Almost all of that money went to a Phoenix company that critics say has enjoyed a sweetheart deal with the commission despite problems with the products and services the company provides. The damning 17-page report comes as the budgets of many state agencies are being dramatically cut back because of the bleak financial picture.
The report says the commission got a huge budget boost in fiscal 2001, receiving $6.2 million in revenues that year to provide services, up from $262,000 just two years earlier. (Almost all of the pool of money came from a new tax levied as a surcharge on wire-service accounts.)
The 14-member commission is charged with providing services to Arizona's deaf and hard-of-hearing, including oversight of telecommunications and relay services, text telephone distribution, education, referrals and general information.
According to the auditor general, "The agency did not have a plan to effectively manage this significant increase in its operating budget. Specifically, [it] contracted for services and goods without adequate planning, made inappropriate payments to vendors, disregarded guidelines designed to spend public monies efficiently, and purchased items that constituted gifts of public monies."
Even more specifically, the report says, ACDHH broke the rules for purchasing and paying for more than $1 million in goods and services over a three-year period, including $803,000 in payments to Phoenix business owner Robert Daniels.
Daniels, who is deaf himself, owns a firm that focuses solely on the deaf and hard-of-hearing. Among other things, he produces videotapes and public-service announcements, and "consults" with various agencies and companies.
It was bad enough, says the auditor general, that "the agency failed to adequately determine its needs, identify vendors that might reasonably respond to a request for proposal, and determine the time needed to complete projects."
The state also paid Daniels' firm hundreds of thousands of dollars for services that it didn't complete on time. Records indicate that one $256,550 contract to develop and produce open-captioned videotapes was finished almost a year after the final deadline.
In another contract, ACDHH paid Daniels $30,325 before he completed a series of public-service announcements for television (the contract was for $121,300). The auditor general says that "constituted unauthorized payments in advance of the receipt of goods."
ACDHH executive director Sherri Collins tells New Times that she fixed most of the issues addressed in the report "long before the report was concluded."
Adds Collins, "We take the report to heart. . . . We have reviewed our procedures against the report recommendations. We have made internal changes, personnel changes, and procedural changes."
As for the cozy relationship with Robert Daniels, she says, "The field of deafness is a very small and very complex area. There are very few vendors who have the understanding and background that Mr. Daniels, who is deaf, is able to provide. . . . [He] competed through competitive bids for deaf-related services as directed by the State Procurement Office."
She says Daniels currently has one contract with ACDHH that expires in June.
The auditor general's report says Collins spent $168,118 on promotional items "without demonstrating that the expenditures served a public purpose." Those items included $16,595 for magnets, $8,147 for pill boxes, $3,800 for cowboy hats, $8,036 for mouse pads, and $3,847 for "stress balls."
In her February 11 response to the auditor general, Collins wrote that she'd intended to use the "promotional materials" to bring attention to the Arizona Relay Service, which allows deaf people to communicate with the hearing over the phone. She says the current Arizona Relay Service contract requires MCI to provide the promotional materials.
The auditor general's report isn't the only problem facing the commission and its executive director. On March 5, Helen Young, a former commission member and longtime advocate for the deaf, sued Collins, ex-deputy director Claudia Foy, and the commission itself on behalf of Freelance Interpreting Services Inc., which Young owns and operates. She is not a direct competitor of Daniels and her concerns stem from her service on the commission.
Filed in Maricopa County Superior Court, Young's suit alleges Collins, Foy and others retaliated against her and her business soon after she started raising many of the issues that the auditor general recently corroborated. Freelance Interpreting contracts with the state to provide interpreting services for the hearing-impaired to several state agencies.
The lawsuit claims that "Those responsible for approving these questionable expenditures have engaged in a systematic attempt to sever Ms. Young's ties with the Arizona Commission for the Deaf and Hard of Hearing, and to sabotage Freelance's state contract by encouraging other state agencies to cease their use of Freelance services."
For example, the lawsuit alleges Claudia Foy filed several unfavorable performance reports against Young in early 2001, after Young had started raising concerns at the commission. That came shortly before an evaluation team was about to determine if the state should renew Freelance's contract. One complaint alleged Freelance's interpreters were violating the state's dress code. However, the state has no such code.
"Ms. Young's vocal opposition to wasteful spending at ACDHH has given rise to retaliatory acts by ACDHH, Collins and Foy. . . . These acts of retaliation have caused Freelance grievous economic injury reflected in a substantial loss of revenue from government agencies compared to years past."
The lawsuit does not ask for a specific dollar amount.
Young tells New Times that Sherri Collins and the commission continued to withhold business from her company, even after the State Procurement Office had resolved almost all of the complaints in Freelance's favor.
"They did all of this only because I dared to open my mouth about the bad stuff that's been going on there for years," says Young, whose parents were deaf and who once served as a foster mother for a 13-year-old deaf girl who was trying to raise a small child. "I went on that board [for two years] because I thought it would be a service to the community. Instead, what I saw was a tremendous waste of taxpayer money and an unbelievable bias in favor of one guy [Bob Daniels] and his company, when there were other companies out there that could have done the job for less money and more quality."
Collins says she knows nothing about the lawsuit, and declined to comment further about Young's allegations.