When it comes to oversight of federal programs, President Obama and key Democratic allies appear mired in self-contradiction. On one hand, they demand more accountability from the programs. On the other, they advocate increasing budgets for agencies with documented weak internal controls. Legal Services Corporation (LSC) may be the most glaring example of this syndrome.The White House Fiscal 2010 budget calls for a hike in LSC spending from $390 million to $435 million. That’s actually a taxpayer bargain compared to the $750 million a year that Sen. Tom Harkin, D-Iowa, is seeking for the corporation under his proposed Civil Access to Justice Act (S. 718). If lawmakers really want to do the public a good turn, they would focus on how LSC spends its existing money. Recent audits of the corporation by Legal Services Corporation’s Office of Inspector General (OIG) and Congress’ Government Accountability Office (GAO) reveal an organization in near disarray.
Congress chartered Legal Services Corporation in 1974 as an autonomous nonprofit entity after operating for nearly a decade within the federal Office of Economic Opportunity. From the start, the LSC has spent most of its money on grants to nonprofit legal groups around the country to pursue civil cases on behalf of low-income individuals and families. In practice, its lawyers have used funds for individual and class-action suits to attack the ostensible root causes of poverty, often acting contrarily to its charter, common sense and rule of law. What’s more, they and their grantees regularly have defied congressional inquiries while building political fiefdoms. In May 22, 2008 testimony before the Senate Judiciary Committee, NLPC Chairman Kenneth Boehm, himself a counsel to the LSC board during 1991-94, “(T)he model of legal services delivery it (LSC) promotes is prone to inefficiencies, abuses, lack of accountability and wasted funds.”
The latest audits lend support to this view. Investigators have found, among other things, that Legal Services violated the Federal Advisory Committee Act, which requires public transparency from advisory groups to executive branch agencies; allowed its own employees to “double dip” from LSC headquarters and grantees; and failed to follow its own contracting rules in virtually all cases, often bypassing competitive bidding requirements in the process. Certain LSC grantees also have exhibited a blind spot in their expense accounts. Inspector General auditors concluded, for example, that California Indian Legal Services had incurred more than $80,000 in questionable expenses, including $6,384 for 136 unused rooms at the Pechanga Resort & Casino in Temecula, California in connection with a conference. The Ft. Worth-based Legal Aid of North West Texas spent nearly $190,000 for a decorative multi-story natural stone wall exterior for its newly renovated offices. And the GAO found that Philadelphia Legal Assistance Center used a portion of its federal funds to provide interest-free loans to employees who weren’t even required to sign contracts.
Such findings amplify critical audits a few years ago supervised by then-LSC Inspector General Kirt West. These reports revealed LSC executives, including Chairman Frank Strickland and President Helaine Barnett, used corporation funds for perks such as first-class airline tickets, limousine service, lavish hotels and restaurant meals which, among other culinary delights, featured $59 three-entrée buffets and $14 Death by Chocolate desserts. The Legal Services Board of Directors came close to firing West for having the temerity to expose this sybaritic excess, but backed away in the face of a House Judiciary subcommittee investigation. West left on his own anyway, recognizing his short life expectancy at LSC. His replacement, Jeffrey Schanz, appears to have had little effect on this organizational culture.
Senator Charles Grassley, R-Iowa (in photo), ranking minority member on the Senate Finance Committee, isn’t happy about this. “The failures on the part of the LSC and its management cannot and should not be swept under the rug,” he wrote recently in a dear-colleague letter urging cancellation of additional LSC funding in absence of overdue reforms. He noted: “The fact that serious and vigorous oversight of the LSC grantee community is almost nonexistent is, to say the least, alarming. This misuse of federal funds that has happened over the years is offensive and just the tip of the proverbial iceberg.”
Members of Senate and House Appropriations subcommittees don’t appear to share his concerns. On June 25, the Senate version of the Commerce, Justice and Science FY 2010 appropriations bill provided $400 million for LSC. More ominously, the measure contained a provision, led by Sen. Barbara Mikulski, D-Md., to lift restrictions on the use of non-federal funds enacted in 1996 to prevent Legal Services lawyers from using taxpayer money to advance political causes. Those restrictions came about directly as a result of NLPC recommendations. The full House already approved its version of the appropriations bill on June 19 by a 259-157 margin, providing $440 million for LSC. Though this version at least continues existing limitations on the use of grants, it also lifts the restriction on the ability of Legal Services programs to collect attorneys’ fees.
Corporation officials insist such findings are an aberration. “More than 95 percent of our funding goes directly to help the nation’s poor, and we would hope that they would not be penalized, especially at a time when so many are at risk of losing jobs, homes and access to health care,” wrote LSC spokesman Stephen Barr in an e-mail published in the Washington Times. “The LSC Board of Directors and the LSC staff have spent hundreds of hours over the past two years implementing the recommendations of the GAO and the LSC inspector general.”
Yet certain employees at Legal Services headquarters view the issue differently. They’ve gone so far as to contact a union, the International Federation of Professional & Technical Engineers, for potential representation. Workers at LSC’s Office of Compliance and Enforcement and the Office of Program Performance “feel pretty well ignored by management at this point in regard to their concerns,” said union treasurer Paul Shearon. And some disgruntled employees periodically have funneled complaints to members of Congress. Much of Senator Grassley’s information, for example, comes from internal whistle-blowers.
None of this is likely to make an impression upon Legal Services boosters. For them, LSC programs have been a great success and deserve more funding. On July 23, President Obama issued a proclamation to commemorate the 35th anniversary of Legal Services Corporation. LSC, the president stated, “has moved our Nation and our legal system toward greater equality…Persons of all ethnic and racial backgrounds know its great work, and women, who represent 75 percent of LSC-supported clients, especially benefit from its expertise.” The corporation’s funding for the coming fiscal year is primed for an increase. It’s not a question of “if,” but “how much.” Appropriations Committee members in both the House and Senate would do well to review Inspector General and GAO audits before further loosening the purse strings.