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Sheltered Workshop

Contract Analysis, JCBS, ADD & ISCi

Background for Free Press article, February 26, 2004

The Johnson County Board of Services (JCBS) has been operating the sheltered workshop under its own auspices since the Industrial Service Contractors, Inc (ISCi) walked off the job last year. The 60-plus developmentally disabled clients continue to be served and the new contractor Lafayette County Enterprises, is operating the workshop and supplying the required professional staff. Management and administrative functions are performed by the JCBS’ executive director, Terri Marr, and the JCBS has hired its own bus drivers and other non-workshop personnel.

In late December, the JCBS also took over management of the group home and other programs previously administered by Advancement for the Developmentally Disabled (ADD). In addition to directly administering a number of programs, ADD had provided management and accounting services to the JCBS and had furnished the professional staff for ISCi. ISCi had directly employed the developmentally disabled clients and had contracted with outside agencies to provide work performed by the clients. Clients were paid from first from a flat amount paid by the Department of Elementary & Secodary Education, then contract receipts, with any shortfall made up by the JCBS.

In order to determine if the taxpayer is getting more bang for the buck, it’s necessary to look at what the old arrangements and costs were.

Each organization had its own board. The JCBS board is appointed by the County Commission as required by state statutes. The board for ISCi, a non-profit corporation, was made up of volunteers; the board for ADD, also a non-profit corporation, was originally comprised of members of the other two boards. The relationship among the organizations was established by a complex set of interlocking contracts. The costs cited are for 2002; new contracts for 2003 were never executed, with parties operating under the terms of the 2002 contract but using 2003 budget estimates.

ISCi leased its professional staff from ADD. The exact provisions followed in the last year are difficult to determine, because two versions of the contract, with slightly different terms, exist. Both versions of the contract were to run from January 1, 2002 through December 31, 2004 and obligated ISCi to pay ADD for the cost of all staff, including fringe benefits. The main difference related to consideration for administration and support service. The signed contract executed 12/18/2001 limited this cost to 15% of “net revenue” which was to “include an amount not-to-exceed forty percent of th costs related to the personnel cost to ADD, Inc for the position of the Executive Director.” The unsigned January 1, 2002, contract set the amount for this service at 15% of gross revenues. What constitutes “revenues” is not defined in the contract.

The JCBS had 4 contracts with ADD and 8 with ISCi. Each group of contracts had a master contract whose only terms were that ADD and ISCi had to show they were incorporated, have required insurance, and have proper state licenses. Under one of the ADD contracts, ADD provided an executive director and clerical support. This entailed preparing the budget and maintaining financial accounts and records; for this ADD was paid $28,000 in 2002. Two of the additional contracts dealt with administration of the Family Support Services program (not to exceed $44,000) and a Community Support program (for $89,000). Under each of these contracts, ADD received a fee equivalent to 15% of the total annual contract; it is not clear if this fee was included in or in addition to the not-to-exceed amount. The 4th ADD contract related to operation of the group home.

Four of the JCBS/ISCi contracts related to staffing costs. JCBS paid ISCi, who in turn leased the staff from and paid ADD. One contract, for $35,700, provided for vocational training and planning for workshop clients. A second, for $35,500, provided for employee behavior management and therapy for eligible clients; Department of Mental Health rules require a qualified degreed person for this position. A third contract, for $48,600, reimbursed ISCi for what they paid ADD for management services and fringe benefits. A $21,000 contract funded vocational training for literacy and life skills for the clients. The fourth contract dealt with the group home.

The largest of the remaining JCBS/ISCi contracts dealt with transportation. The JCBS owned the vehicles and was to pay ISCi up to $69,000 for all driver-related costs (wages, training, licensing) supervision and maintenance; what constituted maintenance was not spelled out. In addition, the JCBS paid fuel costs directly to MFA oil, since fuel was purchased on credit cards at the MFA self-serve facility. The JCBS also directly paid vehicle insurance; this cost had increased considerably because of a series of accidents. Over 20 credit cards were in use. Under one of the contracts, ISCi paid $1 per year to lease the workshop facility while the JCBS took full responsibility for any repairs. Another contract, for up to $17,400, allowed the ISCi board to purchase or lease equipment for the workshop. This contract did not state which organization was to hold title to the equipment purchased. A final $2200 contract paid for client employee incentives.

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