By Matt Murphy

STATE HOUSE, BOSTON, JAN. 21, 2012. On the heels of revelations that the former Chelsea Housing Authority executive director concealed hundreds of thousands of dollars in salary from the state, Gov. Deval Patrick will propose in his budget next week to impose new reporting and auditing requirements on local housing agencies and to cap executive pay at the locally run authorities, according to an official familiar with the budget.

The governor will also file legislation to prohibit local housing authority board members from being compensated, but unlike the other executive regulations the pay ban would require approval from the House and Senate.

“I think we want to improve the system, protect the tenants and provide the best services possible. I think we need to tighten up and reform the system to improve upon it, but it is providing very decent housing for approximately 50,000 households so it’s a critical part of the safety net,” said Aaron Gornstein, the incoming undersecretary for housing and community development.

Gornstein plans to formally join the Patrick administration Jan. 30 after 21 years working as the executive director of Citizens’ Housing and Planning Association.

Among the reforms to be proposed by the governor is a requirement that local housing authorities provide the Department of Housing and Community Development with a list of the top five management salaries, and a prohibition on using state subsidies for executive director buyouts above the level state employee would be entitled.

Mandatory ethics training for housing authority employees, more detailed auditing procedures and financial certifications, purchasing oversight, and penalties for reporting violations will also be included in the budget package.

Patrick also plans to sign an executive order to accompany his budget creating a Commission on Housing Authority Governance Reform. Gornstein said part of the mission of the task force will be to examine whether it makes sense to regionalize some public housing operations and cut down from the 242 local authorities that currently exist.

The salary cap was based on federal standards for public housing chiefs, according to Gornstein. “We thought that was a reasonable approach and the vast majority of housing authority directors are making less than that at this point,” he told the News Service.

The attempt to reform the housing authority system, which falls under local control but is subject to state regulation, comes as former Chelsea Housing Director Michael McLaughlin is under investigation for allegedly concealing an exorbitant salary.

McLaughlin resigned in November following revelations that he had underreported his income as $160,000 when he was actually being paid $360,000 a year, more than even the housing director for New York City.

Patrick demanded McLaughlin’s resignation, which was submitted, and has petitioned the Supreme Judicial Court to place the housing authority into receivership. McLaughlin is also under investigation by the F.B.I., and other state and federal agencies over allegations that he co-signed checks to himself for unused sick days and vacation at the time of his resignation, and the evidence was destroyed.

Though McLaughlin enjoyed a close relationship with Lt. Gov. Timothy Murray, the administration has distanced itself from the disgraced housing chief and expressed outrage at the breach of public trust.

The Boston Globe reported that McLaughlin and Murray exchanged more than 80 phone calls over the course of a seven-month period, including in the hours after the newspaper placed inquiries about his salary, though Murray denies knowing about his pay and said he frequently talks with local housing officials.

The governor’s budget will also propose a $4 million increase in funding for the operation of state public housing to $66.5 million for fiscal 2013.

Since 2007, the state has invested more than $400 million in capital improvements to the public housing stock, which includes 50,000 state-funded units and 30,000 federally-funded units. Public housing is the largest inventory of affordable housing in the state for low-income families, but Patrick says age and lack of investment by prior administrations has left much of the stock “uninhabitable.”

Gornstein said the reform proposals were not entirely prompted by the McLaughlin scandal, but also include long-talked-about ideas to improve the public housing system and improve transparency and accountability.

“Certainly some came from that situation, but it prompted the department and the governor’s office to really look at what systems we have in place and really tighten those up. Many of the other ideas have been talked about for a while. I don’t think it’s a reaction to that, but it’s something that needs to be done,” Gornstein said.



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