[nfbmi-talk] the real conflicts of interst

joe harcz Comcast joeharcz at comcast.net
Fri Apr 22 13:47:12 UTC 2011

April 22, 2011

Ladies and Gentlemen,

In recent news stories and in the resignation letter of Ms. Gerri Taeckens NFB has been accused variously of "nepotism" "conflict of interests" and the like. The real conflicts of interests in at least on case were denoted in the RSA monitoring report which I'll attach after my signature line. MCB had at least one conflicted vendor relationship with New Horizons and that is documented in the public record. And MCB stubbornly still tries to hide its activities with that vendor which, by the way was made an Honor Roll recipient in December of 2009.

In short though here New Horizons funneled money to MCB for Transition Services. MCB used it to match federal grants. Then, without a competitive bid MCB contracted with New Horizons for services.

Now, there are some political issues involved here too. But I'll write about them some other day. The bottom line is that commissioners and interested citizens for that matter have the right and indeed the obligation to demand that MCB plays by established rules, is open, transparent and non-partisan. Period.



Attached from RSA Final Monitoring Report:

6.  Unallowable Source of Non-Federal Funds – Benefits to Private Donor


Legal Requirement: 


34 CFR 361.60(b)(3) states, in pertinent part:

Expenditures made from contributions by private organizations, agencies, or individuals that are deposited in the account of the State agency or sole local agency in accordance with State law and that are earmarked, under a condition imposed by the contributor, may be used as part of the non-Federal share under this section if the funds are earmarked for—…

(iii) Any other purpose under the State plan, provided the expenditures do not benefit in any way the donor….The Secretary does not consider a donor’s receipt from the State unit of a grant, subgrant, or contract with funds allotted under this part to be a benefit for purposes of this paragraph if the grant, subgrant, or contract is awarded under the State’s regular competitive procedures.


Finding 6:  MCB has entered into many agreements, known as “cash match agreements,” with local school districts in MI for the purpose of providing non-Federal match funds for the VR program.  One of these “cash match” agreements is with the Macomb ISD.  The Macomb ISD receives $9,000 in funds earmarked as match funds for the VR program from New Horizons, a local private CRP.  New Horizons provides job placement services to MCB’s eligible consumers as a fee-for-service vendor.  Thus, New Horizons gives the Macomb ISD $9,000 to give to MCB for non-Federal match purposes; MCB, in turn, pays New Horizons to provide VR services.


Federal regulations governing the VR program permit private entities, such as New Horizons, to contribute funds to a State VR agency to assist it in satisfying its non-Federal share requirements so long as the donor does not benefit from the expenditure of those funds (34 CFR 361.60(b)(3)).  In this case, New Horizons benefits directly from the expenditures of its donated funds because MCB, in turn, pays New Horizons to provide VR services on a fee-for-service basis rather than under a contract awarded under the State’s regular competitive process.  Accordingly, MCB has failed to comply with the requirements of 34 CFR 361.60(b)(3) for the use of contributions from private entities for matching purposes.  


Corrective Action:  MCB must:

6.1       cease using Title I funds, including the match funds it receives from New Horizons for match purposes, in a manner that inappropriately benefits New Horizons as required by 34 CFR 361.60(b)(3);

6.2       submit a written assurance to RSA within 10 days of receipt of the final monitoring report that it will no longer use Title I VR funds and its matching funds to benefit private donors of those matching funds;

6.3       develop and implement policies and procedures to prohibit reversion of funds to benefit private donors; and

6.4       complete and submit the following source of match spreadsheet entitled, “Macomb ISD Cash Match/New Horizons,” that provides summary information on the total amount of funds Macomb ISD received from New Horizons for match, and the total amount used by MCB for State VR Services Program match in FYs 2005 through 2009:


      Macomb ISD Cash Match/New Horizons

       (FYs 2005 through 2009)
     FY 2005
     FY 2006
     FY 2007
     FY 2008
     FY 2009
      Total funds Macomb ISD received from New Horizons for match
      Total funds from this program MCB used for match  in specified FY


Agency Response:  Based on the review of 34 CFR 361.60(b)(3), MCB has ceased a possible “reversion to donor” practice in regards to the Macomb Cash Match Agreement. MCB understands that the CRP must not receive a benefit from their contributions; although, the vendor provides the funds to the ISD to be used in ways that could assist all transition students.  Therefore, any and all transition students could benefit.  MCB also maintains that there was no substantial harm to the Federal interest with the Macomb Cash Match agreement.


With regard to completion of the chart as required by corrective action 6.2 above, MCB has limited staff and resources and cannot work on issues which go back to October 1, 2004 (beginning of FY 2005).  The agency’s highest priority is working on current issues.  The documentation is available onsite for RSA reviewers.


RSA Response:  RSA appreciates the fact that MCB has ceased the “reversion to donor” practice described above.  Given that MCB does not refute the Finding, MCB must complete the corrective actions 6.2 through 6.4 outlined above.


Technical Assistance:  None requested at this time.  


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