An uproar over expenditures of the Boys & Girls Clubs of America, including the salary of CEO Roxanne Spillett, could jeopardize federal legislation to authorize up to $85 million a year for cash-strapped clubs.
In a five-page letter last month, four Republican senators – Chuck Grassley (Iowa), Tom Coburn (Okla.), Jon Kyl (Ariz.) and John Cornyn (Texas) – asked Boys & Girls Clubs of America (BGCA) Board Chairman Robert Bach for detailed information about how Spillett’s salary was set, who made the decision and when.
Spillett: BGCA says she’s worth a million.
The letter also seeks extensive records about the BGCA’s accomplishments under earlier appropriations – specifically, how it spent more than $550 million awarded to open new club sites in “distressed areas,” including public housing; justification for spending more than $4 million on travel last year by national staff; details of grants to local clubs of more than $500,000 and a thorough accounting of various investments.
Unlike organizations that scramble each year to get earmarks in the federal budget, the Boys & Girls Clubs got its own line-item appropriation in the Justice Department budget, beginning in 1997. Technically, the appropriation came as a 1996 amendment to the Economic Espionage Act of 1966.
The line-item – originally authorized at as much as $20 million a year and which grew to $85 million a year – was designed to make clubs available to millions more youth, specifically those in economically distressed areas, such as public housing. The funds were to be used as seed money to establish new club sites that would become self-sufficient. The goal was to have 5,000 sites in operation; the number stands at less than 4,400.
The senators asked for all the information by March 29, but there was no indication it would be made public immediately, if at all.
Coburn: Motivated by fiscal concerns or politics?
How did it happen?
The controversy began almost quietly, during a little-noticed executive meeting of the Senate Judiciary Committee on Jan. 28. Committee Chairman Patrick Leahy (D-Vt.), asked if there was objection to moving to the Senate floor his proposed bill to authorize as much as $425 million over the next five years for the BGCA, one of his favorite groups.
Coburn spoke up, saying he backed the mission of the organization but had questions about its finances. He then proceeded with a list of inquiries that included:
• Whether the BGCA had met requirements of previous federal appropriations to open more clubs in public housing.
• Why local clubs weren’t content with the overall allotment to the national organization and instead were asking for individual earmarks.
• Why the national group spent so much money on lobbying when club sites were being closed because of lack of money.
• Why CEO Roxanne Spillett received almost $1 million in total annual compensation.
It’s hard to tell whether Coburn was simply continuing his regular campaign against wasteful spending – his Senate website prominently features his choices for “Washington Waste of the Day” – or whether he was extending a longstanding public feud with Leahy that has pervaded everything from legislative action about the Emmett Till civil rights case to the nomination of Sonia Sotomayor to the Supreme Court.
But in less than six weeks, Coburn’s objections to Leahy’s legislation had grown into an imbroglio. The news about last month’s letter was splashed on CNN, featuring an interview with Grassley. An Associated Press story about the questions for the BGCA – highlighting those surrounding Spillett’s salary – appeared in newspapers across the country.
The blogosphere erupted, with people heaping vitriol on the organization and Spillett for “siphoning” money for high salaries from money destined for poor children.
The offices of Coburn and Grassley did not respond to requests to discuss the fate of the BGCA legislation. While Coburn has publicly said the legislation is “going nowhere” until he gets answers to the questions, there is no indication that he has actually placed a “hold” on it.
The BGCA issued a statement from Board Chairman Bach, defending BGCA executive salaries as “equitable” and describing Spillett as an “extraordinary leader.” The BGCA has said that none of her salary comes from the federal money.
The Atlanta-based nonprofit had little else to say, refusing to discuss specific aspects of the congressional inquiry until after responding to the senators’ letter.
It may be that Boys & Girls Club officials simply underestimated Coburn’s irritation and the mood in the country against high executive compensation.
The BGCA’s original response to Coburn’s inquiries from January did little to smooth the waters. It seemed to reinforce some critics’ view that BGCA officials have acted haughtily in their dealings with both the Senate and the Justice Department.
The first third of BGCA’s three-page response repeated the organization’s stump lines about how highly rated it is in philanthropic circles, along with an entreaty that “kids that need clubs the most need Congress’ support the most.” The reply did not directly address Coburn’s questions about whether enough of the federal money was getting to those kids.
The BGCA blamed many of its troubles in opening new clubs in public housing on a lack of federal money.
To understand this, it helps to understand a bit about how BGCA is set up and how local clubs are funded:
The national office serves primarily in a support function for the more than 1,100 separately incorporated local clubs. Many of the clubs operate in multiple locations, bringing the total sites to more than 4,300.
Each local club is responsible for raising its own operating budget, and members pay a small fee – from $20 to $40 a year – part of which goes to the national headquarters. National headquarters serves as both a funding pass-through (grants go through Atlanta to local clubs) and a resource, developing the 60-plus separate programs (financial literacy, self-esteem, gang prevention) and the associated materials that are used nationwide. Local clubs must raise the funds to pay for the programs they offer.
National headquarters manages the federal grants and completes the paperwork required for reporting. Although its federal appropriations have allowed for as much as 16.42 percent of the total grant amount to be used for the indirect costs of monitoring and managing the grants, BGCA officials said indirect costs have been limited to 9 percent of the total grant money, while 91 percent has gone to the local clubs.
Much of what Coburn complained about has been known for years, including Spillett’s compensation, which has hovered around $1 million a year since 2005. (See “Boys & Girls Clubs Get Whacked” from 2007 at http://www.youthtoday.org.) In addition, Justice Department officials have questioned whether BGCA had a strong plan for opening new club sites in public housing, even though that’s what the federal money was for.
But BGCA and its board, stocked with some of the nation’s top executives – Bach, the chairman, is head of Microsoft’s Entertainment Division – don’t seem to have seen earlier warning signs that some in the federal establishment were not enthralled with BGCA’s performance.
BGCA’s 2008 annual report, the latest available, states that 12 percent (or 516) of its approximately 4,300 club sites are in public housing. According to its federal income tax return for 2008, BGCA established 285 new clubs in “distressed areas” that year, serving 45,000 new members, but it does not specify which were in public housing. Leahy’s legislation put the number of club sites in public housing at 440 in 2009.
Among other things, the senators who wrote the letter are seeking details of when each public housing site opened and how many of those have since closed, and when.
BGCA received $60 million in 2001 for opening new club sites, an amount that grew to $85 million by 2005 but was cut to $40 million in 2007 – still more than any other youth-serving organization. There were no appropriations under the expansion program for 2009 or 2010.
Instead, recent appropriations have been for mentoring programs, amounting to $40 million last year.
The new legislation would give BGCA as much as $85 million a year for the next five years for general support, rather than public housing expansion. Coburn’s primary questions center on why the organization should get such funding to support operations if, in fact, it has not fulfilled its promises under previous appropriations.
According to data compiled by Youth Today, BGCA has received approximately $559 million through earmarks and its Department of Justice line-item since 2001. About 95 percent of that came through the line-item that’s now in question.