Two child welfare agencies exceeded Florida cap on executive salaries, says IG report

Two privately-run, government-funded child welfare service organizations are being investigated for violating a state law on excessive executive compensation, the state’s chief inspector general told a House committee on Monday.

Eckerd Youth Alternatives and Family Support Services of North Florida are under scrutiny for using extraordinary means to enhance their executive’s annual pay with state and federal funds, said Melinda Miguel, Florida chief inspector general, at a meeting of the House Public Integrity and Ethics Committee.

But how they are doing it and how much their compensation exceeds the state cap on executive pay is still under review, she said. Her agency hopes to present findings to the governor and legislators by June of next year.

Miguel concluded that in the future there should “be more clear guidance from the state on what constitutes executive compensation.”

Eckerd Youth Alternatives is also known as Eckerd Connects in Clearwater. Jacksonville-based Family Support Services of North Florida is not affiliated with Big Bend Community Based Care in Tallahassee.

Florida Coalition Against Domestic Violence fallout

Miguel launched the investigation in March 2020, in response to an executive order by Gov. Ron DeSantis after the Miami Herald and the Florida House of Representatives found that the Florida Coalition Against Domestic Violence paid its chief executive officer, Tiffany Carr, more than $7.5 million over three years.

The Florida House, working on information first disclosed by the Miami Herald, discovered a scheme by the coalition and some members of its board of directors to pad the salary of Carr and her deputies and allow them to cash in paid time off with funds intended to be used to help victims of domestic abuse.

In August, Carr reached a settlement with the state to pay $2.1 million cash back. The insurance companies representing the former FCADV officers also will pay more than $1.7 million to the Department of Children and Families and a court-appointed receiver.

In total, the state is expected to recover $6.7 million from the settlement and the selling of assets at the now-defunct coalition, Andrew McKinley, deputy general counsel at DCF, said on Monday. On Friday, $3.1 million of it had been paid and a certified domestic violence center will replace the coalition to provide statewide domestic violence training, technical assistance, and legal services, he said.

Since the contract was awarded a week ago, however, DCF has been unable to provide the Miami Herald with copies of the documentation.

DeSantis ordered the chief inspector general to conduct the review after legislators and Attorney General Ashley Moody suspected that the elaborate scheme used by Carr may be replicated in other social service agency contracts.

Miguel’s investigation provided a window into the lucrative nature of the state’s 20-year-long push to privatize state services. It found that $3.9 billion in state dollars and $3.4 billion in federal dollars flowed into 839 agencies that have sole-source, public-private agreements with state agencies. Much of it has little oversight.

In 2017, then-Gov. Rick Scott and Florida legislators imposed a cap on how much a community-based care lead agency may pay its employees, limiting it to not more than “150 percent of the annual salary paid to the secretary of the Department of Children and Families.” The cap applies to an employee’s base pay, or base pay combined with any bonus or incentive payments.

The IG report contends that Eckerd Connects, whose chief of community-based care was Chris Card during the time of the IG’s review, exceeded the 2019 statutory compensation limit of $213,819 by $23,781. Eckerd Connects responded that they have two lead agencies under two separate contracts, each paying Card $118,800, and that each contract is “under the statutory cap.”

FSSNF, based in Jacksonville, indicated that its former CEO’s 2017 salary plus bonus was $224,028, exceeding the limit by $12,528 because he was paid under an agreement that was in effect prior to implementation of the 2017 law.

Miguel’s review also found that the agencies use creative approaches to exceeding the state cap.

For example, some executives are paid with “supplemental paid time off that was awarded at the time of their annual performance reviews and subsequently cashed in,” the report said. Although the child welfare agencies don’t call it a bonus, “the supplemental paid time off was, in effect, a bonus,’’ Miguel concluded.

In addition, the social service agencies appeared to find other ways around the state’s salary cap, such as awarding deferred compensation or paying an additional salary through a contract with a subsidiary of a state-funded agency, such as managing entities.

The report notes that Big Bend Community Based Care, whose CEO is Mike Watkins and does business as NWF Health Network, did not fall under the compensation cap because “highly compensated members of NWFHN and NWF Partnership for Better Communities, Inc.” were identified as employees of a subsidiary organization called Vision HR II, Inc. and considered “leased employees” for payroll and benefit services.

Watkins said in an interview Tuesday that he makes $525,000 a year and that his compensation is set by his board to meet the 75th percentile of comparable executive salaries based on a national compensation study by GuideStar. He said the board divided his pay three ways because it is the most efficient way to compensate him — $175,000 through Big Bend Community Based care, $175,000 from the managing entity, which also contracts with DCF, and $175,000 from grants and services funded outside of state and federal money.

“The pure efficiency of bookkeeping is not avoiding the cap,’’ Watkins said. “I can assure you, if I was one dollar over the cap, they’d be reporting it.”

The IG report also notes that Lakeview Center, Inc. president and CEO Allison Hill is also an officer and employee of parent company Baptist Health Care Corporation and LCI reimburses “BHCC 100% of the LCI president/CEO’s compensation.”

“Eight of the nine CBC lead agencies reported having related or affiliated organizations during the survey period,’’ the report states.

The IG report recommends the governor’s office tighten the contract terms for executive compensation by:

▪ Defining “compensation” to include salary as well as “incentives, bonuses, paid time off, and other compensation.”

▪ Addressing issues arising from executives getting paid from more than one state contract or state agency.

▪ Evaluating the practices associated with related third-party professional employer organizations.

▪ Limiting compensation arrangements with subcontractors.

A preliminary report released in January found that nine nonprofit organizations, all contracted by the Florida Department of Children and Families, appeared to be spending millions compensating executives above the limits allowed by state law. After reviewing the agency responses, Miguel homed in on only two organizations.

The inspector general’s review found another three agencies that contract with the Department of Education’s Office of Early Learning that exceed the compensation cap, but the agencies returned the money. They included the Early Learning Coalition of Hillsborough County, the Early Learning Coalition of Miami-Dade/Monroe County and the Children’s Forum.

Mary Ellen Klas can be reached at meklas@miamiherald.com and @MaryEllenKlas