Auditor: May Institute Charged State Beyond Allowed Limits
May 20, 2013 The state auditor today issued an audit which found that the May Institute, a Randolph-based nonprofit that provides educational, rehabilitation, and behavioral healthcare services in more than a dozen states, charged the state $348,769 to pay staff salaries beyond allowed reimbursement limits.
Nearly 40%, or $138,213, of those charges went to the president/chief executive officer of the May Institute
, with the balance going to 10 management staff, according to the state auditors office.
The audit covered two years, from July 1, 2009, through June 30, 2011, during which time it generated $104 million and $108 million in revenue, respectively.
The May Institute provides valuable educational and rehabilitative services to a vulnerable population, but if you do business with the state you have to follow the states rules when you spend public money, said State Auditor Suzanne M. Bump.
According to the auditors office, the May Institute president/CEOs total compensation amounted to more than $376,000 in FY 2010 and $451,000 in FY 2011, and the Commonwealth reimbursed the nonprofit approximately $140,000 each year in accordance with set salary reimbursement limits.
State auditors found the May Institute improperly charged the Commonwealth $138,213 for additional president/CEO compensation. The additional compensation provided for such items as personal services for the president/CEOs family, the personal use of two vehicles, and a per diem allowance of $105 for traveling costs while he worked from a house he owns in Georgia.
The audit also found that the May Institute failed to report as much as $151,717 of the president/CEOs total compensation as taxable income to both the Internal Revenue Service and the Massachusetts Department of Revenue.
Although the state auditors office, and the report itself, did not name the president/CEO, a report in todays Boston Globe identified Walter P. Christian as having served in the post for the time period covered by the audit. He led the agency from the time he joined in 1978 until he retired last December, and received a lifetime achievement award five years ago from the Boston Business Journal.
In a statement released today, May Institute said it recognizes the serious nature of the findings, and has already taken significant steps to ensure these types of errors do not arise again.
It added, Anticipating the planned retirements of the CEO and CFO at the end of 2012, a new leadership team was put into place more than one year ago to ensure a smooth transition. That team has made significant changes, including the implementation of tighter controls and reporting standards to ensure that May Institute meets or exceeds all state and federal requirements.
May Institute said that after its board decided in 1998 to develop national programming, Christian led that effort in the Southeast, noting, The use of two cars was part of the former CEOs approved compensation package as he worked from Georgia and from the corporate headquarters in Massachusetts.
In addition, according to the Institute, the board decided to provide financial support to Christian, in addition to his salary, to enable him to care for his ailing wife.
The Institute said the per diem that Christian received was an exception to our policies and unique to his situation at the time and that similar exceptions have not been made for other executives.
Bump called on the May Institute to repay the state:
- $138,213 in nonreimbursable compensation that it provided to its president/CEO charged against its state contracts.
- $210,556 in salaries it paid to certain managers that exceed the amount allowed by state regulations.
In addition, the auditor recommended that the May Institute should take measures to ensure that it does not charge any unallowable compensation expenses against its state contracts and ensure that all taxable compensation items are properly reported and should review the salaries of all of its managers and appropriately apply state limits to all affected employees.
The auditors office said the May Institute responded positively to the audits findings and has said it is amending its salary payments for program managers and is negotiating an agreement with the state to resolve its unallowable charges.
May Institute was founded in 1955 and today operates nearly 200 service locations in more than a dozen states.