THE MISSISSIPPI LEGISLATURE

Introduction

In early 1996, a series of Clarion-Ledger newspaper articles alleged that the Mississippi Firefighters' Memorial Burn Association might have excessive administrative expenditures and that the Delta Regional Medical Center might have used funds intended for the Mississippi Firefighters' Memorial Burn Center for Medical Center projects. As a result of public interest in this issue, the Legislature passed Senate Bill 3032 (1996 Session) prohibiting expenditures from the Burn Center's FY 1997 special fund appropriation ($8,712.32) until the PEER Committee could complete an investigation of alleged misuse of funds and present the findings to the Joint Legislative Budget Committee.

Overview

The Mississippi Firefighters' Memorial Burn Center, an operational unit of the Delta Regional Medical Center in Greenville, Mississippi, provides specialized care for burned patients admitted to the Medical Center. The Medical Center provides all administrative functions for the Burn Center. The Mississippi Firefighters' Memorial Burn Association is a private, nonprofit organization which solicits public and private funds to help offset expenditures of the Burn Center.

The Burn Center receives revenues from two primary sources-those generated directly by the provision of services to patients (payments from Medicare, Medicaid, private insurance, worker's compensation insurance and self-pay patients) and those provided through the Burn Association, including public and private contributions and trust fund proceeds. (Occasionally, the Legislature appropriates funds directly to the Burn Center for specific projects.) During fiscal years 1993 through 1995, the Burn Association remitted one hundred percent of public funds collected ($2,267,969) and fifteen percent of private funds collected ($165,623 of $1,138,726 collected) to the Burn Center. The Burn Association retained the remaining eighty-five percent of private funds for its administrative and fundraising expenses ($959,537) or future transfers to the Burn Center ($13,566).

The percentage of total gross revenues the Burn Association expends on administrative expenditures compares favorably with those of similar charitable fundraising organizations, and exceeds the standards recommended by national groups which evaluate expenditures and activities of charitable nonprofit organizations. However, the Burn Association uses eighty-four percent of its private contributions to fund administrative and fundraising expenditures. Thus the majority of private donations goes toward supporting the activities of the Burn Association rather than directly benefiting the Burn Center.

During the course of this review, PEER found that the Burn Association has not complied with state law requiring annual registration with the Secretary of State's office as a charitable organization, nor has the association filed required annual reports.

Recommendations

Legislative

1. Because PEER's review documented managerial and administrative inefficiencies primarily on the part of the Burn Association rather than obvious misappropriation or misuse of public or private funds by the Burn Association or Burn Center, the Joint Legislative Budget Committee should approve the disbursement of funds appropriated during the 1996 legislative session for the operation and maintenance of the Burn Center ($8,712.32).

Administrative

2. Delta Regional Medical Center, Burn Center, and Burn Association managers should distinguish clearly in their publications and oral presentations the roles and management of the entities.

3. The Burn Association's board of directors should review its fundraising methods in an effort to minimize administrative and fundraising expenditures while maximizing contributions of public and private funds to the Burn Center. Improvements in the Association's fundraising methods should include a formal plan of work based on established criteria and periodic reporting to the board of work accomplished and results of such efforts. Such methods could also include the Burn Association encouraging volunteer groups and organizations to lobby their local counties and municipalities to contribute regularly to the Burn Center.

4. The Burn Association's board of directors should implement recommendations of its certified public accountant regarding the identification, classification and documentation of project and other costs of the Burn Association. In addition, the board should regularly review and monitor the Burn Association's expenditures in an effort to ensure the appropriateness of such expenditures with the organization's purpose.

5. The Burn Association's board of directors should regularly produce annual reports which present all public and private contributions, expenditures, remittances to the Burn Center and percentage of the Association's administrative costs to total, public, and private contributions. The Burn Association should automatically provide such annual reports to all public entities which contribute funds to the Burn Center as well as all private individuals or organizations who contribute more than $1,000 annually to the Burn Association.

6. The Burn Association's board of directors should comply with state statutes regarding annual registration with the Secretary of State's office as a charitable organization and submittal of required annual reports.

Download Full Text Report in Acrobat Format - (136,413 bytes)

PEER Home Page.

E-Mail