Work programs assailed in Senate

City-based Chimes cited for CEO salary

By Jamie Smith Hopkins | Sun reporter

October 21, 2005

WASHINGTON // U.S. senators yesterday sharply criticized the results of a pair of federal work programs for people with disabilities, saying too few are helped and many of them are not being prepared for mainstream jobs.

Members of the Senate Health, Education, Labor and Pensions Committee also said at their hearing yesterday that some of the nonprofits benefiting from these federal contract set-asides are enriching their executives with high salaries and "lavish" perks. They issued a staff report that singled out five charities as examples - including Baltimore-based Chimes Inc., a charity serving the mentally disabled.

Chimes, which does work for federal agencies through the Javits-Wagner-O'Day program for the disabled, paid chief executive Terry A. Perl about $715,000 in 2003, according to its most recent IRS filing.

The average pay for charity CEOs is less than $100,000, the Senate report said.

"I believe these five nonprofits represent the tip of the iceberg," said Sen. Michael B. Enzi, a Wyoming Republican and chairman of the committee.

Sen. Edward M. Kennedy, a Massachusetts Democrat, said the programs had "shameful and serious failures ... and flagrant abuses by certain contractors for personal gain."

"The time is right for reform," he said. "We can and must do better."

A Chimes spokesman said the charity had not been provided with a copy of the report, which was released yesterday after six months of work by committee staff. None of the five nonprofits - the others are Social Vocational Services Inc. in California, National Center for the Employment of the Disabled in Texas, ORC Industries in Wisconsin and Pride Industries in California - were called to testify.

"The report is what it is, and there will be no comment until they've seen the report," said Chimes spokesman Levi Rabinowitz.

Rabinowitz said the charity has made "no significant changes" to executive compensation since 2003.

That year The Sun reported that Chimes failed to include the majority of the compensation paid to key executives between 2000 and 2002 on its main IRS filing. The group said it noted the salaries on a separate submission for a nonprofit trade group called Chimes Delaware, a practice criticized by nonprofit law experts. It changed its reporting method for the 2003 filing.

More oversight

Committee members said yesterday that changes and more oversight are needed for the two 70-year-old programs they're investigating: Javits-Wagner-O'Day, which sets aside contracts for nonprofits that hire disabled workers for at least 75 percent of direct-labor jobs; and Randolph-Sheppard, which gives priority to blind business owners to run operations such as cafeterias in federal buildings.

Javits-Wagner contracts totaled more than $2 billion in the 2004 fiscal year, according to the Committee for Purchase, the small federal agency that oversees it. It's unclear what the total is for Randolph-Sheppard - senators criticized the Department of Education, which oversees that program, for having little data available. The department also declined to send a representative to the hearing, they said.

"Even minimal oversight" would have uncovered the problems the staff report finds, Kennedy said.

Among the committee's concerns:

The number of licensed blind vendors has dropped in the last 30 years to about 2,700 from 3,400.

Less than 9 percent of workers the blind vendors employ are blind or have other disabilities. In 2002, that amounted to about 600 people.

The nonprofit Javits-Wagner contractors employ thousands of disabled workers, largely in production and service jobs such as janitorial work, but they're preparing few of those employees for the competitive marketplace. Last year, 5 percent of participants were placed in mainstream jobs.

Rules blamed