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.