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Top FSSA official's contract raises questions

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PostPosted: Fri May 05, 2006 10:06 am    Post subject: Top FSSA official's contract raises questions Reply with quote

From WTHR in Indianapolis:

13 Investigates--Top FSSA official's contract raises questions

Indiana Democrats are calling on Inspector General David Thomas and Marion County Prosecutor Carl Brizzi to investigate the state's arrangement with Fort Wayne resident Dick Rhoad.

13 Investigates first raised questions about Rhoad's contract with the Family and Social Services Administration two months ago. As the agency's chief financial officer, Rhoad oversees the spending of billions of dollars every year on services for Indiana families. FSSA Secretary Mitch Roob said he is very happy with Rhoad's work.

"Dick Rhoad is doing a great job for the taxpayers of this state," Roob told Eyewitness News earlier this year. "He's doing a great job for us. We'd be lost without him."

Roob was so impressed with his CFO, in fact, that in January he allowed Rhoad to resign and, according to a new contract, hired him back the very same day with a bigger paycheck. Now, instead of getting paid about $100,000 as a state employee, each year Rhoad gets $180,000 as a private contractor - for doing the same thing he did before.

"It's not an exorbitant salary," Roob said. "He went from being a state employee with benefits to being a contract employee with no state benefits.... He's not making more money doing this."

So why make the change? The answer lies in a new Fort Wayne neighborhood where you'll find Dick Rhoad's home - 120 miles from his office in downtown Indianapolis. In his first six months on the job, Rhoad billed the state more than $14,000 to commute from home to work. Week after week, according to state documents, taxpayers paid for his gas money, his meals and his stays at Downtown hotels.

Eventually, the state budget agency told FSSA it couldn't do that, which meant Dick Rhoad would have to pay his own commuting expenses. But FSSA figured a way around that by making Rhoad's position a contract job that pays an extra $80,000 a year to cover benefits and that commuting expense.

$2 million contract

And if an extra $80,000 sounds like a lot, consider this. 13 Investigates obtained an earlier version of Dick Rhoad's contract that would have paid his private consulting company $2 million over two years.

"I'm pretty sure the other contract was a draft that was never enforced," Roob told Eyewitness News.

Roob contends the earlier contract was just an idea that never got very far. But it did get far enough to be approved by Rhoad, by the agency's chief attorney and by Secretary Roob. All of them signed the $2 million contract.

"The point is," Roob said, "we didn't do it."

Rhoad himself declined our requests to talk about the contracts and his new job, but his boss defends the deal.

"We have an ethics opinion on this to make sure that it was being done above board," Roob said.

Both state statute and administrative ethics rules prohibit conflicts of interest. State law also bars a state employee from leaving an agency to go right to work for a company that does business with that same agency.

At FSSA's request late last year, State Ethics Commission Director Mary Lee Comer offered an informal opinion that the arrangement with Rhoad did not appear to violate any ethics requirements.

In one email, Comer wrote that the post-employment prohibition didn't apply to Rhoad because he wasn't leaving FSSA to work for a private company - he was leaving to work for FSSA itself. In a follow-up e-mail on the conflict of interest issue, she simply suggested that FSSA not finalize Rhoad's new contract until after he official terminated his state employment.

FSSA did not stick with that timeline. Instead, the contract was executed on his last day as a state employee.

Both independent observers and state Democrats are now raising concerns about the deal.

"I see an attempt to really get around these rules," said government watchdog Julia Vaughn told Eyewitness News. "Shortcuts were taken to ensure this could happen so it does raise concerns."

IUPUI political science professor Bill Blomquist said state ethics rules might need to be tightened up to address unique situations like this. Even if Rhoad's new contract is ethical, he added, turning a powerful state employee into a private contractor might not be a good idea.

"If you have an in-house CFO, there's no question that anything that person does is public record and available to the press, to the public, to anyone who's available to scrutinize it," Blomquist said. "When you contract out to a private contractor, then it becomes a question."

Wednesday afternoon, state Democrats filed a request with Inspector General David Thomas for a formal review of the Rhoad contract.

"From the face of it, it looks like there's possible violations," said Democratic Chair Dan Parker. "That's why a prosecutor needs to look into it...We're not in the business of allowing people to get rich off of state government. State government is there to do the people's work."

In a letter hand-delivered to Thomas' office, Parker wrote: "I believe that this contract may be in violation of at least one state ethics law and possibly a criminal statute that prohibits public servants from profiting from government contracts."

Governor Mitch Daniels Wednesday referred comment on the matter to Secretary Roob. In an earlier interview with Eyewitness News, Roob said he didn't understand the questions about Rhoad's contract.

Roob said Rhoad was the man he wanted for the job, the agency needed him working in both Fort Wayne and Indianapolis, and making his position a private one with a higher salary was what FSSA had to do to keep him.

"I think we're trying to find an issue where there really is not," he said. "I kind of don't see what we're trying to get at here."

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