Press Release  Holyoke Geriatric Authority Audit Finds Problems, Leads to Changes

Boston — State Auditor Suzanne M. Bump today issued an audit of the Geriatric Authority of Holyoke (GAH) which found a series of management deficiencies led to a $2.2 million debt owed to the city of Holyoke. The audit, initiated by Mayor Alex Morse, is being used by GAH’s new leadership to prevent the accumulation of further debt, repay the city, and steer the authority to a path of self-sufficiency.

The Geriatric Authority of Holyoke, an independent governmental entity operated by a seven-member board comprised of appointees of both the mayor and city council, offers a variety of care and service options for the elderly, including 24-hour care. In Fiscal Year 2011, GAH received more than $6.8 million in revenue with expenditures of more than $7.3 million.

The audit, which reviewed a two-and-a-half-year period ending in June, 2012, highlighted several missed opportunities for the GAH to grow its revenue. Missed opportunities included allowing its physical therapy license to expire, underutilizing GAH facilities, and underutilizing the authority’s service vehicles. Each missed opportunity prevented the GAH from either providing additional money-earning services or collecting rent to help ensure its financial viability.

The audit also reveals GAH in 2012 received over $150,000 in state funding to which it may not be entitled. The Executive Office of Health and Human Services (HHS) provided the payments based on documentation that the GAH received $367,663 in appropriations from the City of Holyoke in Fiscal Years 2009 and 2010. Holyoke’s City Treasurer contests that the money provided to the GAH were not appropriations, but money that GAH owed the City because the City was paying for GAH’s portion of its employees and active retirees’ premiums for health, dental, and life insurance.

Further inefficient and unauthorized transactions contributed to the Authority’s financial decline, according to the audit. The report cited a failed GAH attempt to replace its aging nursing-home facilities that resulted in a loss of more than $400,000. The audit also questioned the appropriateness of certain legal services, employee retirement packages, and employee automobile benefits.

The audit’s review of GAH’s internal policies and procedures found several practices which provided inadequate protection over GAH resources. Improvements needed included more frequent reconciliation of financial accounts, complete inventories of GAH assets, and written contracts between GAH and its service providers.

“The series of deficiencies detailed in this report describe an environment ripe for waste and abuse,” said Auditor Bump. “Holyoke is at a crossroads of its financial future and it must be determined if the Geriatric Authority can be transitioned to a state of self-sufficiency or if it should continue to be supported by the taxpayers. I commend Mayor Morse, the leadership of the city, and the authority for their willingness to confront a problem and begin corrective action.”

The GAH, now managed by a new executive director, has responded positively to all audit findings and states it will institute new cost-saving measures, review its internal procedures, and begin collecting new streams of revenue by increasing the amount of services provided and leasing out more of its facility space.

The Office of the State Auditor conducts technical and performance assessments of state government’s programs, departments, agencies, authorities, contracts, and vendors. With its reports, the OSA issues recommendations to improve accountability, efficiency, and transparency.

Read the audit of the Geriatric Authority of Holyoke here.

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