December 14, 2017
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How Maine quietly handed off financial oversight of a $23M program for infants

By Erin Rhoda, BDN Staff
Updated:
Stock photo | BDN
Stock photo | BDN
Maine Families served 2,393 families with 2,644 children in all counties in state fiscal year 2014.

Once legislators wrangle over the budget and the state secures federal money, it’s often up to state officials to pinpoint who can do the work of government. Often a company or nonprofit organization competes for the available money through a bidding process, and the state determines who’s best for the job.

The LePage administration has made a point of putting more contracts out to bid. In an April email, Department of Health and Human Services spokeswoman Samantha Edwards said DHHS has sought to increase competition by issuing 100 to 125 requests for proposals this year compared with an average of 30 to 35 per year when the administration took office.

“Competitive procurement is a state requirement. The procurement process produces accountability among providers and ensures that Maine taxpayers receive the best value for the dollars they expend on services. This is a key priority for the Administration,” she wrote.

That’s one reason people in child advocacy and protection fields started asking questions in late winter when they learned a nonprofit was taking over administrative and financial duties of a statewide home visiting program called Maine Families without a competitive bidding process. The program operates on more than $9 million per year in federal and state funds and aims to help parents when it matters most for their infant’s long-term development.

Dozens of interviews and documents show what led to a no-bid contract funded entirely with public dollars: a closed decision-making process, the state’s questionable justification to avoid competitive bidding, and limited communication about the transfer of a multimillion-dollar state program to the nonprofit sector. The circumstances raise questions about transparency and accountability.

One observer said he had “never seen anything like this” in the decades he has worked in and with state government, and to make changes in such secrecy was “unbelievable.”

For years, DHHS has managed contracts with about a dozen local agencies across the state that carry out Maine Families services and help new parents adjust to life with an infant. Now the Maine Children’s Trust, through its own contractual arrangement with DHHS, will manage all local contracts on the state’s behalf. The trust was established by state law with a mission to prevent child abuse and neglect.

The change in responsibility wasn’t widely communicated. The trust’s own director, Jan Clarkin, said she did not precisely know how the state awarded her organization the contract, which provided $3.46 million for administration, training, data collection and clinical consultation, and $19.42 million as funds to be passed through to the local home visiting agencies, over 2½ years starting April 1.

The trust previously managed several functions of the Maine Families program but did not provide financial oversight.

At $9.15 million per year, the award represented a 558 percent increase in the trust’s annual revenue, which was $1.39 million in 2013, the year of its most recently available tax filing.

At first, several trust board members could not answer questions about the new arrangement — although a small group of board members had approved the concept in May 2015 — such as how much money they would be responsible for, how the trust’s operations would change, or whether the new money and duties would affect the trust’s role as an independent overseer of child abuse prevention programs.

In turn, the big question they asked was this: Will the trust be able to challenge the LePage administration’s policy decisions if the trust is managing the state’s money and carrying out its work?

‘An emergency’

Documents requested under the Freedom of Access Act show DHHS Commissioner Mary Mayhew signed paperwork on Feb. 8 paving the way for noncompetitive procurement.

Any time state agencies seek no-bid contracts, they have to provide one of several justifications set out in state law. In this case, the justification offered by Mayhew was that “an emergency exists that requires the immediate procurement of goods or services.”

Yet Maine Families has long been overseen by the state. The program began in the 1990s, and all the home visiting sites established a common identity and became Maine Families in 2010.

The state gave an opaque reason for the emergency in its request for a sole source contract, saying that, without the deal, “vulnerable families would not benefit from critical prevention services and the State would lose the investment in the recruitment and retention of a certified home visiting workforce, lose federal funding, and would need another year to attempt to rebuild those assets.”

Asked why the state couldn’t continue to administer all the Maine Families contracts, Edwards, the DHHS spokeswoman, said it was a matter of timing. DHHS did not have the time to develop multiple contracts, so it created one with the trust.

“The lapse in service that could precipitate loss of federal funding would come from the timing needed to develop and administer 17 contracts in the same timeframe we needed to develop and administer just one consolidated contract,” she said.

The state’s guidelines say a department’s “lack of adequate advance planning” does not count as justification for seeking a sole-source contract. Emergency contracts are generally awarded in unexpected or uncontrollable situations, according to the Division of Purchases, which provides a hypothetical example on its website of an emergency circumstance: a case in which state employees are experiencing major data connectivity problems and need to hire outside consultants to help, since in-house staff don’t have the expertise or tools.

What’s more, interviews and the trust’s meeting minutes show the state had been working with the trust a minimum of nine months before the “emergency” to set up an arrangement.

And years ago the LePage administration publicly shared its desire to outsource Maine Families to the trust to reduce state administration and overhead.

“The state’s current financial situation underscores the need to leverage a stronger public private partnership. One bold strategy would be to study outsourcing the program to an entity such as the state’s Children’s Trust Fund,” Mayhew wrote in a Sept. 17, 2012, report submitted to the Maine Legislature.

Historically, multimillion-dollar no-bid contracts are rare. In 2008, the Office of Program Evaluation and Government Accountability, the Legislature’s independent investigative arm, reviewed a random sample of 295 state contracts and found just one worth more than $1 million awarded on a sole-source basis.

And, as the LePage administration touted the accountability inherent in the competitive procurement process, it had recently eliminated a level of scrutiny in how contracts get approved.

On March 3, Gov. Paul LePage issued an executive order that made review by the state’s top attorney — with whom he often has fought — optional. Previously, the Maine attorney general’s office was required to review contracts worth more than $3 million.

Attorney General Janet Mills said her office was not consulted on the trust’s contract.

All requests for sole-source contracts are posted on the Division of Purchases’ website for a week to allow for public comment, particularly from vendors. Documents show the request for the trust’s contract was publicly displayed from Feb. 11 — the Thursday before a long weekend for many, heading into Presidents Day and February school vacation — through Feb. 17.

Sheryl Peavey, the chief operating officer at the Maine Center for Disease Control and Prevention within DHHS, is named as the manager of the trust’s contract. She did not return a call seeking further clarification about the underlying impetus for the change in financial management of Maine Families.

It’s “entirely reasonable” that the trust would have been considered for the contract if DHHS had put it out to bid, said Sue Mackey Andrews, president of Solutions Consulting Group, which provides consulting services for the early care and education of infants and young children. The trust gave her its child advocate award in 2014.

But “the lack of transparency and publicity about all of this is very troublesome to me. If having the trust operate the Maine Families home visiting program is such a good idea, why is there no publicity about this?”

The change in duties for the trust comes at a time when more families in Maine are falling into extreme poverty. The number of children living in households with incomes of less than half the federal poverty level increased by 6,000 — or 35 percent — between 2010 and 2014, according to the Annie E. Casey Foundation.

It also comes at a time when the state has cut in half the ranks of public health nurses, who historically fulfilled similar duties to Maine Families home visitors but have medical training.

‘Dual roles’

Maine Families is the largest home visiting program in the state, with the equivalent of 100 full-time home visitors. Offered for free and on a voluntary basis, home visitors may help new parents cope with their baby’s screaming, check their home for any potential hazards to the baby, help with breastfeeding and show them how to safely put their baby to sleep.

The program served 2,393 families with 2,644 children in all counties in state fiscal year 2014, and 48 percent of families enrolled before the baby’s birth.

It has shown documented results. A smaller percentage of children in the program, 1 percent, are victims of substantiated abuse and neglect, compared with the statewide rate of 1.8 percent, according to a 2012 report. A greater percentage have up-to-date immunizations (92 percent versus 73 percent statewide). Most babies in the program who live in households with a smoker see their exposure to secondhand smoke reduced.

Since trauma and unmet family needs can have lifelong effects, the program is considered by many to be an important effort to guide parents and protect children. Its federal site review in September 2015 showed the program was “not only efficient and effective, but essential to the core mission of the department,” according to state documents.

So why the change? It doesn’t appear that contracting out the financial management will alter services for families or save general fund money; Maine Families has received around $1.5 million per year in state funds in the past and will continue to receive that amount or more over the 2½ years of the contract. The trust may have to build up its own overhead to carry out the program and is moving to a larger location to allow for its expansion, according to the trust’s April 28 board meeting minutes.

State documents, however, say handing over the fiscal management of the program will make state government more efficient. “Consolidation of the contracts advances a more community based structure that reduces administrative burden at the state and community levels,” the request for the sole-source contract states.

DHHS has relied on the trust in the past to support Maine Families through a contract worth $995,000 per year. That agreement, which wasn’t put out to bid either, allowed the trust to train home visiting staff, evaluate local sites, and provide technical assistance and clinical consultation.

Taking over the state’s financial management role — which will involve reviewing, approving and monitoring the local agencies’ budgets and disbursing their funding — represented a natural progression, said Clarkin, the trust’s director.

“The dollar amount is larger, but it’s not a hugely significant change for the trust,” she said.

The expansion has “been nothing but transparent,” she said, and board members have “been getting reports and updates on the status at every board meeting.”

Pam LaHaye, the Maine Families coordinator at the trust, said allowing the trust to handle each site’s contract will be easier on the local agencies, since working with the state can be more complicated. Plus, there will be more opportunities for efficiencies, such as in purchasing and writing reports.

Yet some trust board members disputed the assertion they were kept informed and questioned why all the desired outcomes weren’t discussed openly and often.

“It’s possible that this new administrative management oversight will be more successful, but we don’t know,” said Lauren Sterling, a trust board member and child advocate.

Efficiencies could be realized regardless of who holds the contract, she said. Will the arrangement translate into more accountability from Maine Families agencies, and improved child and family outcomes? Will it mean front-line staff are better trained and supported, and evaluated in a more timely fashion? Will coordination improve among all of Maine’s home visiting programs, which also include Head Start and public health nursing?

“This contracting process requires thoughtful, transparent, and full board vetting, which is not what has happened so far given the size and importance of this program,” she said.

The first time the full board saw the contract was in early June, more than a year after a small group of board members agreed to “accept the proposal from the State” and expand the trust’s role, according to the trust’s meeting minutes. When asked, some board members found they didn’t know how, exactly, the trust got the contract or what their recourse was if they objected to the way the state wanted to direct Maine Families.

The largest question they raised concerned their mission: Would taking over a previously held state function compromise the trust’s ability to propose, defend or criticize state policies concerning children?

As a nonprofit with a broad public mission — which people can donate to through their Maine income tax return check-off — its duties are set out by state law. And the law emphasizes the trust’s position as an independent overseer of child abuse prevention programs.

The trust is supposed to evaluate programs and their funding sources, and develop or recommend “ideas for innovations in rules, laws, policies and programs concerning child abuse and neglect to the Governor, the Legislature, state executive agencies, the business community and other entities,” according to its statute.

“How can we receive $23 million from the state, including $3 million for administration, and still call the state to account when we see that the state’s strategy for children is failing?” said Peter Mills, a trust board member who is also executive director of the Maine Turnpike Authority, a former state legislator and two-time Republican candidate for governor.

Clarkin said the contract would “absolutely not” compromise the trust’s mission.

Faced with phone calls from people with knowledge of the state’s home visiting programs, Mills started gathering information and questions himself:

“What is the full funding history for home visiting programs in recent years? Is the Trust being asked to participate in a downsizing of the programs for which it should be advocating?” And, “If the Trust is, in essence, charged with evaluating itself as a provider of an important service, how will it reconcile these dual roles of provider and evaluator?” he said.

Maine Families used to be funded through the Fund for a Healthy Maine, which receives and disperses the state’s annual share of a multibillion-dollar lawsuit settlement with cigarette companies. Today, over 2½ years, it’s being funded by federal grants ($10.5 million), the state’s general fund ($4.5 million) and, in a recent change, the federal public assistance program Temporary Assistance for Needy Families ($7.8 million).

Mills hadn’t started asking questions sooner because he wasn’t at the meeting when the board first discussed the potential expansion and wasn’t aware of the impending changes to the trust’s scope of work. Like most of the board members, he wasn’t at the meeting because it was called with one day’s notice.

On May 19, 2015, Clarkin, the trust’s director, emailed the organization’s 19 board members with an apology and a request. The apology was for the short notice. The following morning, at 10 a.m., there would be a board meeting where they would vote whether to ratify a decision by the trust’s executive committee to expand the organization’s scope of work.

In the email shared with the BDN, Clarkin did not elaborate on how the scope of work would change, just that the executive committee was “asking for a board vote to ratify their recent supportive expansion vote.”

Given one day’s notice, just nine board members could attend the meeting — two in person and seven via a conference call — according to the trust’s meeting minutes. That meant they were one person short of a quorum. State statute governing the trust requires a majority of board members to be present in order for votes at a meeting to be valid.

The board was called together for the purpose of voting, and the trust’s bylaws state the board must ratify actions of the executive committee for them to be effective, but board chairman Charles Soltan said it didn’t matter that there wasn’t a quorum. They were just “trying to gauge the willingness of the board members who participated.”

“Not having a quorum or enough members really has no bearing whatsoever on anything,” he said. “Executive directors have the authority to enter into contracts, and that’s certainly the case here. There was no need for any formal board vote.”

The meeting continued. The trust had been “requested” by DHHS to expand its management of Maine Families. “Currently we manage the infrastructure supports for the program and we are being asked to assume the management of the direct service agreements as well,” the minutes read.

When one trust board member asked whether there would be enough money set aside by the state, the minutes show the response: “The State has committed that the Trust will have transitional funds provided to ensure that we can set up the staff and systems that we would need to assume this.”

At that time, it appears the state was not considering a full-fledged contract with the trust but an agreement that can have less legal weight: a memorandum of understanding. It was still being worked out, but “the department management has offered their full support in anything we need to make this successful.”

All the board members present voted in favor of assuming greater management of the program, including two who work for organizations — the Franklin County Children’s Task Force and the Aroostook Council for Healthy Families — that receive Maine Families funding to deliver home visiting services.

The bylaws and statute governing the trust are clear on the need to avoid conflicts of interest. However, Clarkin said it was “totally appropriate” for the two board members to cast their votes because they weren’t making a decision about the sum of their funding.

The minutes describe the trust’s change in duties in vague terms such as expanding “the scope of our management” or assuming “the management of the direct service agreements.” They do not describe how much money the trust would be handling or what specific changes the trust would need to make to take on its new duties.

The minutes indicate the trust was still pulling together “a listing of all of the staff, activities, materials and supports” necessary to assume the new responsibility. At the time it was aiming for the transition to happen Oct. 1, 2015.

Near the end of the meeting, board members were told to stay quiet about their decision. Soltan, the board chairman, who also is a lawyer and lobbyist, said that “we have been requested to keep this change extremely confidential to give the state the opportunity to message this change. So until further notice, please do not discuss this outside of the board.”

Asked why he requested silence, he said, “The state hadn’t yet figured out when and how this was going to happen, how they were trying to structure everything.” It was the state’s call to share information and “was not for us as a potential party to start talking about that yet.”

So far, the state has not announced publicly the change in oversight of Maine Families.

‘We knew nothing’

It appears the board members didn’t discuss the decision at length among themselves either. The next time the expansion was mentioned in partially redacted meeting minutes provided by Clarkin was in one paragraph for a meeting held Feb. 22, 2016 — two weeks after the sole-source contract authorization form was signed by the state.

“We knew nothing in the interim,” Soltan said. “Don’t make the assumption that we would have known about it. We’re telling you we didn’t. So don’t make an implication that we did.”

“Clearly [the state was] doing some work about how to get it done in the background. We were just sitting and waiting. We had no specific decisions to make,” Clarkin added.

She said she hadn’t even known the contract was awarded on a sole-source basis. When asked if it struck her and Soltan as odd that the state awarded the contract under an “emergency,” they both said no.

“If you have an understanding of any state contracting or decision making, it is a mystery unto itself, regardless of the department,” said Soltan. “We had no role in, nor participation in, how or if they were ultimately going to do this.”

Others found the emergency justification surprising.

It’s “unusual and really questionable,” given the definition of “emergency” and the state’s previous oversight of Maine Families, said Democratic Rep. Drew Gattine of Westbrook, who co-chairs the Legislature’s Health and Human Services Committee and sits on the trust’s board.

“An emergency doesn’t mean, ‘Oh, the deadline’s coming up, and we never bothered to put this out to bid,’ or ‘We changed our minds about how we wanted to do this.’ An emergency isn’t something that can be self-created by the state by their inaction or by their lack of planning,” he said.

The fact that the contract was awarded on an emergency basis is suspect, said Shawn Yardley, CEO of Community Concepts, which provides Maine Families services in Oxford County.

“If there’s any emergency, who’s responsible for creating it? I don’t think it meets the letter of the law, far more than the spirit of the law,” he said, especially since it appears the state went to the trust directly and expressed interest in having it take on the new duties.

“I don’t know of any other organization that’s acting as a fiscal manager … to administer that level of funding with that small a staff, and does not have an overwhelming knowledge and support of their board to take on their role,” he said.

“I’ve never seen anything like this in my time working in state government or around state government, and to do it in such secrecy is just, it’s really unbelievable.”

Yardley previously served on the trust’s board and was on the original task force in 1993 whose work resulted in what eventually became Maine Families. At that time, several agencies had started home visiting programs that operated largely independently of each other and without coordination, he said.

Why did the state get involved in the first place nearly two decades ago? It wanted to provide standards and oversight, to bring accountability to the service, and to ensure transparency and integrity.

Maine Focus is a journalism and community engagement initiative at the Bangor Daily News.

 

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