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A Wake-up Call for the Oregon Commission for the Blind

Braille Monitor                                                 January 2012

 

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A Wake-up Call for the Oregon Commission for the Blind

 

by Gary Wunder

 

In most organizations that handle money, the words “audit” and “auditors” are enough to start the adrenaline flowing. The purpose of an audit is minimally

to ensure that money received is being handled in a way that can be tracked, is spent with appropriate authorization, and is consistent with the purposes

and goals of the organization receiving it. The need for this oversight, its value to the organization, and the assurance it brings to contributors, taxpayers,

and investors is clear; but the emotional reaction to an audit can be quite different.

 

In the fall of 2011 an audit of the Oregon Commission for the Blind (OCB) was released. Its findings were noteworthy, not because it revealed a significant

slight of hand or abuse of public funds, but because the issues it highlights have been central in audits going back to 1995. The failure to address longstanding

issues has drawn criticism from the press, the Oregon general assembly, and the governor of the state.

 

In an article appearing in the Portland Tribune for October 13, 2011, this is how the audit and the conflict between the Oregon Commission for the Blind

and the state's blind citizens were characterized:

 

Vendors Say State Commission's Failures Hurt Their Businesses

 

by Steve Law

 

Art StevensonBesieged Oregon Commission for the Blind leaders vow to improve their management practices after another blistering state audit--the fifth

since 1995--accused the Portland-based agency of sloppy money management and misleading state lawmakers. In a four-hour meeting Friday, the Commission's

seven-member board, packed with four newcomers chosen by Governor John Kitzhaber, said it would take the audit seriously and try to turn it into a model

agency. But several board members also downplayed the audit findings, raising questions about their resolve to change the culture of an agency charged

with aiding Oregon's nineteen-thousand blind people.

 

Commission Administrator Linda Mock and board Chairwoman Jodi Roth issued separate written responses to the October 5 audit that were largely defensive.

Meanwhile, activists with the agency's Business Enterprise Program, who have been at odds with the Commission for years, are calling for heads to roll.

The new board should have held an executive session to review Mock's performance, given the history of negative audits, said Art Stevenson, president of

the National Federation of the Blind of Oregon and a manager in the Business Enterprise Program. "I do not feel that she should be the administrator of

the Oregon Commission for the Blind," Stevenson said.

 

In an interview Monday Mock said she intends to remain at the helm of the agency. She stressed that her primary concern remains job training, rehabilitation

services, and counseling to some fifteen hundred blind people who are clients of the agency. However, she added, "We realize that the business practices

of the agency need to support that."

 

Many of the controversies revolve around the Business Enterprise Program, which stems from a federal law giving blind people a monopoly on vending machines

and other food service in public buildings. The program employs seventeen blind people.

 

Not Tracking the Money

 

The new audit, similar to others in 1995, 2000, 2001, and 2009, found a pattern of poor accounting and inept recordkeeping at the agency Mock has run for

more than a decade. The Commission for the Blind, which spends $7.8 million in federal and state money each year, didn't have copies of contracts, didn't

track income of the blind vending machine businesses, and had weak controls on spending and discrepancies in financial records. These were among a host

of problems uncovered by six state auditors. Agency leaders have failed to perform tasks that are "fundamental expectations of any manager" in the state,

said Gary Blackmer, Audits Division director under Secretary of State Kate Brown.

 

After a scathing 2009 audit the agency was required to report how it rectified the problems to a legislative committee in January 2010. Auditors concluded

that the agency falsely claimed to have resolved many of its problems. "We found something different from what they told the legislature," Blackmer says.

In the follow-up audit the agency was asked to produce signed contracts with outside food and beverage companies that service state buildings. Some of

those contracts were only signed that morning and not by both parties.

 

Walt Reyes, manager of the agency's Business Enterprise Program, was placed on paid administrative leave in August due to irregularities uncovered during

the audit. He is still on leave.

 

Tracking money from vending machines operated by blind businessmen was hard to do because accounting records were incomplete and inconsistent, said Jamie

Ralls, principal auditor for the state. That's especially important because those machines operate on a cash basis, she said. Auditors also couldn't track

the eleven percent cut that blind business managers are supposed to give to the agency, Ralls said. "If they were doing their job, they could track all

this information," she said. "They could spot when something doesn't seem right."

 

Weak Board?

 

Randy Hauth stands outside the Oregon Commission for the Blind building with a picket sign reading “Abuse of Power” in hand.Some observers say past boards

overseeing the agency have been rather passive. Members relied on Mock and her predecessor--who resigned under pressure after a negative audit in 1999--to

produce board agendas and spoon-feed them financial reports. "The board has in the past liked it that way," said Kae Seth, a past board member and current

president of the American Council of the Blind of Oregon. Board meetings are only conducted every two months for two hours, giving members twelve hours

a year to monitor the agency.

 

"Basically, the board meetings are like a dog and pony show," said Randy Hauth, a representative of the seventeen blind business managers.

 

At Friday's board meeting, when Mock and her fiscal officer, Leslie Jones, presented a proposal for meeting a potential 10.5 percent budget cut that may

be required by the legislature, board member Richard Phay asked why the board didn't get individual department budgets in the agency. "Honestly, we've

just provided a summary because it's much easier to grasp," Jones said. The full agency budget would have been too long to submit to the board, she said--ten

pages.

 

At the meeting some members defended the agency's management and were publicly dismissive of the audit findings. "This audit looks like a witch hunt to

me," said Dr. John Wilkins, an ophthalmologist. "I think this is an incredible waste of taxpayers' money." Later he said, "We're not accountants. That's

not the primary goal of our mission."

 

Carla McQuillanMock complained that the agency had requested a quality assurance staffer to resolve the financial problems highlighted in past audits but

said state budget writers denied the extra position. Roth, the board chairwoman, reiterated that complaint in her written response to the audit. However,

Ralls said there was a half-time person hired with federal stimulus funds to serve as a quality assurance officer during the 2009-11 budget cycle, which

ended in June. Roth said she wasn't aware of that position.

 

New board member Carla McQuillan said agency leaders should stop arguing that the state is "picking on us" and improve their business management. "Things

have just been very sloppy," McQuillan said.

 

Roth appears to have softened her stance after speaking with state auditors and Secretary of State Brown. In an interview Tuesday the board chairwoman said

she would like to see "global changes" in how the agency is managed and how the board functions. "I think that our role is going to be vastly different

in the next months to come," she said.

 

Clashes with Blind Managers

 

The board and Mock also face an ongoing state of rebellion by the blind business managers, who make a living running vending machines, coffee carts, and

other food services in state, county, and city buildings. The blind managers argue the Commission for the Blind doesn't aggressively enforce the federal

Randolph-Sheppard Act, enacted in 1936, and the companion state law, resulting in lost opportunities for blind people to gain business in public buildings.

Nationally those programs provide twenty-five hundred jobs to blind people, Stevenson said. But in Oregon the agency has neglected the program, not even

offering training for the managers, he said. "There has been a mindset in the Oregon Commission for the Blind not to expand the program," or to use it

as a "dumping ground" to place clients when they can't find any other jobs for them, Stevenson said.

 

Auditors found the agency has paid $416,000 in legal bills since 2007 just to respond to claims filed by the blind managers. In most cases those were claims,

authorized by federal law, to prod the state to court more contracts for the program. The managers fought to get control of food concessions in state prisons,

in the U.S. Post Office in Northwest Portland, and in the SAIF headquarters in Salem, among other public facilities. Seth said Stevenson has a conflict

of interest as a blind businessman and president of the other major advocacy group, the National Federation of the Blind of Oregon. However, she said there

had been poor communication between the blind business managers and the agency for years. "It's like two children fighting each other; you just want to

knock them in the head," Seth said.

 

Mock often notes that the Business Enterprise Program involves about one percent of the clients served by her agency. She said that program, created in

1936, relies on an "outmoded model" of rehabilitation for blind people that is very "paternalistic" and leads to ongoing friction in the state agency.

The blind business owners have a more expansive view of their legal rights to state and local government buildings than state attorneys do, Mock said.

In one sign of the dysfunction within the agency and that program, Stevenson is one of the business owners who is not operating with a signed contract.

Stevenson refused to sign one, he said, because he didn't think it granted him due process rights if he was terminated.

 

There you have the article in the Portland Tribune describing the way state taxpayers learned about problems in the agency they support. The Monitor has

interviewed many of the people quoted above, including agency consumers, state auditors, several members of the seven-member Commission (including its

chairwoman, Jodi Roth), and the agency's administrator, Linda Mock. While the newspaper article was thorough in outlining major areas of concern, Monitor

readers will benefit from having more detail as well as information about the events since its publication.

 

In an interview with the Monitor, state auditors expressed surprise at the state agency's defense of longstanding problems and the reaction that Commission

officials are rehabilitation professionals and not accountants. They say the OCB's response differs significantly from other agencies they audit. They

describe their work with most state agencies as a collaborative process designed, not only to ensure financial accountability, but to help improve and

streamline services. They claim that nothing revealed in an audit should come as a surprise to the agency since findings are shared at every stage, both

to ensure that the auditors are drawing appropriate conclusions from what they review and to develop with the agency a plan to fix problems that are identified.

They further argue that none of the social service agencies they monitor are comprised of accountants and that nothing they are expecting to see requires

accounting expertise. They expect to see receipts for money spent, contracts when significant amounts of money are frequently exchanged, and records that

are clear and easy to follow.

 

An audit begins by determining whether an agency demonstrates financial accountability. When expenditures can be adequately tracked, auditors then conduct

what they call a performance review. In this phase of an audit agencies are evaluated against similar agencies and by how well they are carrying out their

duties as mandated by the state and federal laws under which they operate. In the case of the Oregon Commission for the Blind, auditors had wanted to look

at the timeliness of service, the expenditures per client, and the success of the programs in helping blind people find gainful employment. They had intended

to examine the Business Enterprise Program thoroughly to determine whether it was actively pursuing new locations and training blind people to fill them.

 

In auditing the Commission, however, auditors complain that problems observed in basic accounting procedures never allowed them to do a performance audit

in the time allotted for the OCB. So concerned were the auditors by the lack of progress on what they view as longstanding issues that their report was

sent to the Commission board for action, though traditionally audits are sent only to the agency for study and resolution.

 

In response to many of the auditor's concerns, Administrator Mock says the agency has traditionally had a flat management structure, by which she means

it has had relatively few management positions and has focused on putting direct-service people in the field. She says the agency has now concluded that

it has no choice but to reduce some direct-service positions and focus more on centralizing accounting functions and ensuring that all appropriate staff

know and follow procedures. She says one thing the agency has learned is that implementing a policy not only means drafting it but seeing that it is known

to staff and rigorously followed.

 

Findings of concern to the auditors included the lack of a reliable employee leave-tracking system, automobiles belonging to the state being kept at the

homes of employees, cell phones with monthly plans but no use, cell phones which were routinely used in excess of their minute plans and which incurred

the steep charges companies levy for overages, and employees receiving out-of-class pay. Some of these findings require explanation.

 

Tracking employee leave is almost as crucial as tracking employee pay. It is compensation, and a system must be in place to ensure the employee receives

the time off he or she is due and that the agency pays only what it is obligated to pay. The audit found that no system was in place to ensure that leave

taken was reported and, when reported, that it actually appeared on employee timesheets so that it was recorded in the system. Given that no complaints

were received from employees, one has to consider the likelihood that Oregon has paid for time off which it was not obligated to cover.

 

The auditors found automobiles being kept at employee homes in violation of state policy. Administrator Mock says that in certain cases state law does allow

employees to take state vehicles to their homes and that the agency failed to ensure that the circumstances that caused those vehicles to be assigned still

warranted their use. She says that after review this practice has been discontinued except for home-based employees who need state vehicles for the transportation

of clients. Another point cited by the auditors was state vehicles that evidenced little use each month. Mock says these are used by mobility instructors

who take their students to nearby locations to work, that the distances traveled are necessarily small, and that expecting employees to transport students

in the employees’ vehicles causes problems with liability and insurance.

 

Mock says that cell phone bills can be hard to read, so in the past they were simply received and paid without appropriate review. She says they are now

being examined by each department, that some telephones have been eliminated, and that plans have been adjusted to avoid extra charges stemming from greater

than anticipated use.

 

Out-of-class pay is a procedure followed in Oregon when the job duties of employees are changed and they are no longer being compensated adequately for

their new job responsibilities. All positions within an agency must be approved by the legislature, so in those cases where a study has determined a worker

should receive more compensation, state law allows for out-of-class pay until a legislative adjustment can be made and the reclassification of the position

approved. The expectation is that these adjustments will be submitted promptly to the legislature and that it will act in a timely manner to approve them.

State rules allow for out-of-class pay to occur for no more than two years. The auditors say that failure to receive legislative approval for the reclassification

of positions means agencies are required to find the money from other parts of their personnel budget or reduce employees’ responsibilities with a corresponding

reduction in their pay.

 

Mock says the Commission was placed in a difficult situation when it was told by the Department of Administrative Services that it was underpaying employees,

increased their salaries under this temporary spending authority, and then could not get the legislature to approve their reclassification. The agency

has now reduced the hours of one of its management staff to pay for the pay increases, a move that does not require legislative approval.

 

The audit expressed concern about the agency's spending of charitably contributed funds held by the secretary of state. Their concerns were how the funds

have been spent and that expenditures for several years have exceeded income. Tandem bicycling and boat races are two examples in which the agency's use

of this money has been called into question. Mock's response is that the agency has not interpreted the limitations on spending charitably contributed

funds to be the same as for taxpayer funds. In fact the agency has tried to use them to cover needs that can't be handled through the federal-state program.

Whether this difference in interpretation is a matter of law or a matter of policy that the agency can change by setting up procedures for the use of the

charitably contributed funds is unclear and is being explored.

 

Mock makes the point that one of the major reasons why fund expenditures exceed income is that the legislature has decided to appropriate this money to

replace funding normally provided by state general revenue. While the agency has no control over this legislative prerogative and sees the value in using

this money to get a four-to-one federal match, many donors are reluctant to have their money go for services they believe should be covered by funding

from the state. They intend their donations to stimulate greater opportunity, not to shift the financial burden from taxpayers for things state revenue

has traditionally covered. Some are still giving money, but they are restricting it to programs they consider beneficial in the hope it will not be used

to replace general revenue from the state treasury.

 

While the Commission audit was the impetus for the Braille Monitor to investigate and inform readers about an important state resource for blind Oregonians,

it soon became obvious that the audit is but one area of concern there. Blind merchants who participate in the Business Enterprise Program are adamant

in their belief that, when it comes to participatory policy-making and management of their program, the agency just doesn't get it. In their view the agency

does not understand or attempt to develop a participatory relationship as envisioned in the amended Randolph-Sheppard Act, in which, working together,

consumer organizations, the elected committee of blind vendors, and the agency arrive at policies to encourage a strong and vital program to recruit, train,

and advance blind managers.

 

Illustrative of the way the agency regards its relationship with the Business Enterprise Consumer Committee and the consumer organizations of the state,

consumers and managers cite the following example: Administrator Mock offered a proposal she calls "Modernizing the Business Enterprise Program" without

first consulting any of the managers who derive income from the current program or the National Federation of the Blind, which worked for and has always

supported the concept of blind managers operating facilities, including those in state and federal buildings. Instead the concept was advanced to the governor

and only afterward did blind people learn about it. The reaction was predictable--surprise, outrage, and fear. Mock says her intent was not to do away

with the Business Enterprise Program but to modernize it. She is still surprised that the move didn't get more traction and believes it never was given

a fair hearing. Consumers and managers say they were never a part of framing the proposal or even discussing the need for modernization. They heard of

the plan two days before it was taken to the Oregon Commission board, and, though the Business Enterprise Consumer Committee opposed it, the proposal was

still advanced. The Commission board said there was not enough time to act on it, effectively halting its progress, while endorsing the concept of exploring

modernization.

 

In the opinion of blind consumers and vendors, the proposal would have eliminated the state statute giving blind managers priority. In Mock’s opinion the

proposal would have updated the Oregon law by allowing managers to hold contracts for the facilities they operated, freeing them from agency control and

strengthening the law by giving the blind a priority and the right of first refusal instead of the right to bid, which is what Mock and the attorney general

of the state now interpret the law to mean.

 

For five years now vendors have been pressing the Commission to be more aggressive in seeking and keeping facilities. Randy Hauth, who has been the chairman

of the Business Enterprise Consumer Committee for eight years and a blind vendor for twenty-six, notes with alarm that, when he received his first facility,

thirty-three managers were operating businesses in the program. Today there are seventeen. Consumers and managers say the agency passes up facilities by

not bidding in a timely manner, by agreeing to award them to outside interests with the option of revisiting the decision at a later date, and by letting

building administrators terminate their relationships with the Business Enterprise Program without reason.

 

Managers have been pressing the Oregon Commission for the Blind and its board to join with them in testing the statute and letting a judge determine whether

it grants blind people the right to bid or something more expansive such as a priority in operating state facilities and the right to first refusal. Managers

assert and Mock confirms that the agency agreed to bring a test case involving a community college, but she says that the Commission's council (the attorney

general of Oregon) scuttled that idea, saying there is no right of first refusal in the law, only a requirement to let blind people bid on the facility

and then, if it is not awarded to them, to explain to them in writing why their bid was not accepted.

 

Consumers and business enterprise managers contend that the law says the state will give priority to services provided by the blind, that the agency has

the right to survey any property where the state plans to offer vending services, and that the refusal by building management to award a facility to the

blind is not permitted if the agency proposal offers the same quality, quantity, and price.

 

NFB of Oregon President Art Stevenson says that, if the agency won't join in getting a judge to decide the issue, the affiliate and the national body will

join forces in bringing a suit. Scott LaBarre, president of the National Federation of the Blind of Colorado and a leading attorney coordinating many of

the Federation's cases, says that the NFB is considering a variety of legal remedies and has already filed administrative complaints and requests for fair

hearings pursuant to the corresponding Randolph-Sheppard regulations. He says, “The OCB has now reached out to us to discuss these matters, thanks in large

part to the work Carla McQuillan has done as a new OCB Commission member. Any business or person has the right to bid on these state contracts. The vendors

need no special law to give them that right. Our reading of the applicable statute is that it gives OCB the right of first refusal for these contracts

and much more than just the right to bid on them. We are hopeful that the recently opened dialogue will lead somewhere productive. If it does not, we plan

to take legal action to enforce the Oregon statutes and protect the rights of the licensed managers there.”

 

As further evidence of the Commission’s failure to work cooperatively with blind managers, Hauth and Stevenson say that the hiring of Walt Reyes as the

head of the Business Enterprise Program happened in violation of an agreement they had with Administrator Mock. The elected committee expressed reservations

about elevating Reyes from his position as a local vendor representative because of performance problems. They agreed to Mock’s desire to hire him with

the understanding that the Committee and Mock would be involved in evaluating him prior to expiration of the six-month probation all employees must serve

prior to having their jobs considered permanent. During Reyes’s probationary period managers expressed concern about his performance as the acting head

of the program and said he should not be hired. Mock disagreed and offered him a permanent position. As noted in the newspaper article above, Reyes has

been on administrative leave since August, and Mock says she is unable to discuss anything about the case—the dispute over his hiring, his reason for being

placed on administrative leave, and the state’s ongoing investigation by the Department of Administration and the state Department of Justice. Managers

are anxious for the Commission to find a permanent replacement for Reyes and are uncomfortable because the acting director, in Reyes’s absence, is a man

he hired to assist him who is both a personal friend and the godfather of Reyes’s son.

 

One other observation begs to be made here. Some are critical of and put off by what they see as the petty squabbles between the National Federation of

the Blind and the American Council of the Blind, but take a moment to consider the reaction of Kae Seth, the Council's president in Oregon, as captured

in the Portland Tribune article. Participants in a discussion as important as agency accountability and their own livelihoods she characterizes as children

who should have their heads knocked together. From what state child welfare manual is this prescription for better behavior taken?

 

When it comes to the Commission board’s meeting only twelve hours a year to oversee the work of the agency, get consumer input, address appeals from agency

clients, and help the Commission plan for its future, the response of Seth is that the board has liked it that way. One has to wonder whether past boards

have actually considered their critical function in running a citizen-directed agency or whether they have seen their role as ceremonial, a chance for

a bit of public recognition and a way to build a résumé.

 

And what can be said about the comment that Art Stevenson's participation represents a conflict of interest because he is a manager in the Business Enterprise

Program and the president of the National Federation of the Blind? Wouldn't his stake in preserving his livelihood and his obligation to protect the interest

of blind Oregonians he has been elected to serve create, not a conflict of interest, but a vested interest arguing for and even mandating his active participation

and involvement? It is difficult to see in what way Seth's comments could bring about better service, support accountability, or bring unity in work with

the blind at a time when all of our programs face the possibility of devastating cuts and a threat to their very existence.

 

Since the publication of the audit and the appointment of four new members to the Commission board, the time allotted for meetings has doubled, meetings

beyond those scheduled every two months have occurred, and board members are demanding more information to use in decision-making. Commission Chairwoman

Roth expresses optimism that the board and staff will respond affirmatively in addressing the findings of the audit and in addressing the concerns of blind

managers. She says that, while the first reaction of the board and the commission was defensive and protective, a little time and reflection make it clear

that the agency will best be served by doing what it must to implement the recommendations of the auditors and by welcoming a good, hard look in six months

both by the auditors and by the Braille Monitor. She says the presence of four new members on the board is helpful because they will bring a fresh perspective

to the body, they will not feel the need to defend previous practices, and they will bring time and energy to the task of becoming more involved in Commission

decisions.

 

Some Commission members have been told by state officials that either they will address the Commission’s problems, or others will step in to do it, with

the likelihood that the Commission will no longer be a consumer-managed entity. Mock believes this would be unfortunate, noting that Oregon has what she

considers to be the best structure for providing services to blind people. Roth says that, in her meetings with the secretary of state or staff in the

office of the governor, she has never been issued an ultimatum to act, but she has no doubt that a failure to address identified problems would have consequences

no one will like.

 

Stevenson, Hauth, and others agree that the consumer-dominated Commission is unquestionably the best structure but contend that for too long the structure

has been subverted by a cozy relationship between the administrator and the governor's office, with the result that boards hand-picked by the director

simply went along with whatever he or she decreed. They are hopeful that the addition of four new members will result in positive change but still believe

that pressure from outside the agency to test the scope of the law and demand accountability will be required. They, and many other blind citizens in Oregon,

also believe that the Oregon Commission will embrace real change only when someone new heads the Commission. One commissioner reports having been told

that either the Commission will make the changes necessary to right itself and remove it from public controversy, or elected officials in the state will

actively consider changing the form of the Commission so that it is under their control.

 

Administrator Mock, for her part, says she plans to remain as the Commission’s administrator and says the controversy over the audit and the complaint by

managers in the Business Enterprise Program obscure the good work done by the Commission. One cannot detect Mock’s extending an olive branch to forge an

alliance at a time when state funding cuts are inevitable and federal cuts likely. Whether business as usual between the Commission and blind entrepreneurs

represents a false sense of security or a determination that nothing she can do will make a difference is anyone’s guess, but the potential problems for

the blind of Oregon are undeniable, and the need for positive action is beyond debate. Let us hope that the administrator, like former President Lyndon

Johnson, makes a heart-felt plea, “Come, let us reason together,” or, as he eventually did, steps aside knowing he could not weather the storms of a public

upset with his policies and demanding change.

 

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