to be underreported on the UFRs by $101,539, while the compensation of two executives of Seven Hills appeared to be underreported by $18,509.  McCarthy said OSD will seek explanations from those contractors about those differences.

COFAR also reported that the 2009 IRS form for Seven Hills listed four employees making over the $143,986 threshold, while the state UFR listed only two employees making over that amount.  The difference in reported compensation between the two forms was $385,000. 

For Vinfen, the 2009 IRS form listed a total of 10 employees earning more than the threshold compensation amount, while the UFR listed only four employees earning more than that amount.  The difference was $1.2 million. 

McCarthy, as noted, stated that the OSD will reexamine the compensation disclosures made by these vendors.  However, he also offered two explanations for the differences in the numbers of executives listed on the state and federal forms.  One is that there are different filing deadlines for the two forms: the IRS forms lag behind the UFRs.

That may be, but it doesn’t seem a sufficient reason to list different salary numbers on each report or to report salaries for more people on the 990 forms than on the UFRs.   Moreover,  the 2009 Form 990 for Vinfen was signed by its president on May 14, 2010.  The UFR was first submitted to OSD in November 2009 and refiled in April 2010 and then in December 2010.  Again, there’s no apparent reason why the final UFR, which was submitted after the Form 990, would have less executives listed and lower salaries than the Form 990.

The second explanation offered by McCarthy was that the Form 990 has “more expansive” compensation disclosure requirements than the UFR.  McCarthy said the UFR is limited to including individuals in policy making positions, and would therefore not include a highly paid clinician, for instance. 

That doesn’t seem to jibe, however, with the OSD’s reimbursable cost regulation, which doesn’t say anything about exempting non-policy making individuals from the salary cap.

Also, all of the 13 individuals listed in the May Institute Form 990 as making over $150,000 are executive-level employees, starting at senior vice presidents on up to the president and CEO.  Those people are all clearly policy-making individuals, yet only two of them are listed on the UFR. 

Finally, McCarthy addressed our finding that there was more than a half million dollar difference in the reporting of the compensation of the CEO of the May Institute on the state and federal forms in 2009.  This, he said, appeared to be largely due to a one-time $682,343 distribution to the CEO on a vested deferred compensation plan that had been previously reported annually as deferred compensation. 

It wasn’t clear, however, whether McCarthy was saying that because this was a one-time distribution on a previously reported deferred compensaton plan that it didn’t need to be reported on the 2009 UFR.   But even if the CEO’s compensation isn’t counted, the difference between the total compensation for the 12 other May Institute executives listed on the IRS form and the compensation for the one other executive listed on the state UFR is $2.8 million.

We’re glad the OSD will go back to these three vendors and check to see that their UFRs were filled out accurately.  But we’re concerned that there is a potentially larger problem here.  It seems OSD does not have the capacity to adequately oversee the contracting system in this state.  One indication of that is 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, yet it still hadn’t been reviewed by OSD as of today’s date. 

This administration needs to get a better handle on the human services contracting system in Massachusetts.