R. Roth Judd
Executive Director
State of Wisconsin
Legislative Audit Bureau
August 2, 2005
The Honorable, The Legislature:
At your request, we have completed a limited-scope review of the use of outside legal counsel by Wisconsin's 16 technical college districts. The districts spent a total of $8.2 million for outside legal services from fiscal year (FY) 1999-2000 through FY 2003-04. Three districts-Milwaukee Area, Lakeshore, and Gateway-accounted for 53.4 percent of that total.
While a few of the districts, including Waukesha County and Lakeshore, used a formal request for proposals process to secure outside legal counsel, others did not. We have included a recommendation that all districts develop annual letters of engagement with their outside legal counsel that describe the services to be provided and the rates to be charged.
Two districts-Milwaukee Area and Gateway-have established retainer agreements, which establish fixed amounts to be paid monthly for legal services, without regard to the level or type of services rendered. Both arrangements appear to result in higher costs than if services had been billed directly on an hourly basis. In addition, we have serious concerns about the Gateway retainer agreement, under which a former employee is now paid $120,000 annually, but typically provides fewer than 80 hours of legal services per month. In addition, the district is required to provide health, dental, and life insurance benefits to the former employee and his family until January 31, 2008, and to provide these benefits to his spouse in the event of his death. The inclusion of such benefits in a retainer agreement raises serious questions about the propriety of the agreement and may have future tax implications for Gateway. We have recommended that the retainer be terminated immediately.
We appreciate the cooperation of the 16 technical college districts and state board staff in completing this review.
Sincerely,
JANICE MUELLER
State Auditor
State of Wisconsin
Legislative Audit Bureau
August 2, 2005
The Honorable, The Legislature:
At your request, we are responding to legislative inquiries regarding profitability and salaries for two programs operated by the University of Wisconsin (UW)-Madison's Division of Business Services. The Materials Distribution Services (MDS) program allows UW campuses, state agencies, municipalities, and school districts to order a wide range of products from multiple vendors through a single point of purchase. The Surplus With A Purpose (SWAP) program collects surplus property from UW-Madison and other state-owned facilities in Madison and resells, recycles, or otherwise disposes of it.
MDS had estimated expenses of $25.8 million in fiscal year (FY) 2004-05 and employed 26.3 fulltime equivalent (FTE) staff, while SWAP had estimated expenses of $1.3 million and employed 6.2 FTE staff. Both programs have expanded considerably since FY 2000-01. For example, MDS revenues increased 63.5 percent to reach $26.0 million, primarily because the number of product vendors increased. SWAP revenues increased 35.6 percent, to $1.4 million, because of increased activity. Both programs' expenses increased at rates similar to their revenues.
Despite relatively constant staffing levels, staffing costs for both programs have increased more than 17 percent since FY 2000-01. The increases occurred primarily because of changes in the types of positions funded. For example, five new information system positions allow both MDS and SWAP to conduct business on the Internet, while some less-costly storekeeper positions were eliminated. We reviewed March payroll data for each year from 2001 through 2005 and found that five permanent staff received salary increases of 10.0 percent or more in a single year, typically to reflect additional duties. However, most salary increases were within expected ranges.
We appreciate the courtesy and cooperation extended to us by UW-Madison staff.
Sincerely,
JANICE MUELLER
State Auditor
State of Wisconsin
Legislative Audit Bureau
August 3, 2005
The Honorable, The Legislature:
Maximus, Inc., a private agency providing services to participants of the Wisconsin Work (W-2) program in Milwaukee, has responded to our requests for information on the number and amount of bonuses it paid to all staff from 2002 through 2003. This information had been requested in January 2005, but the data Maximus provided us were incomplete at the times we issued our July 2005 letter on the financial management of selected W-2 agencies. Using recently submitted data, we are now able to provided complete information on bonuses paid by W-2 agencies to their employees.
S315
As noted in our prior audit reports, the practice or W-2 agencies providing their employees with bonuses had raised concerns. In November 2001, in response to prior audit recommendations, the Department of Workforce Development (DWD) instructed W-2 agencies on acceptable practices for paying employee bonuses with W-2 funds. DWD now approves agencies' employee bonus policies, and bonuses must be "necessary and reasonable' for administering the W-2 contract.
From 2002 through 2004, 12 of the 16 W-2 agencies we reviewed reported that they did not pay any bonuses with W-2 funds. Four agencies did:
• Based on the most recent data reported to us, Maximus used W-2 funds to pay bonuses totaling $115, 248 in 2002, $187,462 in 2003, and $391,816 in 2004.
• ACS State and Local Solutions, which administers the W-2 program in Waukesha County, used W-2 funds to pay a total of $5,245 in bonuses to two employees in 2004.
• Opportunities Industrialization Center of Greater Milwaukee used W-2 funds to pay a total of $2,460 in bonuses to three employees in 2003.
• Forward Service Corporation, a private agency that administers W-2 in a number of counties, used W-2 funds to pay one employee approximately $75 in 2002, and another employee $275 in 2003.
Maximus indicated that the compensation provided to all staff who work on the W-2 program is directly linked to performance standards established by DWD. In addition, Maximus noted that a fundamental principle of its compensation strategy is to stress performance by linking it directly to compensation. As a result, total compensation for its staff consists of a base salary, as well as performance bonus component that is built into the overall compensation structure. Based on this strategy, Maximus pays monthly and quarterly bonuses to employees who meet performance measures.
From 2002 to 2004, the total amount Maximus paid in bonuses increased by $287,194, or by 240.0 percent. Among those who received bonuses in 2004, the amount paid to program staff ranged from $45 to $4,665 and the amount paid to senior managers ranged from $3,291 to $8,500.
Finally, Maximus' employee bonus compensation plan was approved by DWD. A copy of the plan provided to us by DWD clearly indicates that senior officials, who include the vice president, project director, and project managers, are not included in the compensation plan. Unless a separate bonus compensation plan for these individuals was submitted to DWD and approved, Maximus is not in compliance with its contract requirements under the W-2 program. We recommend DWD review the bonuses Maximus paid to its senior managers and determine if these payments are consistent with the requirements it has established for W-2 agencies, of if they should be repaid.
I hope that you find this information helpful, please contact me if you have additional questions.
Sincerely,
JANICE MUELLER
State Auditor
Pursuant to Senate Rule
17 (5), Senator Brown added as a coauthor of
Senate Bill 247.
Pursuant to Senate Rule
17 (5), Senator Carpenter added as a coauthor of
Senate Bill 268.
__________________
State of Wisconsin
Office of the Governor
July 29, 2005
The Honorable, The Senate:
I am pleased to nominate and with the advice and consent of the Senate, do appoint Pelegrin, Jodi,
of New Franken, as a member of the Athletic Trainers Affiliated Credentialing Board to serve for the term ending July 1, 2008.
Sincerely,
JIM DOYLE
Governor
Read and referred to committee on Health, Children, Families, Aging and Long Term Care.
State of Wisconsin
Office of the Governor
July 29, 2005
The Honorable, The Senate:
I am pleased to nominate and with the advice and consent of the Senate, do appoint Schnuck, Lawrence,
of Milwaukee, as a member of the Examining Board of Architects, Landscape Architects, Professional Engineers, Designers, and Land Surveyors to serve for the term ending July 1, 2009.
Sincerely,
JIM DOYLE
Governor
Read and referred to committee on Job Creation, Economic Development and Consumer Affairs.
State of Wisconsin
Office of the Governor
July 29, 2005
The Honorable, The Senate:
I am pleased to nominate and with the advice and consent of the Senate, do appoint Ragland, Nancy,
of Madison, as a member of the Examining Board of Architects, Landscape Architects, Professional Engineers, Designers, and Land Surveyors to serve for the term ending July 1, 2008.
Sincerely,
JIM DOYLE
Governor
Read and referred to committee on Job Creation, Economic Development and Consumer Affairs.
State of Wisconsin
Office of the Governor
July 29, 2005
The Honorable, The Senate:
I am pleased to nominate and with the advice and consent of the Senate, do appoint Rice
, Corliss,
of Milwaukee, as a member of the Occupational Therapists Affiliated Credentialing Board to serve for the term ending July 1, 2009.
Sincerely,
JIM DOYLE
Governor
Read and referred to committee on Health, Children, Families, Aging and Long Term Care.
State of Wisconsin
Office of the Governor
July 29, 2005
The Honorable, The Senate:
S316
I am pleased to nominate and with the advice and consent of the Senate, do appoint
Shropshire, Mark,
of Appleton, as a member of the Physical Therapists Affiliated Credentialing Board to serve for the term ending July 1, 2008.
Sincerely,
JIM DOYLE
