After Chelsea housing scandal, Mass. caps pay for directors

Action follows scandal over pay in Chelsea

Two months after being embarrassed by disclosures that the Chelsea Housing Authority executive director was receiving $360,000 in annual pay, the state agency that oversees hundreds of housing authorities statewide is imposing a salary cap that would allow pay no higher than $160,000.

The salary cap is the centerpiece of a package of steps to be carried out by the administration of Governor Deval Patrick following the resignation of Chelsea housing director Michael E. McLaughlin, who had deliberately concealed his salary, believed to be the highest of any public housing official in the nation.

“His salary was absolutely outrageous,’’ said Aaron Gornstein, the incoming undersecretary of the state housing and community development department. “It’s our job to make sure taxpayers’ dollars are spent wisely. That’s what this is about.’’

Besides the cap, the state Department of Housing and Community Development will name a commission next week charged with coming up with recommendations for other improvements in how the 242 local housing authorities statewide operate. A 60-day deadline has been set for those recommendations.

State officials also will seek to eliminate pay to members of the local boards of directors that govern housing authorities, said Gornstein.

Board members, who typically meet once a month to go over broad policy issues, now receive up to $5,000 in pay annually. However, many authorities already operate with no pay to directors. In Chelsea, directors were paid about $5,000 annually.

Gornstein said disclosure that McLaughlin was paid $360,000, with local board approval, triggered a deep state review of public housing. There are 1,415 units of public housing in Chelsea.

With McLaughlin gone, state records show thatthe highest paid housing directors are Richard J. Sergi of Brockton, who is paid $166,527 to manage 3,430 housing units; Gregory Russo of Cambridge, who makes $165,380 to manage 2,700 housing units; and Joseph Macaluso of Somerville, who is paid $160,000 to oversee 2,520 housing units.

The salaries for Sergi and Russ will remain unchanged for the duration of their current contracts, but new contracts will be subject to the cap, Gornstein’s office said.

Patrick pressured McLaughlin and the five members of the Chelsea housing board of directors to resign in the days after the Globe reported McLaughlin’s salary and that he had submitted a falsified report to the state saying his salary was $160,000.

When asked about it in October, McLaughlin told the Globe that he did so because of “the rebel in me.’’

The state, beginning next week, will require housing authority boards to certify executive directors salaries, by matching payroll documents to actual expenditures.

McLaughlin announced his resignation within hours of Patrick’s call to do so, but stayed late that evening at the housing authority office on Locke Street before leaving with half a dozen boxes of materials. McLaughlin’s close family friend and office accountant, James McNichols, helped McLaughlin with the boxes, and later admitted to shredding documents.

The next day, McLaughlin, after hurriedly submitting his resignation to the board, left midafternoon with McNichols and three checks for more than $200,000, which he said was his compensation for unused vacation, sick, and personal time. The checks were cut by McNichols.

The state stopped payment on two of the checks, but not before McLaughlin had cashed one for $80,000.

Since then, McLaughlin and the Chelsea Housing Authority have come under intense criminal and civil investigations by federal and state authorities.

Using copies of McLaughlin’s cellphone records, the Globe determined last month that McLaughin put in only 15 full workdays in Chelsea in 2011. The records showed McLaughlin, 66, a longtime Democratic political powerbroker with close ties to Lieutenant Governor Timothy P. Murray, spent 47 weekdays in Maine and Florida with his top assistant and close personal friend, Linda Thibodeau. He spent another 21 work days at out-of-state conferences from Phoenix to Miami, usually with Thibodeau.

McLaughlin has submitted paperwork for a public pension that could exceed $250,000, but the Chelsea Retirement Board has put processing of his application on hold at the request of authorities.

Since his resignation, McLaughlin has not returned telephone messages and his lawyer has declined comment.