For Immediate Release - August 25, 2011

Auditor’s Office Finds Western Mass Provider Mismanaged $1 Million in Public Funds

(BOSTON, MA) –State Auditor Suzanne M. Bump today released an audit of the Northeast Center for Youth and Families, Inc. (NCYF) which detailed the misuse of more than $1 million in public funds over a five year period.  Auditors found that NCYF overbilled the Department of Youth Services $651,221 for two foster care programs, failed to monitor services provided by paid consultants, maintained questionable staff bonus guidelines and let its worker’s compensation insurance lapse. NYCF also used program subsidies inappropriately to fund severance packages and pay off losses incurred by programs the center ran in other states.

Auditor Bump is calling for restitution from the Easthampton-based NCYF, which provides foster care and specialized treatment programs for more than 600 emotionally disturbed or mentally ill children from across Massachusetts.

“The public needs to know that the State Auditor is on their side, protecting their tax dollars from waste and abuse,” said Auditor Bump. “We want to ensure that human service providers like the Northeast Center are spending public funds legally, appropriately and wisely to maximize every dollar and help the greatest number of physical and emotionally needy children, adults and families.”

Auditor Bump noted that after a three-year drop in the foster care population, the state increased NCYF’s contract payments in a good faith effort to prevent two of its foster care programs, Nexus and Safe Passage, from suffering financial losses. However, auditors found that NCYF did not submit the correct documentation of what it cost to run the programs that would justify the rate increases. DYS acknowledged in the audit that it failed to verify the information against the center’s yearly financial statements resulting in an unallowable overpayment of $651,221.

NCYF also misused $406,360 in state funding to pay for out-of-state operating losses for three residential treatment programs the center ran in Connecticut in violation of state regulations.

“This is a troubling finding that makes us question whether it’s an isolated practice,” said Auditor Bump. “Our auditors are creating a data program that will help us to quickly determine whether others among the nearly 1,200 service vendors may be using our tax dollars to operate out-of-state programs.”

Auditor Bump also criticized the center for giving employees nearly $1 million in bonuses over a three-year period in apparent violation of state regulations that call for a board approved pay-for-performance standard policy that determines bonuses. She is calling on DYS and Operational Services Division to review the bonuses to determine if NCYF should reimburse the state. NCYF also gave nine senior staffers, including the former Chief Financial Officer and Executive Director severance pay funded with $148,098 in state contract revenues.

Auditors found that $53,950 in contracts for consultants the center hired also did not qualify for reimbursement. One of these consultants worked as the center’s Director of Special Projects in direct violation of federal and state law that prohibit non-profit organizations from awarding contracts to employees.

During fiscal year 2007, NCYF allowed its worker’s compensation insurance to lapse for 21 days during which time an employee was injured on the job and submitted $52,073 in medical expenses, lost wages and a settlement. Auditor’s determined that NYCF
misused over $7,000 in state funds to pay the claim.

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Audit Report: Northeast Center for Youth and Families, Inc. pdf format of Northeast Center for Youth and Families, Inc.