Post audit says Farm following the rules
By Joey Berlin
Originally published 01:19 p.m., May 8, 2008
Updated 01:19 p.m., May 8, 2008
A report on The Farm Inc. by the Legislative Post Audit Committee found no major infractions by the Emporia foster care and family provider.
But a significant improvement in TFI’s financial standing and an increase in the amount of compensation paid to the non-profit organization’s highest-paid employees, is something Rep. Peggy Mast, a member of the post-audit committee, wants to look into further. Now that TFI has been audited, Mast would like to look into other existing foster care programs in the state and what their highest-paid employees are making.
“When you look at the bottom line of it, I think the important thing is to look at how maybe similar groups are profiting big-time off of what should be focused on children’s care,” she said.
Mast said the audit into TFI was prompted by an internal “whistle-blower” who felt that TFI was using the money for its service contracts “more for their own benefit than for the individuals that they served.”
The report answered two questions. Question One was, “Were appropriate procedures followed in awarding contracts to The Farm for foster care and family preservation services in 2005?” Question Two asked, “Have moneys from the contracts awarded to The Farm been used only for appropriate purposes related to the contracts?”
On Question One, the report found that during bidding for family preservation and foster care contracts in May 2004, a Social and Rehabilitation Services employee inadvertently disclosed information that caused TFI to increase its bids. As a result, the report said, the state paid TFI $2.9 million more than it otherwise would have over fiscal years 2006 and 2007.
“With minor exceptions,” the report said, “SRS and the Division of Purchases officials generally handled other aspects of this negotiated procurement appropriately.”
Mast said no disciplinary action was taken against the SRS employee who improperly revealed the information that caused TFI to increase its bid.
In response to Question Two, the report stated that TFI generally used its contract funds “in accordance with best practices for non-profit organizations.” The report said that the contracts awarded to the organizations focus on the outcomes of the organization’s work, rather than dictate how the money can or should be spent.
“Other than the broad requirement to provide foster care and family preservation services, the contracts didn’t place any restrictions on how contract funds could be spent,” the report said.
Management compensation for TFI’s five highest-paid employees increased between 2 percent and 9 percent across fiscal years 2006 and 2007, according to the report. It noted that Peg Martin, chief executive officer of TFI, received $190,000 in compensation during the year 2007, which was still less than that paid to the CEOs of two other providers, DCCCA and Kaw Valley Center Behavioral Health Care.
The report also explored other characteristics of the organization, including its establishment of seven affiliates, three of which are listed as active companies. Two of the inactive companies are listed as for-profit organizations. The report stated that most other foster care and family preservation contractors in the state have affiliates, and found that TFI hadn’t used its affiliates to increase compensation for management.
During 2007, according to the report, TFI donated $500,000 to one of its affiliates, The Kansas Family and Children’s Foundation, but reported that donation as an expense to SRS.
“The Farm officials told us they decided to classify it as a donation expense based on discussions they had with their CPAs, and because the SRS report didn’t provide a better place for this transaction,” the report said.
Mast said the $500,000 donation was an acknowledgment by TFI that it “had plenty of excess revenue.”
The report also noted a potential conflict-of-interest situation in the fact that Martin’s husband serves on TFI’s board of directors. Evidence from the minutes of board meetings showed that other board members were aware of the family relationship.
Mast said once the request for the audit was made, members of the post-audit committee started receiving letters asking them to withdraw the audit, and stating there were organizations “that abused the system worse” that should be audited instead.
“That’s the first time I’ve ever experienced that — being lobbied not to have an audit after one has been requested,” she said. “So I think that does give some merit to the fact that maybe the whole system needs to be reviewed, and I’m hoping that SRS is going to do that. And they said that they were going to go ahead and rebid the contracts, when they stood in front of us.”
Mast said she would be pushing for audits into other agencies similar to TFI, such as DCCCA and Kaw Valley, in the future, and pushing SRS Secretary Don Jordan to make sure these agencies are focused on needs of children, rather than becoming lucrative businesses for individuals working for non-profits.
“I think non-profit agencies shouldn’t be making a big profit — I guess that’s my problem,” she said.
Martin couldn’t be reached for comment. In a statement presented to members of the post-audit committee on April 29, Steve Solomon, director of public policy for TFI, said the organization believed it had “nothing to fear by the audit,” and the findings of the audit confirmed that.
“We agree with the LPA staff that we all can learn from our experiences with the current process and make changes that will enhance the bidding process and the fulfillment of the contract obligations for the benefit of children and families,” Solomon said.
Comments
We allow registered users to post comments on this Web site. To learn more about our posting policies please read our User Poster Agreement Policy.
admireed (anonymous) says...
Peggy, hope you have the same concerns regarding high pay for "executives" of our universities and school districts.
May 8, 2008 at 4:17 p.m. ( permalink | suggest removal )
TacoBellB (anonymous) says...
This comment was removed by the site staff for violation of the usage agreement.
May 8, 2008 at 5:30 p.m. ( permalink )
create (anonymous) says...
How can a non-profit organization work when it's being sucked dry for salaries? $190,000??? This is wrong! I wonder how our teachers and police feel after reading this article.
May 8, 2008 at 6:31 p.m. ( permalink | suggest removal )
create (anonymous) says...
One more thing. I plan to remember this article when TFI is crying for funding at Christmas time with their decorated Christmas tree sale. Ha! Dig into your own pocket, Peg Martin.
May 8, 2008 at 6:33 p.m. ( permalink | suggest removal )
wirewatt (anonymous) says...
The wages paid to the top person are out of line with wages for the other top jobs in the area. I think an audit is needed to see what it is being paid at the county health center. The taxpayers of the county might discover what we are really paying.
May 8, 2008 at 9:06 p.m. ( permalink | suggest removal )
pizza (anonymous) says...
I applaud Peggy Mast for her investigation into this non-profit agency and I hope she continues her work. I would suggest, however, that nearly all the money being discussed is being disbursed by the state SRS which is one of the state's largest bureaucracys, if not the largest. Simply because a child care agency is following the rules does not mean the SRS rules are appropriate or reasonable. Just look at the administrative salaries of agencies which contract to do the SRS work and these salaries are, apparently, agreeable to SRS. I suggest that if Rep. Mast wishes to fully investigate this can of worms she will need to also dig deeply into the SRS. We will need to re-elect her to another term because she could well have bitten off more than she can chew in one term !
May 8, 2008 at 11:03 p.m. ( permalink | suggest removal )
cloud (anonymous) says...
The money needs to follow the kids. The money is for the children.
Children should never be a commodity.
May 9, 2008 at 12:01 a.m. ( permalink | suggest removal )
citeegirl2 (anonymous) says...
Kids caught in a bad situation, and overworked social workers-most I know and work with are not overpaid! Their's is a difficult job. So where is that money going? Services for the kids? That is not cheap, and trust me very much needed for these kids. I question the making a profit, it sounds to me that they are! Some profit is ok, but maybe that is where to look and not just employees salary.
May 9, 2008 at 6:31 a.m. ( permalink | suggest removal )
TacoBellB (anonymous) says...
Not sure why my comment was removed - I did not mention any names when I made my comment about local mishandling of funds, but that must be against the rules.
Here's the main point:
"As a result, the report said, the state paid TFI $2.9 million more than it otherwise would have over fiscal years 2006 and 2007."
An audit did not find a problem with the above? As a tax payer that helped unknowingly overpay that much money - I have a problem with that! Can the state get it back from them?
May 9, 2008 at 7:41 a.m. ( permalink | suggest removal )
tosie (anonymous) says...
It's simple - TFI executives are HIGHLY overpaid and the staff on the line doing all the work are EXTREMELY underpaid. I can't even begin to explain to everyone how hard the work is that the people at TFI do on a daily basis. The mental and emotional stress that the TFI staff endure is tremendous and the slave driving that occurs when someone works there is horrendous.
Moral has gotten very low in the past few years and nobody wants to come to work in the morning, but unfortunately they need the job. The staff are paid just enough to get by and the benefits are decent, but it's not enough for how people are being treated there. Maybe moral would be higher if some of that "Executive Bonus Money" would be passed down to the staff who are doing all the work and keeping the ogranization running smoothly. All the while the executives are off traveling or doing their thing because they can afford it. The rest of the staff are stuck and can't even take one vacation day without getting behind by three days. It's ridiculous and that's why TFI has lost some really good, honest, and hard working staff over the past few years.
TFI does a really good job running as a "business", obviously due to their increase in profits, but it fails to have the heart of a true "non-profit" oganization. Instead, as finances increase it has become all about outcomes, bringing in the money, oh and don't forget about the kids. In the beginning it used to be about the kids, then lets meet our outcomes, then lets make sure we are ok financially. It's sad what the taste of money will do to some people. It tends to help them forget where they came from.....
May 9, 2008 at 10:44 a.m. ( permalink | suggest removal )
netloafer (anonymous) says...
It's pretty clear to me that a thorough investigation is warranted. There are lots of problems - potential conflicts of interest, possile collusion with S.R.S. on contract bids, funds being diverted under the guise of being a "donation" to a subsidiary, attempting to use political influence to squash or withdraw an audit, etc.
TFI telling the Gazette and the public that they are in technical compliance may be "technically true, but it begs the question. There seems to be a willingness on the part of TFI management to sidestep morality in order to profit at the public's expense. That's the question that needs to be answered.
Pretty serious stuff, worthy of a full investigation by Rep. mast's committee. And worthy of some in-depth investigative work by the Gazette.
May 9, 2008 at 11:14 a.m. ( permalink | suggest removal )
momus (anonymous) says...
My question is, and it's just a question, how many different offices does the Farm have in Emporia? After they moved to the extension office, is there any way that we could have the organization consolidate all offices in one building and then funnel savings to the lower level staff, or better yet the children?
May 9, 2008 at 12:09 p.m. ( permalink | suggest removal )
USNretired (anonymous) says...
SRS is long overdue for an overhaul. This is just one more issue that makes me wonder what SRS really accomplishes.
May 9, 2008 at 12:33 p.m. ( permalink | suggest removal )
tosie (anonymous) says...
There used to be 4 offices in Emporia but they have consolidated and are down to 2...Corporate at 6th & Commercial, which is a building they own and 618 Commercial, which houses the business office.
SRS doesn't do a whole lot....the contractors actually handle everything and answer to SRS. SRS simply monitors the contractors and makes sure they are meeting all contract outcomes.
May 9, 2008 at 12:43 p.m. ( permalink | suggest removal )
netloafer (anonymous) says...
I was at Diamonds by Design the other day and found out that TFI is taking over their building, which would bring the number of TFI facilities to three.
What I'm troubled by is the growth of the corporate end of TFI's business. It would take some digging into the details, but this has all the earmarks of an organization that is growing beaurocracy rather than constituent services.
The problems that appear in the audit seem to lead in that direction as well. A lot of things (fund shifting, collusion, etc) can be hidden in a beaurocratic maze.
May 9, 2008 at 1:04 p.m. ( permalink | suggest removal )
momus (anonymous) says...
Thanks for answering my question tosie! Is there any way the Farm could downsize to one building? The old extension office is HUGE inside. I would think a move would provide some operational efficiency and free up funds for a variety of things, but I don't know if the Farm would ever be willing to make that sort of change...
May 9, 2008 at 1:05 p.m. ( permalink | suggest removal )
tosie (anonymous) says...
I'm not sure why they would be taking over the Diamonds by Design building unless there has been additional growth in the services they are providing in the Emporia area and are hiring more workers. They actually were busting at the seams in the Extension Office building at one point because not only does it house the business office but foster care workers and a few other staff as well. I'm not sure what's going on there. When they obtain more foster homes in the Emporia and surrounding areas that could mean hiring more foster care workers.
They have done pretty well about consolidating in Topeka by having everyone in one building and that is a HUGE office with a lot of people in it. With that said, maybe some of the consolidation has helped get Peg the posh office she has in Overland Park, KS.
May 9, 2008 at 2:03 p.m. ( permalink | suggest removal )