Audit hits use of funds by Randolph nonprofit
May Institute’s pay, benefits faulted
The longtime head of a Randolph-based nonprofit that provides services to people with autism and other disabilities was living in Georgia for more than a decade while collecting a six-figure salary and improperly billing the state for personal expenses, according to an audit scheduled to be issued Monday by State Auditor Suzanne M. Bump.
The audit says the May Institute used state funds to reimburse its former president and chief executive, Walter P. Christian, for nearly $140,000 in expenses that Christian should have paid for out of his own pocket, including a home health aide for his wife, day care fees for a grandson, the use of a Chrysler Town & Country minivan in Georgia, and a Chrysler Pacifica that he used when visiting Massachusetts.
The May Institute also failed to report more than $150,000 of Christian’s salary and benefits as taxable income to the Internal Revenue Service and the state Department of Revenue, according to the audit, which was obtained by the Globe before its scheduled release.
Bump’s financial review covers a two-year period — from July 2009 through June 2011 — but Christian, who is not named in the audit, had been running the organization while maintaining his primary residence in Georgia for more than a decade, until retiring in January, according to a spokeswoman for the May Institute.
“In 1998, May Institute’s board of trustees made a decision to develop national programming and Dr. Christian was tasked with developing services in the Southeast [Georgia and Florida],” said Julia A. Burgess, the organization’s director of corporate communications, in a written statement. “During that time, Dr. Christian was fully engaged and working from both his home in Georgia, and in Massachusetts, as he worked to expand the organization.”
Christian, along with the May Institute’s former treasurer and chief financial officer, was replaced four months ago, after auditors from Bump’s office began asking questions and poring over the organization’s financial records. But Burgess said their departures were unrelated to Bump’s review.
Thomas J. Frain, a critic of the state’s decades-long effort to privatize services to the mentally disabled, said the audit’s findings raise questions about the state’s ability to account for the millions it is spending on private service providers, many of them nonprofit organizations like the May Institute that reward their executives with generous salaries.
“Is this really what people in the Commonwealth intended when they privatized these services?” said Frain, president of the Coalition of Families and Advocates. “We have the head of a very large organization being paid all this money by the Commonwealth and living very far from the Commonwealth. What was he doing to justify his salary?”
Founded in 1955, the May Institute reports annual revenues of more than $100 million and describes itself as one of the largest providers of services to people suffering from autism in Massachusetts and the United States.
According to Bump’s audit, it employs 2,000 people and provides services to 8,500 individuals and families through programs in 14 states.
Overall, the audit says, the organization billed the state nearly $350,000 for salaries and benefits awarded to Christian and 10 other managers that the organization was not entitled to receive because the managers’ salaries exceeded state limits on executive compensation for organizations that provide social services under state contracts.
The state capped annual salaries for managers of social service providers at about $144,000 in 2010 and $149,000 in 2011.
Because the audit examined only two years of the May Institute’s operations, it was not clear how long the organization may have been overcharging the state for salaries and non-reimbursable benefits.
Bump was unavailable for comment over the weekend, but her audit urges the May Institute to repay the $350,000 to the Commonwealth and adopt new measures to ensure that it does not go over the limits on salaries and benefits in the future.
“The May Institute should review the salaries of all its managers and appropriately apply state limits to all affected employees,” the audit says.
Burgess said the May Institute will review the matter of repayments to the state with Bump’s office and other state agencies.
“If it is determined that anything does need to be repaid, we will do so,” she said in her statement.
Burgess also said the organization has made unspecified “significant changes” to prevent problems with executive compensation going forward, “including the implementation of tighter controls and reporting standards.”
The May Institute, the audit says, padded the salaries of some executives by reporting that they were clinicians when, in fact, they were managers. The state salary cap does not apply to medical doctors, psychologists, and other clinicians.
In fiscal 2010, for example, the organization exempted the salaries of four managers from the salary cap on the grounds that they were clinicians.
But when questioned, the audit says, “the May Institute could not provide evidence that these four employees had clinical duties, and their titles . . . indicate that their roles were managerial.”
Christian, who led the May Institute for more than three decades, did not return telephone calls to his Clarkesville, Ga., home. But the audit says that, when questioned by Bump’s office, officials at the May Institute said he traveled to Randolph “at least twice a month” and was “otherwise accessible as needed” via e-mail, cellphone, and the Internet.
During the fiscal year that ended in June 2011, Christian collected a salary and benefits valued at more than $450,000. Of that amount, $218,632 was covered by state funds, while the remainder was paid through other sources.
Bump, in her audit, said that Christian was not entitled to receive $69,607 of that money because the funds came from the state and were used to cover the nonreimbursable personal expenses.
After Christian moved to Georgia, the May Institute opened four offices in that state and an additional office in Orange Park, Fla., near Jacksonville.
Still, the audit shows that the organization continued to focus most of its activities in Massachusetts, which is responsible for about two-thirds of the organization’s revenue. During fiscal 2011, for example, the Massachusetts Department of Developmental Services paid the May Institute $31.8 million, while local Massachusetts governments and quasi-governmental agencies paid the organization another $28.6 million.
Bump’s audit follows a high-visibility 2011 review of the state’s educational collaboratives in which her office uncovered widespread abuses, including excessive salaries and benefits paid to executives and managers. The collaboratives are groups of local school districts that pool their resources ostensibly to reduce the cost of providing services to special-needs students.
Following the review of the collaboratives, the state Legislature and Governor Deval L. Patrick approved new powers for the state auditor, granting the office greater leeway in reviewing the expenditures of private organizations that provide services on behalf of the state.