COFAR blog

We hope a federal investigation of Triangle, Inc., a corporate provider to the Department of Developmental Services for alleged anti-union activity brings public attention to the potential for privatization of DDS programs to result in low pay for provider staff and poor care.

In our view, the alleged efforts by Malden-based Triangle’s management to block staff from unionizing imply an implicit acknowledgement by the management that it wants to keep direct-care wages low. Low wages, in turn, result in lower-quality care.

In preventing their workers from organizing, providers like Triangle appear to be pitting themselves against the growing movement in Massachusetts for a $15 living wage for workers.

The Boston Globe reported earlier this month that the National Labor Relations Board has issued a formal complaint against Triangle after at least three former employees of the provider were allegedly fired for helping organize the agency’s staff to unionize with SEIU Local 509.  The union represents both state workers and staff of state-funded providers to agencies such as DDS.

Triangle’s chief executive, Coleman Nee, allegedly stated that anyone in the agency who even voiced support for the union could be fired. Nee is a former Cabinet secretary under then Governor Deval Patrick.

The relatively low level of pay and benefits to direct-care staff in human services has been a long-standing issue in Massachusetts and elsewhere around the country.

“Nonprofit DDS providers do not want to pay a living wage to their direct care workers because their CEOs are keeping the money for themselves,” COFAR Executive Director Colleen Lutkevich wrote in a comment on the Globe site. “It can only benefit people with developmental disabilities if unions help these workers to earn more money. The management is a disgrace and it’s not the people they serve that benefit, it is their own pocketbooks.”

COFAR and SEIU Local 509 have tracked both corporate provider executive and direct-care compensation in recent years. Last May, the SEIU released a report charging that major increases in state funding to corporate human services providers during the previous six years had boosted the providers’ CEO pay to an average of $239,500, but that direct-care workers were not getting a proportionate share of that additional funding.

As of Fiscal 2016, direct-care workers employed by the providers were paid an average of only $13.60 an hour, according to the SEIU report.

The SEIU further noted that the increases in funding to the providers, known as “Chapter 257” rate setting reforms, had actually allowed the providers to earn  $51.8 million in net or surplus revenues (over expenses) in Fiscal 2016.  As the report stated, those surplus revenues would have more than covered the estimated $34 million cost of boosting all direct-care workers’ wages to $15 per hour.

Based on that report, state Senator Jamie Eldridge filed a budget amendment last year to require human services providers in Massachusetts to spend some of their surplus revenues on raising direct-care wages to $15 per hour. The measure was rejected, however, by a House-Senate conference committee on the budget.

It was not clear whether Eldridge intends to refile his amendment this spring. The SEIU as well has turned its attention away from that proposal and toward proposed legislation and a proposed ballot question in November that would raise the minimum wage for all workers in Massachusetts to $15 per hour.

While we support the legislation and ballot question aimed at all workers, we would also hope that Eldridge’s amendment would be reintroduced given that the funding apparently already exists to fully fund a $15 per hour living wage for human services workers.

Privatized human services reflect larger inequities

The privatized human services system in Massachusetts, in fact, reflects income inequities and other problems with privatized services in other areas of the economy.

As state funding has been boosted to corporate providers serving DDS and other human services departments, a bureaucracy of executive-level personnel has arisen in those provider agencies. That executive bureaucracy appears to be suppressing wages of front-line, direct-care workers and is at least partly responsible for the rapidly rising cost of the human services budget.

Ironically, a key reason for a continuing effort by the administration and Legislature to privatize human services has been to save money. However, we think that privatization is actually having the opposite effect.

Triangle executives are lavishly compensated

Triangle Inc. appears to be a microcosm of the human services system in Massachusetts, and to reflect many of its problems.

The Globe reported that Triangle had some 3,900 people enrolled in various programs and services during Fiscal 2017. The agency received $10.2 million in revenue in Fiscal 2017, including $6.9 million in funding from DDS, according to the state’s online UFR database.

Coleman Nee, the Triangle CEO, is listed on the UFR database as having received $223,570 in total compensation in Fiscal 2017. That may not cover an entire year with the agency.

It appears Nee started with Triangle sometime in 2016. Prior to him, the CEO was Michael Rodrigues, who made $257,442, according to IRS Form 990 for Fiscal 2016. That year’s Form 990 lists six executives, including Rodrigues, as making over $100,000 at Triangle.

It is unconsionable that executives of nonprofit agencies who are making six-figure incomes paid for with state funds are engaging in efforts to supress the pay of their direct-care employees. The fig leaf offered by a nonprofit moniker does not protect those executives from either charges or the appearance of profiting inappropriately off the taxpayers.

Its’s time for the Legislature to take steps to reform the DDS system, starting with a concrete action to raise direct-care wages.

In an apparently little-noticed setback to the effort to raise the minimum wage in Massachusetts, the legislative conference committee on the state budget rejected a living wage for direct-care workers in human services earlier this month.

The conference committee tossed out language that would have required corporate human services providers to boost the pay of their direct-care workers to $15 per hour.

That language had been proposed by Senator Jamie Eldridge and had been adopted in the Senate budget, but it wasn’t in the House budget, so it went to the conference committee. The conference committee chose not to include Eldridge’s language in its final budget even though the inclusion of the language would not have affected the budget’s bottom line.

In a press release issued in May when the Senate adopted his measure, Eldridge termed a $15-per-hour wage for direct-care workers “part of a growing movement to provide a living wage to every worker in Massachusetts.”

An aide to Eldridge said last week that the direct-care wage boost had been requested by SEIU Local 509, the state-employee union that represents human services workers. The aide said, however, that Eldridge had no immediate plans to file legislation to keep the momentum going for that living wage.

We have urged Senator Eldridge to keep the living wage movement going. In the human services arena, the lack of a living wage for direct-care workers appears to be closely related to the rapidly increasing privatization of care.

As state funding has been boosted to corporate providers serving the Department of Developmental Services and other human services departments, a large bureaucracy of executive-level personnel has arisen in those provider agencies. That executive bureaucracy is suppressing wages of front-line, direct-care workers and is at least partly responsible for the rapidly rising cost of the human services budget.

Ironically, a key reason for a continuing effort by the administration and Legislature to privatize human services has been to save money. However, we think that privatization is actually having the opposite effect.

In May, the SEIU released a report charging that major increases in state funding to corporate human services providers during the past six years had boosted the providers’ CEO pay to an average of $239,500, but that direct-care workers were not getting a proportionate share of that additional funding. As of Fiscal 2016, direct-care workers employed by the providers were paid an average of only $13.60 an hour.

Eldridge’s budget language stated that providers must spend up to 75 percent of their state funding each year in order to raise the wages of their direct-care workers to $15 per hour.

While the conference committee enacted deep cuts in DDS and other state-run programs as a result of a growing projected budget deficit, the Senate language on direct-care pay would have only required that providers direct more of the funding they were already getting from the state to their direct-care workers.

The SEIU’s report on the compensation disparity confirmed our own concerns in that regard. A survey we did in 2015 found that more than 600 executives employed by corporate human service providers in Massachusetts received some $100 million per year in salaries and other compensation.

Along those lines, we are concerned that the ongoing privatization of human services is having a devastating impact on state-run programs, particularly within DDS. As we recently reported,  funding for critically important state-run programs, such as state-operated group homes and service coordinators, is being systematically cut while funding is rapidly boosted to corporate providers.

This additional disparity in human services funding is resulting in the elimination of choices to individuals and families in the system and perpetuating a race to the bottom in care.

There appear to be few if any people in the Legislature who are questioning the runaway privatization of human services much less who are willing to buck the trend. An effort to require providers to offer a living wage to their direct-care workers would be a start in that direction.

We hope Senator Eldridge will continue to push for the direct-care living wage, and that he and others will begin to examine the connections that exist between low wages for direct-care workers and the ongoing, unchecked privatization of human services.

A 2008 state law, which substantially raised funding to corporate agencies running group homes for people with disabilities, has resulted in only minimal increases in wages for direct-care workers in those facilities, according to a new report from the SEIU Local 509, a Massachusetts state employee union.

Since the law known as Chapter 257 took effect, the average hourly wage for direct-care workers rose by about 14.8 percent to just $13.60 in Fiscal Year 2016, according to the SEIU report, which was released last week (and got little media coverage, btw).

In contrast, the report noted, the law helped boost total compensation for CEOs of the corporate providers by 26 percent, to an annual average of $239,500.

According to the SEIU, raising wages of direct-care workers employed by provider agencies was a key goal of Chapter 257, and yet those workers “are still struggling to earn a living wage” of $15 per hour. The union contended that the funding increases made possible by Chapter 257 “did not come with any accountability measures, leaving it up to the private agencies to determine their own spending priorities.”

The SEIU report found that human services providers in the state received a total of $51 million in net or surplus revenues (over expenses) in Fiscal 2016, which would have been more than enough to raise the wages of all direct-care workers to the $15-per-hour mark.  Yet, the providers have chosen not to do so.

Last week, the state Senate approved a budget amendment that would require human services providers to spend as much as 75 percent of their state funding each year in order to boost the pay of their direct-care workers to $15 per hour.  The amendment had not been approved in the House, so it will now go to a House-Senate conference committee.

The SEIU report provides confirmation of a report by COFAR in 2012 that direct-care workers in the Department of Developmental Services’ contracted system had seen their wages stagnate and even decline in recent years while the executives running the corporate agencies employing those workers were getting double-digit increases in their compensation.

In January 2015, a larger COFAR survey of some 300 state-funded providers’ nonprofit federal tax forms found that more than 600 executives employed by those companies received some $100 million per year in salaries and other compensation. By COFAR’s calculations, state taxpayers were on the hook each year for up to $85 million of that total compensation.

The SEIU report stated that during the past six years, the providers it surveyed paid out a total of $2.4 million in CEO raises. The highest total CEO compensation in the union’s survey was that of Seven Hills Foundation’s CEO who received a total of $797,482 in Fiscal 2016.  Seven Hills received $125 million in state funding that year, with most of that funding coming from DDS.

The SEIU report stated that the average direct-care employee at Seven Hills makes just $12.47 per hour, more than a dollar less than the average wage for workers across all the organizations analyzed in its report.

Vinfen, the third largest provider in the state, provided its CEO with a total of $387,081 in compensation in Fiscal 2016. Vinfen spent a total of $1.7 million on compensation for its top five executives in that fiscal year.

The potential for double-digit increases in CEO compensation was not mentioned by provider-based advocacy organizations that  actually sued the then Patrick administration in 2014 to speed up the implementation of higher state funding under Chapter 257.

According to the plaintiffs in the lawsuit, the higher state funding was needed quickly in order to keep up with the rising costs of heat, rent and fuel, and to increase wages to direct-care staff in order to reduce high staff turnover.

In comments in support of the provider lawsuit in 2014, one key provider lobbyist contended that time was of the essence in boosting provider funding. “…Every day that full implementation (of Chapter 257) is delayed, the imbalance and the unfairness grows,” the lobbyist said.

Yet, according to the SEIU, the providers made 3.2 percent, 2.7 percent and 2.3 percent respectively in surplus revenues on average in the Fiscal 2014, 2015 and 2016 fiscal years. The imbalance that existed was actually between executive-level salaries and direct-care wages in those provider organizations.

As a result of the lawsuit, both the Patrick administration and the incoming Baker administration approved major funding increases to the provider-run group-home line item in the DDS budget, even as it was becoming clear the state was facing major budget shortfalls in the 2015 fiscal year.

“This all suggests,” last week’s SEIU report concluded, “that the amount of state funding is not at issue in the failure to pay a living wage to direct care staff, but rather, that the root of the problem is the manner in which the providers have chosen to spend their increased revenues absent specific conditions attached to the funding.”