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"The Truth Behind The Triviality"
"In the end, it all comes down to money - not principle, not public policy, and certainly not reform. It is often said that actions speak louder than words, but sometimes words are far more illuminating than actions. In this instance, the governor's version of "transparency" is really a smoke-and-mirrors clouding of the public's view of the political version of trivial pursuit."
- Health and Education Facilities Authority vice chairman Marvin Gordon and former executive director Robert J. Ciolek, The Boston Globe, 3/26/09
The truth behind the triviality
The Boston Globe, 3/26/09
By Marvin Gordon and Robert J. Ciolek
In recent statements about a lucrative $175,000 position for Senator Marian Walsh, Governor Deval Patrick characterized critics as harping on a "trivial" matter. The announcement yesterday that the pay would be cut to $120,000 shows that the governor's tuning fork has finally alerted him to public outrage. Still, the appointment is outrageous.
Walsh, who was named assistant executive director of the Massachusetts Health and Educational Facilities Authority, has no experience in the world of bond finance. She would be filling a position that is vacant, purposeless, and unneeded. In order to pay her salary, the authority may charge it to the nonprofits it serves, or reduce its charitable facility grants to various Commonwealth Health Centers serving our needier citizens. The authority's board of directors knows this, but its duty to the institutions it serves is apparently trumped by its fealty to the governor. Patrick should withdraw his support and the board should - in a more public manner than its last vote - rescind the offer of employment, which will send an important message to the institutions, the bond rating agencies, and the marketplace that prices HEFA bonds.
The Health and Educational Facilities Authority was created 40 years ago to assist Massachusetts nonprofit institutions, such as hospitals, colleges, health clinics, and cultural groups, in accessing the tax-exempt bond market. The purchase of these bonds by private investors permits the institutions to build dormitories, hospital facilities, and museums, and to acquire capital equipment.
The basis for establishing the authority as an independent entity was the Legislature's understanding that it could perform the work and meet the requirements of the federal tax code at no cost to taxpayers. And while the staff of the authority is small - only 15 - its bond issuances are large, given the significant number of nonprofits in the state. To put it in perspective, there are about 8,000 entities with the power to issue tax-exempt bonds, and the Health and Educational Facilities Authority last year ranked sixth nationwide. Issuing bonds is what it does. And, it does it well.
But, the present situation at the authority is of deeper concern. The governor's plan is to put the authority out of business by folding it into another state authority, the Massachusetts Development Finance Authority.
The Development Finance Authority is an agency within the Office of Administration and Finance and, although legally independent, it is structurally much less independent than the Health and Educational Facilities Authority. With overlapping power to issue tax-exempt bonds for certain nonprofit institutions, the two authorities compete for clients. This competition provides a benefit to those nonprofit entities, in that each authority competes with the other by reducing fees for bond issuances by hundreds of thousands of dollars.So why would the governor now want to force a merger? The Development Finance Authority, as the governor's development agency, has been asked to be many things to many people. And it needs funding to do those things, preferably money not from the Commonwealth of Massachusetts. By becoming the only issuer of bonds, the Development Finance Authority would be able to end competition and, in all likelihood, raise the fees paid by hospitals, clinics, and colleges for bond issuances. Worse, it could raid funds controlled by the Health and Education Facilities Authority for millions of dollars, currently held in Trust for the benefit of charitable tax-exempt institutions. It is our hope that the charities division of the attorney general's office reviews such an effort.
At its last meeting, the Board of Health and Education Facilities Authority voted to create a committee "to reach out to (MDFA), to identify efficiencies and cost savings that might be gained by working together." That is code for putting the Health and Education Facilities Authority out of business. It is instructive that no one from any nonprofit institution to our knowledge has yet to be asked to serve on that committee. These issues are being kept out of the public view.
In the end, it all comes down to money - not principle, not public policy, and certainly not reform. It is often said that actions speak louder than words, but sometimes words are far more illuminating than actions. In this instance, the governor's version of "transparency" is really a smoke-and-mirrors clouding of the public's view of the political version of trivial pursuit.
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