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Globe Editorial

Watchdogs need more power to probe state subcontractors

September 6, 2011

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THE GROSS abuses by the leaders of the Merrimack Special Education Collaborative - including a whopping $37 million in questionable or improper expenses, according to a state audit - were enabled, in part, by the director’s ability to hide extra salaries, bonuses, and pensions in a related private nonprofit organization that was subject to far less scrutiny.

Massachusetts law is generous to private contractors who take state money, whether they are nonprofit or for-profit. While government agencies are subject to full financial scrubs, private subcontractors are largely outside the purview of the government’s watchdog officials, State Auditor Suzanne Bump and Inspector General Gregory Sullivan.

Now, Bump is lobbying the Legislature to pass a law that would enable her to audit the finances of subcontractors. The Legislature should give her the power to do so, and extend greater oversight authority to Sullivan’s office, as well.

Both officials should use their new powers with reasonable discretion, understanding that they have been given the right to scrutinize the books of a private entity solely for the purposes of uncovering public corruption. They shouldn’t be in the business of second-guessing the management decisions of private entities, unless they reflect a misuse of government funds.

There are some decent arguments for keeping government watchdogs out of the hair of private contractors. Fear of constant audits might discourage some worthy firms from taking government work. But that fear is outweighed by the growing number of private entities that seem to exist almost solely for the purpose of getting government money. In these firms, officials can shield their pay and benefit records from the eyes of the state, even if all their funds come from the government. For some, it’s a recipe for abuse.

Merrimack, one of about 30 public educational collaboratives, is a case in point. Its former director, John Barranco, was able to hide the extent of compensation given to himself, his aides, and even a former girlfriend by charging it to a private nonprofit subcontractor, according to Sullivan. He also charged up $50,000 in personal expenses to the subcontractor.

It was a scheme that would shock the conscience of most subcontractors, who do the jobs they’re paid to do without unnecessary frills. But where loopholes exist, devious characters will try to take advantage of them. That’s why the Legislature should give Bump and other watchdogs the authority to follow state money wherever it goes, even into the coffers of largely hidden subcontractors.