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Gov. Patrick should look at contractors’ salaries too

February 28, 2011 7 comments

The Boston Globe ran a front-page story yesterday announcing that Governor Patrick is reviewing the salaries of chief executives and lower-level workers at the state’s 42 independent agencies and will reduce those he believes are excessive.   Many of these executives earn more than twice Patrick’s own salary of $140,000.

The governor is also seeking to combine agencies or eliminate jobs to further cut costs in the next year.  These independent or quasi-public agencies run the gamut from Massport, which runs Logan Airport, to the Massachusetts Technology Developmental Corporation, which provides venture capital funding to startup companies.

This is all well and good, but we would urge the governor to take a look as well at salaries in the state-funded human services vendor industry in Massachusetts.   There are hundreds of these companies that contract with agencies in the Executive Office of Health and Human Services, and the salaries of the executives running them are often above $100,000 as well.   In 2009, we looked at a few of the firms that contract with the Department of Developmental Services.   A few examples from among the vendors that we reviewed that year were the following:

  • Vinfen:  8 executives making over $100,000 a year, with the president making $376,000, including benefits.
  • Justice Resource Institute: 7 executives making over $100,000.
  • Seven Hills: 4 executives making over $100,000, with the president and CEO making $520,600, including benefits.
  • Work, Inc.:  5 executives making over $100,000.

These salaries are a problem because there are so many of these companies contracting with the state.  As services once provided by state employees have been privatized over the past 30 years, the number of people drawing high salaries in the contractor industry has grown exponentially.  Those salaries are part of the cost of care in the community-based system, which the taxpayers fund. 

While the administration has tried to portray the DDS developmental centers, for instance, as unduly expensive, there used to be only one set of administrators in each center drawing relatively high salaries (although few, if any, of them made salaries above $100,000).  

The executives of the contracting firms that have replaced the developmental centers and other state-run operations constitute a new and even more expensive layer of bureaucracy that is soaking up state funds.  This is one reason why we believe privatization in general doesn’t result in predicted savings.  

There is also an increased potential for fraud and waste in our highly dispersed, contracting system because the state doesn’t have the capacity to oversee it nearly as well as it was able to oversee functions once provided by state employees.  This has left the contracting system vulnerable to fraud, waste, and poor care provided by inadequately trained direct-care workers, whose salaries, by contrast, are low.

In Wisconsin, we are witnessing a battle over the value of public service as state employees there rise up to defend their collective bargaining rights.  Let’s not forget, though, that privatization over the long run is just as effective as the direct elimination of collective bargaining agreements in weakening public employee unions and workers’ rights.  Both strategies ultimately throw people out of work and produce a largely low-paid, non-union workforce.

And both strategies tend to result in an expansion of contracted services as the public sector loses more and more of its capacity to manage its affairs due to continual downsizing of its workforce.

The difference between these two strategies is that privatization is not seen as being as overtly confrontational as eliminating collective bargaining.  So our own governor can engage in major privatization initiatives that weaken public unions while still claiming to be a friend to them.  

That’s why we hope that in addition to scrutinzing the salaries of the executives of the independent agencies, the Patrick administration will at least take a look at the state’s human services contracting system.  We think there is as much, if not more, fertile ground for savings there.

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