Salaries At Nonprofit Agencies Under Spotlight

CRT's Chief Says It Has Become Big Business

April 24, 2005
By ROBERT A. FRAHM, Courant Staff Writer

Fighting poverty in Hartford is big business.

Just ask Paul C. Puzzo.

A college dropout who started as a field worker and community organizer for the Community Renewal Team nearly 40 years ago, Puzzo rose through the ranks, became CRT's president and chief executive officer and built a struggling anti-poverty agency into a $55 million-a-year operation.

He has kept a low profile for the head of one of the region's largest nonprofit organizations, but Puzzo drew some unwanted attention recently: Federal auditors said CRT's top salaries, including more than $300,000 in annual pay and fringe benefits in 2002 for Puzzo himself, were excessive for an agency that runs Head Start preschool programs.

The report sent ripples through the agency's Head Start centers, where teachers - some making less than $20,000 a year - are in the midst of contract negotiations.

Members of the agency's board of trustees say the federal audit unfairly compares CRT's salaries to those of executives running much smaller Head Start agencies. They contend that Puzzo's pay is appropriate for the CEO of an agency that runs not just Head Start but more than 30 programs covering housing, nutrition, employment, criminal justice, youth programs and other matters.

Puzzo defers questions about his salary to the trustees but makes no apology for expanding CRT's scope, saying the agency's size is part of its strength.

"Becoming a big business has also brought stability. We don't lay people off every other week. We don't miss payroll," Puzzo said from his spacious office in CRT's modern headquarters in Hartford's North End.

Puzzo, 61, a stocky man with graying hair and a neatly trimmed beard, has seen his role change dramatically since he joined the agency in the 1960s at the height of the civil rights movement and President Johnson's War on Poverty. He was 21 when he left the University of Hartford to work in a CRT program counseling adults for school and employment.

"I dropped out of school and did this instead," he said in an interview last week. "This seemed more compelling."

CRT was a fledgling agency then. Over the years it has attracted workers who later played significant roles in Hartford political circles - including future mayors Thirman Milner, Carrie Saxon Perry and Eddie Perez. "It was a very exciting time for us," Puzzo said, "a time things were changing ... a time when a number of people emerged and became a generation of leadership for this community."

After holding several jobs at CRT, Puzzo was named its executive director in 1983, taking over a program with an $11 million-a-year budget and a $3 million debt, he said.

Board members credit Puzzo with putting the agency back on solid financial ground.

"We now run a $50 million-plus operation in large part because of Paul Puzzo's performance," said Fernando Betancourt, chairman of CRT's Board of Trustees, after the release of the federal audit.

Longtime board member Conrad Mallett said of Puzzo: "Before he was appointed [CEO], CRT's finances were in a shambles. There was all kinds of criticisms of end-of-year deficits. ... He cleared that up."

In 1998, CRT also took over a struggling Middlesex County anti-poverty program to save it from financial collapse.

Mallett said he does not understand the flap over Puzzo's salary. "People who run nonprofit agencies are not [running] monasteries," he said. "They do not take vows of poverty."

Still, the auditor's disclosure of Puzzo's salary raised eyebrows.

"I was angry, and then I wanted to cry," said Dee Orzel, a seven-year veteran Head Start teacher making slightly more than $11 an hour at a CRT preschool center in Middletown. "When you see something like that, it makes you feel unappreciated."

Teachers received a 1.6 percent cost of living increase this year and have been in negotiations for a new contract for more than a year, union officials said.

Orzel, whose job runs 39 weeks a year, said her pay is stretched thin by the cost of college courses she is taking to improve her training. Her colleagues, too, were upset at Puzzo's salary, she said. "They were furious. There are no raises, and he's living large."

"The salaries we pay teachers are comparable to or higher than what's paid in the region," Puzzo said. "We don't have the dollars ... to pay a higher salary. ... We are committed to providing as much as we can for those teachers."

The recent criticism of Puzzo's compensation by the U.S. Department of Health and Human Services was based on his $321,350 in salary and benefits in 2002 - 2.5 times the average salary of the chief executives of other Connecticut nonprofit agencies that provided federal Head Start services to pre-school children, according to the audit.

CRT's tax return for the 2003 calendar year lists Puzzo's salary at $254,375 plus $120,937 in benefits and deferred compensation and a $9,164 expense account, for a total of more than $384,000.

"If [his pay] is approaching $400,000, it's one of the highest in the country" among CEOs whose agencies run Head Start programs, said Windy Hill, associate commissioner in charge of the federal government's Head Start Bureau.

With such a large discrepancy between executive salaries and those of frontline workers, such as teachers, "you have to think about whether this is an appropriate strategy for an anti-poverty organization - to turn it into a corporation," Hill said.

Aside from questioning the size of executive salaries, the recent HHS audit said that CRT claimed $177,867 in improperly documented credit card charges for travel, meals, club memberships and other expenses over a three-year period. CRT officials concede that their record-keeping should have been better but say all expenditures were related to business.

The audit was not the first time CRT had run into criticism.

An earlier federal audit found chronic under-enrollment from 1999 to 2001 in CRT's Head Start program, but federal officials say the agency has corrected that problem. Another federal review in 2002 identified deficiencies in management, including problems at Head Start centers in East Hartford and Bristol, saying CRT "has ignored its financial responsibility to ensure that [those centers] have the resources available to them to run quality programs." Puzzo said those issues have been resolved.

Puzzo, who lives with his wife in a modest home near Lake Pocotopaug in East Hampton and owns a condo in Florida, says there are two sides to the growth of CRT into the complex enterprise it is today. For one thing, he no longer has time to work directly with clients.

"I don't have the satisfaction of saying I did something good for that person - that mom who gets a job or that child who gets a scholarship," he said. "It's always a balancing act when you become a big business. Are you losing touch? But it also gives you the ability to provide quality."

Agencies such as CRT should be measured on whether the community is satisfied with their performance, says David A. Bradley, a lobbyist with the National Community Action Foundation.

In recent years, CRT has continued to expand, with new services such as free Internet access and tax preparation advice for low-income neighborhoods. The agency also recently opened a 100-unit assisted living center in Hartford for the low-income elderly.

"They are entrepreneurial," Bradley said. "They do a lot of different things that I admire. Paul is creative that way. The agency is a sizable economic force in the low-income community."

State Sen. Eric Coleman, who represents Hartford, said, "I've observed CRT has taken on more of a corporate aura. ... I don't know whether that's a criticism. ... There seems to be a perception that what CRT is supposed to be doing is getting done."

The Rev. Cornell Lewis, a community activist, gives Puzzo good marks for "trying to steer CRT in a direction to be really involved in the community."

Lewis, a former member of the CRT board, said, "There's something to be said about the pressure of running an agency and everything that goes with it. ... There's a certain amount of abuse that goes along with the job."

Is the job worth $384,000?

"I have to think about it," Lewis said. "That's a lot of money."

Courant Staff Writer Mike Swift contributed to this story.

Reprinted with permission of the Hartford Courant. To view other stories on this topic, search the Hartford Courant Archives at http://www.courant.com/archives.