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Questionnaire for candidates for the Office of State Auditor
The Providers’ Council is the Commonwealth’s largest association of community‐based human service
provider organizations. These nonprofit organizations are primarily funded through government
funding, which is principally through state contracts. They provide a range of residential, day programs
and supports to people with intellectual and/or physical disabilities, children at risk of abuse and
neglect, individuals who are homeless, those facing a life altering health issue, or are at risk of
victimization and in need of protection. This sector is composed of mission driven nonprofits that
provide state mandated services to the Commonwealth’s most vulnerable individuals and families. The
Council supports the sector’s community organizations, workforce and the one in ten residents
depending on their care. The human service sector in Massachusetts is estimated to employ over
180,000 at over 5,500 residences, program sites and administrative offices. It is a vital industry to the
health of Massachusetts’ residents and to the overall state economy. The latest report data revealed the
human service industry generated $4.6 billion in revenue and that its payroll exceeded $2 billion. It is
also a sector that has experienced significant budget cuts due to recessionary forces and government
priorities. Accordingly, an industry that was once $2.7 billion is estimated to enter Fiscal year 2011 at
$2.3 billion in direct state funding.
The State Auditor has an important role to provide an independent financial, managerial and technical
assessment of various state agencies, programs and contracts. The Council and its provider members
support taxpayers receiving fair value and programs complying with applicable laws and regulations.
Toward a better understanding of our respective roles in serving the public, we have five questions for
your response. The Council requests your written response by September 8th to the following questions:
1. Compliance and Education
Our sector continues to meet the demands of the public for accountability, integrity and the
delivery of quality services. We understand the role of the State Auditor is to assure the public
that all state contractors meet their obligations in the context of fiscal compliance,
reasonableness and knowledge. We think if a problem arises in our sector it is more likely an act
of omission rather than commission. To that end, we want our sector to be more fully informed
and hope your office can have an educative role along with your monitoring and investigatory
authority.
Question: If you agree, how will you plan to work with the provider sector to maximize the
opportunity to educate our sector and assist in our compliance? If you don’t agree with the
need to provide an educative role, why?
Answer: I most certainly agree on the need for an educative role on the part of the Auditor.
Transparency will be the greatest guide for all of my office’s activities. Transparency allows
for education, enlightenment and empowerment – for the citizenry and providers alike.
Toward the goal of Total Transparency, I will ensure that all standards and compliance metrics
are not just shared very publicly, but also that the standards and metrics themselves are open
for public discussion to determine their merits and applicability.
2. Regulatory review
State regulations 808 CMR 1.00: Compliance, Reporting and Auditing for Human and Social
Services ‐ is a baseline document that governs the sector’s expenditures and your audit criteria.
These regulations have not been reviewed with the input of providers for many years. Providers
may be able to offer solutions that are more cost effective and increase compliance
Question: How will you ensure that these regulations remain true barometers to determine
compliance of the sector? How will you engage providers in a review of the regulations and to
assist in reducing the administrative burdens and expense of compliance?
Answer: Collaboration and bidirectional feedback between the public and private spheres will
be the essential nature of my office. Today too much is lost in the perfunctory nature of the
relationships between government, providers and consumers of public services. We must
work together to tear down the barriers between those constituencies, especially between
the providers and consumers.
I will act as an advocate for providers and consumers; in the process I will mandate regular
public hearings and debates on the costs of compliance and the necessity of various aspects of
compliance. As an efficiency expert in the private sector, I am well‐versed in improving
services while reducing overhead and delivery costs.
3. Financial sustainability of the sector
In our mutual efforts to maximize scarce resources to provide essential services to one in ten of
the state’s residents – its most vulnerable – it is important that our sector be financially
sustainable and be provided proper funding. In 2007 EOHHS issued a financial health study
which indicated that the procurement policies of the Commonwealth present the people we
serve and the workforce with “considerable risk.” The report stated that it is in the
“Commonwealth’s interest to ensure that provider organizations are financially stable and that
the industry’s workforce is paid a fair living wage.” Obstacles to this include their findings that
“Almost half of providers do not generate sufficient cash to pay for operations” and that “Fifty –
six percent of providers report deficits on Commonwealth activities each year.” Chapter 257
was unanimously passed by the Legislature and signed by the government to provide fair and
adequate funding, but this has not happened.
Question: Will the Auditor’s Office work to build the fiscal health of our sector? What
measures might be taken to achieve this?
Answer: I will absolutely work to build the fiscal health in this sector – and in all sectors which
are influenced by government operations. Watching the growing incongruity between the
amount being spent at the top and the resources being allocated in actual services delivery
was one of the primary drivers causing me to run for office. Government spending has
continuously risen, and more money has been poured into the system as a whole – but not
enough is making it to those who deliver actual services.
We need greater visibility into and more discussion of waste and inefficiency. But we also
need public dialogs about ideas for doing things better, and for rewarding those individuals
and providers who propose and implement ways to do a better job, and put into place the
right incentives for them.
4. The Uniform Financial Report
The Uniform Financial Report (UFR) has been problematic for our sector. The document is
expensive to produce and it resorts contract based accounting systems into program based
schedules for many. In some cases, it costs organizations well over $20,000 annually to
complete and modify their systems, in addition to paying an independent CPA firm an additional
annual audit fee. The audit by independent CPA firms should be largely adequate to meet the
state’s needs for fiscal accountability. The UFR has become more problematic as it is the base
document for the Division of Health Care Finance and Policy for the setting of rates subject to
Chapter 257. The UFRs merely document the impact of over 20 years without cost of living
adjustments. They do not reflect true market costs. The absence of any adjustments has caused
direct care wages to suffer – the sector’s largest variable expense. The issue speaks to the
financial health and the proper funding of our sector.
Question: Would you consider revising the UFR to reduce its expense and expensive demands
on administrative time? Would it be possible to request only a few targeted schedules in
addition to the certified audit to provide data that is truly required for compliance? Would you
consider bench marking major expenses to create ratios that measure business viability and
strength to provide financial health data to the Division of Health Care Policy and Finance?
Answer: I will work with your sector to review and discuss UFR and find ways to reduce cost
and complexity of such overhead. We need rules and procedures that make sense, provide
adequate safeguards and streamline things to reduce the burden of things which do not
directly provide services for those in need.
5. Pacheco Law (M.G.L. ch. 7 sections 52‐55)
The so called Pacheco bill was passed in 1993 and set up a series of tests that a state agency must
pass before it can award a contract to a private company to perform services that are or could be
performed by state employees. Many feel that it provides roadblocks to more efficient operations
by state contractors. In this period of diminishing state funds to provide programs to vulnerable
people, all options should be readily available to ensure all state funds are spent in an optimum
manner. At this time the State Auditor may reject any proposal he/she deems not to be “in the
public interest” without providing a definition or reason. The rules are final and may not be
appealed.
Question: Would you be willing to create an appeals process for disagreements between the
Auditor and state agencies? How would you assuage the concerns of the private sector that feels
the law is tilted toward state services provision and thereby costs the state more money? Would
you make any other recommendations?
I would create an appeals process, and in addition would ensure that all actions and
determinations under the Pacheco Law are made extremely public, and that the guidelines
mandated for assessing state services versus private sector services is in line with reality rather
than arbitrary and often unrealistic benchmarks.
The more effectively we can work together to reduce waste and inefficiency, the better job we
can do at making sure the right services are provided by people making a fair income and do so in
a sustainable, taxpayer‐friendly manner.
Massachusetts Council of Human Service Providers, Inc.
250 Summer Street – Suite 237
Boston, MA 02210
617.428.3637 ph