Catherine and Richard Walker are the founders of Road to Responsibility, which provides training for mentally disabled adults. (File photo)

By SYDNEY SCHWARTZ
The Patriot Ledger

MARSHFIELD - A Marshfield nonprofit that serves disabled individuals is the focus of a state investigation because of the organization’s fiscal management.

Road to Responsibility Inc., the focus of a damning state audit over questionable business practices once before, receives $15 million annually in contracts from the state Department of Mental Retardation, which has launched the current investigation.

A Patriot Ledger review of records found that the organization, which operates on a $22 million annual budget, pays two top officials, a husband and wife team, nearly a quarter of a million dollars and spends far more on travel and facilities than similar agencies. Many of the organization’s business ventures are losing money, according to its acting chief executive officer, Catherine Walker.

She said the Department of Mental Retardation has multiple contacts with Road to Responsibility, totaling $15 million.

Walker said she learned of the state’s concerns Sept. 18. She said her organization is working on a report to send to the Department of Mental Retardation.

‘‘There will be a full response,’’ she said. ‘‘We’re disclosing everything. We’re going through the process and making sure that people have the information they need.’’

The chairman of Road to Responsibility’s board of directors, Frank L. Davis III, would not comment on the inquiry.

Questionable contract

One item that came to light in a review of an agency public filing was the award of a $1.6 million contract to remodel its headquarters to a company owned by the brother of a board member.

A spokeswoman for the state’s Executive Office of Health and Human Services, Alison Goodwin, would not release any details of the current investigation of Road to Responsibility, and a public records request by The Patriot Ledger seeking documents related to the investigation was denied by the Department of Mental Retardation. The Executive Office of Health and Human Services oversees the Department of Mental Retardation.

High salaries

In fiscal year 2006, the most recent year for which a tax return is available, Road to Responsibility spent nearly $12.9 million on salaries and wages. It paid its officers nearly $1 million, including a combined $242,732 to founders Richard Walker Jr. and Catherine Walker. Those salaries were up more than $1.1 million from the previous fiscal year, including $542,357 more going to officers and directors.

Richard Walker, the president, has been on medical leave since November 2005 because of struggles with ongoing orthopedic problems.

But between July 1, 2005, and June 30, 2006, Richard Walker earned a salary of $162,510, plus $12,780 in benefits. That year, he worked an average of 40 hours a week, the tax statement says. His wife said he was on medical leave for half of that year.

Catherine Walker, appointed acting CEO by the board in her husband’s absence, said the board of directors voted that Richard Walker would receive his full salary for his first year on medical leave. Since then, she said, he has been on long-term disability. No public records were available for confirmation.

Catherine Walker, previously vice president of quality and development, earned $80,222 in 2006, with $10,891 in benefits, working an average of 40 hours a week. Before her husband got sick, she said, she worked from their home in New Hampshire, commuting to work in Marshfield a few times a month.

Current records that would include her salary are not available from the state.

Losing money

Despite the salaries and its multiple government contracts, Catherine Walker told The Patriot Ledger that her organization loses money on many of its business ventures.

Among other things, Road to Responsibility runs Ocean Village Bookstores in Marshfield, Plymouth and Falmouth, The Ocean Village Motor Inn in Marshfield, a food kiosk in Braintree and a consignment shop in Cohasset. All of those operations employ the agency’s disabled clients.

‘‘The Marshfield motel does well,’’ Catherine Walker said last month. ‘‘We’re not, on most of them, breaking even.

‘‘Traditional bookstores are run by one person ... We’re trying to do something that is not traditional.’’

‘‘The goal isn’t to make money... It’s to make sustainable ventures that they’re able to break even, and they’re able to hire people with disabilities,’’ she said.

In 2006, the organization received $15.7 million in fees and contracts from government agencies and spent nearly $19.6 million in program services, including salaries, wages and benefits.

Program services brought in $2 million in 2006, including $91,649 from the bookstores, $98,007 from the hotel and $181,825 from the consignment shop. Clients earned $391,226 in wages.

In 2006, however, the organization spent a total of nearly $12.9 million of it’s $22 million budget on salaries and wages, $1.5 million on travel and $2.6 million on occupancy. The organization had a total of $424,510 in miscellaneous expenses.

Doing more with less

Road to Responsibility supports 1,000 individuals with a staff of 400, according to its Web site.

In comparison, Quincy-based Work Inc., another organization that provides rehabilitation services and develops community-based employment for disabled individuals, has a budget of about $18 million. Work Inc. spends about $11.2 million on salaries and wages, but only $213,652 on the compensation of officers and directors, according to the organization’s fiscal 2006 tax return. That year, it spent only $109,820 on travel.

Work Inc. serves more than 1,000 people daily and has about 300 employees. About 80 percent of its income comes from state and federal governments, a Work Inc. spokesman said.

Deficit spending

Catherine Walker of Road to Responsibility said her organization had owned Jan’s Ocean Village Ice-Cream store in Marshfield and sold it for financial reasons. Ice cream is now sold at the agency’s Marshfield bookstore. The agency is hoping to sell a motel it owns in Kingston and a farm in Newport, N.H., that the agency bought to provide its clients vacation opportunities, Walker said.

The 40-acre farm property, which Road to Responsibility purchased in 2004, has two homes and is worth $518,340, according to Unity, N.H., town records.

‘‘It just didn’t work out financially,’’ Catherine Walker said. ‘‘It is a constant struggle.’’

‘‘Do hope at some point we’re going to at least maintain some sustainability? That’s the goal,’’ she said.

But despite the statement that the agency is losing money on some programs, Road to Responsibility continues to spend. In addition to its rising salaries and travel expenses, the agency recently completed a $1.6 million expansion and rehabilitation of its headquarters in Library Plaza in Marshfield.

The renovations were done by Pyne Construction, a North Quincy firm owned by Ted Pyne, brother of John J. Pyne of Scituate, a member of Road to Responsibility’s board of directors.

The organization disclosed the relationship in the annual filing but made no mention of whether the job had gone out to bid or if other companies were solicited.

The organization tore off the front of its headquarters, a 30-year-old converted retail building, and added a 12,000-square-foot building in an abutting vacant lot, nearly doubling the size of the headquarters.

‘‘We wanted it to be comfortable and good working conditions, but we didn’t want a speck of luxury, because we couldn’t afford it and we didn’t need it,’’ Richard Walker told The Ledger in 2005. ‘‘Plus, the places I’ve made these people work over the years, they deserved something nice.’’

Early signs of trouble

Catherine and Richard Walker co-founded Road to Responsibility in 1988. In the summer of 1989, when another human service agency fell into financial problems, the Walkers took charge of several of the other organization’s facilities and hired 150 employees in 23 days.

In 1994, the state auditor reported on an examination of the books of Road to Responsibility. The auditor found that Richard Walker made illegal interest payments to his father on a 1989 loan with state money and said he should repay more than $24,000, including money for questionable expenditures for fund-raising, lunches, flowers and gifts.

The auditor also said the agency and its president had squandered state grant money, including paying for cleaning a swimming pool that the state says does not exist.

In a response in the auditor’s report, Walker said the 1989 loan from his father was necessary in the agency's early days to ensure its survival. He said the interest paid his father over three years was no more than local banks were charging. Walker defended other expenditures challenged by Auditor Joseph DeNucci. The pool-cleaning charge, he said, was an error.

DeNucci's report said expansion and jobs for Walker's family members were at stake, not survival.

‘‘Certain members of RTR’s staff either directly or indirectly benefited from this expansion,’’ the 1994 report stated. ‘‘For example, RTR’s president, his wife and his father were all employees and members of RTR’s board of directors. As the agency grew, so did their job responsibilities and rates of compensation.’’

In 2004, Richard and Catherine Walker moved with their children from Marshfield to Andover, N.H., where they bought a 6-bedroom home on 1.5 acres, now worth $416,100, according to the Andover, N.H., selectmen’s office.

Their former Marshfield property, at 38 Raleigh Road, now held by the Walker Family Trust, is worth $1.86 million.

The family moved from New Hampshire to Kingston last year, Walker said. She said she and her husband are in the process of selling the New Hampshire home.

‘Working on a response’

Catherine Walker had agreed to an interview and a tour of the organization’s facilities, but on Wednesday canceled it after she said she discussed it with the board chairman.

She said the board of directors is currently working on a response to the Department of Mental Retardation. She believes they will complete the report in a few days.

‘‘The focus needs to be on us being able to answer the questions that anyone has,’’ Catherine Walker said. ‘‘It’s part of what you have to go through when you’re running a business and running a nonprofit.

‘‘The most important thing is that we’re doing whatever’s in the best interest of the individuals we support.’’

Fact file

Road to Responsibility was founded in 1988 by Richard and Catherine Walker to serve individuals with disabilities

It is headquartered in Library Plaza, 1831 Ocean St. in Marshfield

According to the Web site, it supports more than 1,000 individuals with a staff of 400 through residential, employment, habilitation and recreation services in 22 towns from Boston to Cape Cod

It runs the Ocean Village Bookstores in Marshfield, Plymouth and Falmouth, the Ocean Village Motor Inn in Marshfield, a food kiosk in Braintree and a consignment shop in Cohasset

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Sydney Schwartz may be reached at sschwartz@ledger.com .

Copyright 2007 The Patriot Ledger
Transmitted Saturday, October 13, 2007