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Yet another corporate DDS provider is slapped by a state audit

June 3, 2021 3 comments

The Berkshire County Arc is one of the the latest in a series of corporate residential providers to the Department of Developmental Services (DDS) that have found themselves targets over the past two decades of the state auditor for misuse of state funds.

A few other examples include audits of Brockton Area Multi Services just this week; Human Service Options and Nonotuck Resource Associates in 2016; the May Institute in 2013; Crystal Springs in 2012; and Toward Independent Living and Learning in 2002.

From personal use by corporate executives of the Berkshire Arc’s credit cards to personal use of its frequent flyer airline miles, the problems cited in the Berkshire Arc audit sound almost monotonously familiar.

The Berkshire Arc and its lobbying affiliate, the Arc of Massachusetts, have hit back, arguing that many of the audit findings were technical in nature.

To be sure, the Berkshire Arc audit does have at least one finding that seems to imply a largely technical violation involving the financing of capital improvements and maintenance of residential and other properties. The Berkshire Arc shouldn’t have charged the state for that, the audit said, because the properties are technically owned by another nonprofit affiliated with the Berkshire Arc.

That violation seems technical because it seems that the Berkshire Arc’s clients did potentially benefit from the capital improvements.

But other findings about misuse of credit cards and airline miles were clearly about people in high-level management positions allegedly benefiting themselves personally. One would think that after decades of these kinds of audit findings, the heads of these organizations would finally put an end to these practices.

“Our audit makes clear that those in leadership fell short of meeting their oversight and fiduciary responsibilities,” State Auditor Suzanne Bump said in a press release.

But it seems these kinds of problems will likely continue to occur in a system that has seen care for persons with developmental disabilities largely handed over to corporate contractors to DDS. It’s a system in which DDS itself and other regulatory agencies appear to constantly fall short of their own oversight responsibilities.

The Berkshire Arc received over $25 million in funding in Fiscal Year 2019 from state agencies including DDS, the Massachusetts Rehabilitation Commission, and the Commission for the Blind, according to the audit.

Among other problems cited by the audit, the Berkshire Arc allegedly used its credit cards to pay $124,247 in expenses that were non-reimbursable under its state contracts because they were inadequately documented, were not related to the organization’s social service program activities, or were luxury items otherwise prohibited by state regulations. Those items included valet parking, priority boarding, main-cabin extra seating on airlines, and alcohol.

The Berkshire Arc responded that the extra main-cabin seating was purchased so an individual with disabilities could attend a national self advocacy conference in 2018. But the audit stated that the supporting documentation that the Berkshire Arc provided indicated that the extra cabin seating was purchased by and for the organization’s chief operating officer, with no indication that it would be used by one of the clients.

The audit found that Kenneth Singer, the Berkshire Arc’s president and CEO, used credit card reward travel miles earned by the organization for his personal use in violation of state regulations and the organization’s own policy. The audit alleged that “at a minimum,” Singer redeemed miles earned by the Berkshire Arc on agency credit cards to pay for trips made for personal reasons to Hawaii and Mexico.

As a result of this issue, the audit stated, the Berkshire Arc “lost the opportunity to reduce its travel costs…(and) the money saved could have been used to provide additional services to its clients.”

The auditors also determined that Singer’s wife, Christine, who was working as a consultant to the Berkshire Arc, used the organization’s credit cards for $2,057 in trips, meals and gifts for a Berkshire Arc conference. Further, the audit noted, the Berkshire Arc charged its client funds accounts $43,192 in credit card purchases for which it did not have the required documentation.

In what seems to be the technical violation, the auditor said the Berkshire Arc paid for $487,341 in capital improvements to properties owned by a related party. The audit claimed those expenses were for assets that were not owned by Berkshire Arc and were therefore not program-related.

The Berkshire County Arc’s response was that its properties are “100% occupied and utilized by Berkshire County Arc for residential services, day services, programming, and operations.” It doesn’t appear that the audit questioned or contradicted that assertion.

The audit recommended, among other things, that the Berkshire Arc establish monitoring controls on all credit card expenses before payment, and that the organization “properly identify and correctly report all non-reimbursable expenses.”

We’re glad the state auditor is periodically reviewing the books of DDS providers, and making recommendations for correcting the deficiencies in financial management. The Berkshire Arc, in particular, also pledged to revamp some of its bookkeeping and management practices.

But what is needed is a more comprehensive review of the DDS system as a whole to address the patterns of faulty management that seem endemic to the system given that they keep coming up again and again in the audits. It is somewhat disappointing that these audits are done piecemeal. We have long called for a comprehensive investigation of the DDS system in Massachusetts.

If nothing else, the continuing series of piecemeal findings by the state auditor of mismanagement among providers shows just how much such an investigation is needed.

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