The relationship between the National Board of Chiropractic Examiners (NBCE) and the chiropractic profession has always been one of a professional trust, as demonstrated by the NBCE's nonprofit status and because the NBCE is the only such testing body for chiropractic in the U.S.
Concerns about the actions of the NBCE Board of Directors have been raised within the profession over the years, however, at the last annual meeting of NBCE (April 16, 1999), a number of delegates were more vocal in their protestations than ever before.1 there was clearly a heightened level of frustration exhibited at the meeting.
Historically speaking, but relevant to the current situation, is an interesting piece of documentation about the discontent with the board dating back to November 3, 1982. It is the resignation letter to the NBCE executive director from the NBCE's legal council, Jerry C. Daniel:
| LAW OFFICE: HOUTCHENS, HOUTCHENS AND DANIEL 1027 NINTH AVENUE GREELEY, COLORADO 80631 November 3, 1982
National Board of Chiropractic Examiners
Dear Randy: The purpose of this letter is to suggest that the National Board begin seeking other legal counsel to handle its day-to-day affairs. While I have had a marvelous rapport with you and your staff and have enjoyed working for you I just do not feel comfortable with your present Board of Directors. Against my advice Board members vote for themselves and make changes in order to perpetuate themselves in office, they vote fee increases to be effective while they are still in office, they appear to want a lawyer who is going to tell them what they want to hear rather than give them good sound legal advice, as reflected in the Leslie Kushner and Irene Gold situations, and, in general, I perceive a situation where the Board wants to go its own way regardless of the consequences.
While I have the greatest admiration and respect for the past Board, the situation has changed to the extent that I feel it is in the best interest of all involved if you do seek counsel other than myself to represent the National Board.
Thank you for permitting me to serve you in the past and I am sure that our personal relationship will remain intact.
|
To gain a better understanding of the current board and its historical development, we investigated and uncovered a few issue of concern that were presented to Paul Tullio,DC, NBCE president and at-large director. Dr. Tullio was vice president and a member of the NBCE Board of Directors at the time of Mr. Daniel's resignation. Originally intended to be a live interview, Dr. Tullio requested that the questions be faxed for his consideration and response.
As almost all of the NBCE's operating income comes from testing graduating chiropractic students, it is important to recognize that money being spent by the board comes out of the pockets of chiropractic students. For this reason, in the interview below, some of the more relevant dollar amounts will also be stated in terms of the number of chiropractic students that paid to take Parts I,II and III, a total of $600 per student. These values will be stated parenthetically as Student Test Equivalents.
As this was a written interview, it prevented the kind of verbal exchange that is the strength of a live interview. The exclusive interview is presented here in its entirety, with additional information and clarifications notated as Editor's note.
DC: In 1982, the NBCE's attorney apparently resigned over issues with how the board was functioning. What were those issues and do they still exist? Which current directors were on the board at the time of his resignation?
Dr. Tullio: In 1981, NBCE was in a state of financial difficulty. The new 1982 board completely revamped the operations of the organization and brought it to a solvent level through good fiscal business practices and management. It was felt that different counsel and other professionals could better serve the board as it addressed issues in the future.
Board members in 1981 were: Drs. Richard Vincent, Gary Ledoux, Tom Workman, Robert Hastings, Frank Hideg, William Kalas, Ed Saunders, Paul Tullio, Vern Webster, Jerry Auerbach and Donald Ross. Board members in 1982 were: Drs. Vern Webster, Paul Tullio, Tom Workman, Jerome Auerbach, Richard Carnival, Arnold Goldschmidt, Frank Hideg, Donald McKelvey, Jay Perreten, Titus Plomaritis, and Donald Ross.
Current board members who were on the board in 1982 are Dr. Frank Hideg, Dr. Paul Tullio, and Dr. Titus Plomaritis.
Editor's note: The sharp contrast between Dr. Tullio's explanation of the board attorney's resignation and Mr. Daniel's resignation letter should be noted. Also important to know is that the three board members still on the board since Mr. Daniel's resignation: the current president (Dr. Tullio, chairman of the board, 1988-1998); the chairman of the board (Dr. Hideg, president, 1992- 1998); and the immediate past president (Dr. Plomaritis, president, 1986-1992, and secretary, 1995-1998). Even though he has not been the president since 1992, Dr. Plomaritis was made immediate past president by the board after Louis LatimersÕ death in 1998. This effectively keeps him as an ex-officio member of the six-person executive committee.
DC: Looking at the "Test Administration Expenses" for the 1999 budget, there is an "Observers at Test Site" line item. Is this the accounting for the board's travel to the tests?
Dr. Tullio: As you may know, the NBCE assigns board members to be observers at all administrations of NBCE examinations to ensure adherence to its security and quality control standards. You are correct that the line item is the account where the expenses for board travel to exam sites would be included.
Editor's note: According to the NBCE's "1999 Proposed Budget," this line item adds an additional $160,000 (267 Student Test Equivalents) to the board's travel expenses, a total of $607,350 (1,012 Student Test Equivalents) for 1999, or over $55,000 (92 Student Test Equivalents) per director (please see the graph in this issue).
DC: In 1999, the NBCE budgeted $468,700 in "Meetings and Travel" for the individual board members on a total of 433 travel days or almost 40 travel days per director. This doesn't include the cost of sending a board member to each of the tests. Some critics have suggested that this amount is excessive. How do you justify it? Is there any concern that such a high amount of inurnment by the board members may expose the NBCE to loss of its non-profit status by the IRS?
Dr. Tullio: First, a minor point. board meetings and travel were budgeted at $447,350 for 1999, not $468,700. Secondly, and more importantly, NBCE directors are a "hands on" board in terms of participating in committee and board meetings and board business to further the cause of chiropractic. The board normally has two full board meetings per year, two separate executive committee meetings, and then participates in the meetings of other organizations. These other meetings include, but are not limited to, the CCE, ACC, The Chiropractic Centennial functions, FARB, CLEAR, WFC, as well as test committee and board committee meetings at headquarters, FCLB annual and district meetings, etc. The $468,700 budget amount includes the expenses incurred by the NBCE executive director who, as part of his responsibilities, must attend and participate in the foregoing meetings.
All of the expenses incurred are directly and specifically related to the business of the NBCE and are required for the NBCE to fulfill its mission and purposes. Reimbursement of expenses and reasonable per diem payments to compensate Board members for services provided to the NBCE do not constitute private inurnment under Internal Revenue Service regulations. All of the Board's actions, including its decisions concerning expense reimbursement and per diems, are done in consultation with its accounting firm and legal counsel. In short, the Board's activities are entirely consistent with its tax-exempt status and Internal Revenue Service requirements.
Editor's note: In reviewing the NBCE 1999 Budget, the directors' travel is subtotaled at $447,350, and below that is listed $21,350 in other expenses, which is how we derived the $468,700 total. The other expenses are: Greeley Country Club - $3,600; Director Gifts - $2,750; Registration Fees - $7,500; Misc. Director Expenses - $7,500. The travel expenses for the executive director are $21,400.
There seems to be some discrepancies between Dr. Tullio's response on the 1999 budget and the official 1999 Proposed Budget figures presented below:
| Meeting # | Per Year | Days | Directors Attending | Total Meeting Days |
| Board Travel: | ||||
| Board Meeting | 2 | 7 | 11 | 154 |
| Executive Committee | 3 | 6 | 6 | 108 |
| District Meeting | 5 | 4 | 1 | 20 |
| FARB | 1 | 3 | 1 | 3 |
| ECU | 1 | 10 | 1 | 10 |
| President/Designated Travel: | ||||
| Deans/AO | 1 | 4 | 1 | 4 |
| Test Committee | 4 | 4 | 2 | 32 |
| CCE | 1 | 5 | 2 | 10 |
| Districts | 3 | 4 | 1 | 12 |
| Other/College | 10 | 4 | 1 | 40 |
| Greeley | 6 | 4 | 1 | 24 |
| CLEAR | 1 | 4 | 1 | 4 |
| Treasurer Travel: | ||||
| Audit Observation | 1 | 4 | 1 | 4 |
| Budget Prep/Review | 1 | 4 | 1 | 4 |
| Totals | 40 | 67 | 31 | 429 |
| Daily Cost per Director: | ||||
| Per Diem | $500 | |||
| Meals/Tips | $70 | |||
| Hotel/Car/Other | $380 | |||
| ------- | ||||
| Daily Cost | $950 | |||
| Total # of Days | 433 | |||
| Total Before Air | $411,350 (686 Student Test Equivalents) | |||
| Air Travel: $450 x 80 flights = $36,000 (60 Student Test Equivalents) | ||||
DC: The NBCE Board has almost $8 million in cash and short-term investments. This is more than your entire revenue for 1998. Why would an organization, which is paid to conduct tests for chiropractic college graduates, need such a large reserve?
Dr. Tullio: Eight million dollars in reserves, which equals slightly more than one year's operating budget, is both prudent and necessary to provide the financial stability for the NBCE to fulfill its mission. The NBCE is responsible for providing examinations that are recognized by all states to one degree or another, and it is fiscally prudent that the NBCE have the financial resources available to insure that the testing process that is prerequisite to licensure will be available for all future graduates.
These reserves also provide the wherewithal to develop and complete projects such as the job analysis study, to ensure the psychometric integrity of the exams, the chiropractic college assessment test, for use by the colleges, the SPEC, for use by states for reciprocity and other issues, a Part III and Part IV exam, etc. The reserve funds also cover contingencies such as developmental/building, legal reserve, emergency reserve and endowments and grants.
Moreover, the amount of reserves maintained by NBCE is in line with the financial practices of similar organizations.
Not-for-profit organizations such as the NBCE typically maintain at a minimum one year's operating expenses in reserve and it is not unusual to have at least two years' operating expenses in reserve. The NBCE's reserve policy has been continuously reviewed by its accounting firm and is consistent with Internal Revenue Service requirements.
Editor's note: Since the interview questions were submitted to Dr. Tullio, additional investigation has uncovered a Quarterly Report that shows the NBCE's investment funds at $9,674,553 (16,124 Student Test Equivalents - over three years worth of all students taking Parts I, II and III). This compares dramatically with the amount budgeted for "Special Projects" (CCAT, Job Analysis Report, etc.) of $382,500 for 1999.
DC: Which board members are still members of their state licensing boards? Which board members are still in full time chiropractic practice?
Dr. Tullio: There are four board members who are current members of their state Boards. They are: Dr. Frank G. Hideg (KY), Dr. James J. Badge (AZ), Dr. Larry Gerstein (MO), and Dr. Wayne Wolfson (FL). All members of the National Board are now serving on or have served as members of state licensing boards, and many have been directors and officers of the FCLB. Those in practice are Drs. Jerry Blanchard, Frank G. Hideg, Vincent Greco, David Brown, John Tierney, Wayne Wolfson, James Badge, Paul Tullio, Larry Gerstein and Peter Ferguson.
DC: It has been noted that the NBCE Board of Directors are provided with their airfare, hotel expenses, auto rental, mileage, parking fees, taxi fares and miscellaneous expenses, plus a daily food allowance of $70 and a per diem of $500. Is that correct? This is in sharp contrast to the ACA governors who only receive their airfare and $200 per day per diem to be used for all of the other travel expenses that the NBCE members are reimbursed for. Some of your board members seem to think that this amount of reimbursement is embarrassingly too high. How do you feel?
Dr. Tullio: NBCE Board members commit 30 to 40 days per year to NBCE business away from their practice and the $500 per day reimbursement is reasonable, appropriate and consistent with Internal Revenue Service guidelines. Indeed, the per diem cannot begin to compensate the Board members for their time spent out of town on Board business, let alone for the additional hours spent in preparing for meetings, conference calls, etc. Likewise, the food allowance of $60 per day covers three meals and is consistent with national corporate travel practices. Board members are also reimbursed for only appropriate expenses incurred in travel on NBCE business.
As to your comparison to ACA governors, the level of involvement and time commitment by Board members of a testing organization such as the NBCE is different from the involvement and time commitment of members of a professional association such as ACA. As stated above, the amount of time NBCE Board members are required by the NBCE to be out of their offices each year exacts a great cost to their ability to maintain their professional practices as well as their personal and family lives. All NBCE Board members review and approve the complete budget, which includes expense reimbursement and per diem policies, and have approved the current level of reimbursement.
DC: Why are there no term limits for the at-large members of the National Board? Why are the term limits for the District Directors based on membership on their state licensing boards? This effectively eliminates term limits for many of them as well.
Dr. Tullio: At-large directors must stand for re-election and are elected to a one-year, two-year or three-year term. The NBCE believes term limits can preclude or limit the availability of the services of individuals whose experience and expertise is critical to the ongoing function of the Board. An examining board is different from a professional association where term limits are normal and expected. Individuals who serve or have served on state licensing boards and continue to represent the state licensing boards are the types of individuals who bring knowledge and expertise to the NBCE Board. Additionally, district directors' service on the Board is dependent on the continuing support of the delegates from the states in their districts. To arbitrarily limit their ability to serve is inconsistent with NBCE's mission of developing, delivering and maintaining high quality examinations to serve the state boards.
DC: Why is there no liaison to the NBCE from the Association of Chiropractic Colleges?
Dr. Tullio: The creation of a formal liaison from the organization that produces candidates for NBCE exams might well create conflicts of interest in the future and would, at a minimum, tend to create the appearance of a conflict which would undermine NBCE's independence which is crucial to its role as the impartial developer of examinations. NBCE does, however, attend the annual ACC and CCE meetings and provide information on various aspects of NBCE programs and projects. Each year, we sponsor a National Board Day on the agenda of the ACC Council of Academic Officers where we report and exchange appropriate information.
DC: It has been suggested that the four "at-large positions" are being used to maintain control of the NBCE. How would you respond to that?
Dr. Tullio: The NBCE has found that the four at-large seats have been of great benefit in providing stability, continuity and expertise in a time when turnover on most boards is a major handicap. Generally, the past president of the FCLB is named to one of the four at-large seats. The stewardship provided by at-large directors has been invaluable to the organization.
Editor's note: The board members, not the district delegates, elect the at-large members.
DC: The NBCE just increased the fees for Part IV, is that correct? How much was that increase? Given that over 4,000 graduating students take the test each year, that works out to over $200,000 additional income per year. Recognizing that your "excess revenues" have been approximately $1.5 million in each of the last few years, how do you justify this increase?
Dr. Tullio: The NBCE has not increased the fees for Part IV. In 1996, the Board established the exam fee at $550. That fee has been increased $100 each year to its present level of $850. This amount still does not fully recapture research and development expenses for the practical exam, which has totaled $7,939,649 since 1992 (even without including any apportioned overhead). Furthermore, the Board voted at its meeting in October to freeze all exam fees, including the Part IV fee, for the year 2000. Indeed, the fees for all written exams have not been increased since 1992. The Board also voted in October to allocate $58,000 as grants in the form of fee waivers to benefit 160 students per year.
Editor's note: As the question was based on a $50 increase rather than the $100 increase per year, this would have provided the NBCE with $400,000 (667 Student Test Equivalents) per yearly increase rather than $200,000.
DC: Getting back to the amount of "Meetings and Travel" money spent by the board. It currently works out to over $42,000 per board member. How can you justify that when the money comes from the graduating students?
Dr. Tullio: We have previously responded to your questions on meetings and travel. As noted earlier, the amount of reimbursement to Board members for meetings and travel is reasonable and appropriate. Of course, it is the nature of a testing organization that the main source of its revenue is exam fees. Moreover, in considering these fees, it should be remembered that the testing program of the NBCE allows students access to most states that conduct little or no additional testing, so the exam fees are in lieu of fees a candidate would otherwise have to pay for other exams.
DC: It appears that being a director of the National Board is a ticket to travel. The board has held meetings in Bermuda, Las Vegas, Fort Lauderdale, Palm Beach and other vacation destinations, many of them several times. How do you think the students feel about this kind of a travel schedule using the money they pay for their chiropractic examinations?
Dr. Tullio: As mentioned above, Board membership requires a great amount of travel. The Board conducts its meetings at sites in keeping with most associations and business organizations, and makes reservations well in advance to assure the maximum value of money spent. In most instances, travel destinations are dictated by other organizations we meet with such as the FCLB, CCE, ACC, WFC, COCSA, FARB, CLEAR, etc.
Editor's note: The most recent meeting of the directors, separate from any other organization, was for six days at the new Venetian resort in Las Vegas.
DC: How many days were you reimbursed for at your last board meeting at the new Venetian resort in Las Vegas? Why did you meet there instead of in the boardroom at the home office? From what I understand, it is very nice with an exquisite mahogany table that is so big it had to be assembled inside the room. Some board members have suggested that the meeting could have been held in Greeley and reduced to two days. Do you agree and if not, why?
Dr. Tullio: Board members were reimbursed for six days at our last board meeting with one half of one of these days devoted to a meeting of the executive committee of the NBCE and the ACC. Reservations were made over one year in advance to secure an appropriate room rate. Relative to the length of the meeting, holding it in Greeley would not have reduced the length of the meeting. Our agenda, and matters to address were too lengthy for this to occur. Of the six days, two were for travel, one was for executive committee and other board committee meetings, one half day was devoted to meeting with the ACC executive committee, and two and one half days were used to conduct full board business. The Board has met at headquarters and we do hold Board and test committee and staff meetings there when appropriate. Also, as discussed above, the location of many meetings is determined by other organizations.
DC: It is our understanding that the NBCE is a member of the Greeley Country Club. Is that correct? If so, why? Do you believe that this justifies the thousands of dollars in initiation fees and annual dues for membership considering that none of the board members even live in that state?
Dr. Tullio: The NBCE is not an active member of the Greeley Country Club. It does hold a social membership that allows it to keep a presence in the community and have access to facilities available for appropriate business-related functions. Use of the country club, by Board motion, is restricted to only when necessary and approved by the president. The cost of maintaining our membership is minimal. It is not a golf membership. The membership was purchased in 1991 for $1,000.
Editor's note: The current cost for a social corporate membership is $2,000 initiation fee for the first person and $1,000 for each additional person. The current annual dues are $100 per person per month. According to the NBCE 1999 Proposed Budget, the dues to be paid this year are $3,600 for the year. This suggests that the NBCE has three memberships with the Greeley Country Club, not one. It would seem that paying dues on three memberships would constitute being "active members."
DC: It has been suggested that the spouses of the board members also enjoy the benefits of lavish meals paid for by the NBCE. Is this true? If it isn't, can you please provide copies of payments made by the board members reimbursing the NBCE for meals eaten by their spouses at the last NBCE meeting in Las Vegas? It has also been suggested that the national board pays the before, during and after dinner liquor bills of its directors and their spouses. Is that true?
Dr. Tullio: Board members of the NBCE give up their meal allowance on those occasions where the Board has a dinner meeting. And, all Board members forfeit one extra meal allowance when their spouse is present.
Editor's note: There seems to be part of the question that Dr. Tullio preferred not to answer. It is our understanding that the liquor costs for these "dinner meetings" can be quite high with very little Board business discussed.
DC: According to my figures, you could save hundreds of thousands of dollars if not millions in expenses by putting Parts I, II and III in electronic format and offering it at test sites as needed by the graduates. Why hasn't the NBCE used electronic testing?
Dr. Tullio: Computer administered testing offers the promise of greater flexibility in testing schedules and more expedited results reporting. However, it has not been the experience of other testing organizations that computer testing results in lower costs. NBCE is exploring the feasibility of computerized testing but has not pursued it more quickly because of security needs and the changing state of the organizations which provide computerized testing services. To date, NBCE has focused on the development of the Part IV National Practical Examination over the past few years but the Board has also directed that the CCAT examination be placed on computer as an initial offering and also has discussed making SPEC available on computer.
Editor's note: While the cost of developing the CCAT exam and income from the SPEC exams are shown on the 1999 Proposed Budget, the cost of exploring electronic testing is not.
DC: Could you please explain the "Recap of Financial Condition" found on the September 30, 1999 report:
"The first nine months ended with NBCE's operating income $1,444,655 greater than expenses. The budget excess revenue for the same period is $935,449. Therefore, actual excess revenues before the 8% revenue restriction were $509,206 more than budgeted for. Eight percent of revenue is currently $435,741, leaving a net balance of $73,465 more than was budgeted for."DC: What is the "8% revenue restriction"? Your total "excess revenues" for the first 9 months of 1999 were reported at $1,657,941. That is just $40,000 short of the total of fees collected for all Part IV exams given over those first 9 months. How can you justify excess revenues that are 30% of your operating income as a nonprofit corporation created to serve the testing needs of the chiropractic profession while charging students $1,450 just to take the tests necessary to practice chiropractic?
Dr. Tullio: The eight percent revenue restriction refers to the Board's policy that eight percent of revenues is placed in restricted reserves at the end of each year and is explained in Note 6 of the NBCE's annual audit report. This policy is designed to build up reserves to an acceptable level and, for the reasons set out under item number four, are entirely proper for non-profit corporations.
Your focus on the financial results Report for September 30, 1999 is misleading. The revenue and expense cycles of the NBCE are such that we receive most revenues in the first and third quarters of the fiscal year while the heavier expenses fall in the second and fourth quarters after the exams are administered. In addition, annual property taxes, depreciation expenses, and revenue restrictions are recorded at year-end. Accordingly, more accurate assessment of NBCE's finances is gained by a review of the end of year financial statements.
In 1997, additional operating revenues over and above the eight percent were restricted by Board action. As a result, the NBCE had greater expenses than unrestricted revenues in 1997 leading to a decrease in unrestricted assets of almost $300,000. In 1998, excess unrestricted revenues were approximately $500,000. For 1999, we have budgeted to provide approximately $80,000 in excess revenues above expenses after providing for the eight percent set aside for the restricted reserves.
Again, it must be understood that the NBCE has a responsibility and commitment to be fiscally sound and financially able to provide testing services not only for a given year, but also for years into the future. If for any reason the NBCE could not provide an exam, licensure would not be available in many states as the NBCE exam requirement is written into their statutes. We cannot allow this to happen.
Also, it should be noted that the $1,450 figure cited in your questions represents the total fees for all exams, including $200 each for Part I, Part II, and Part III, which have not been increased since 1992. These fees are spread over a two to three year period as a student becomes eligible for the various exams.
Editor.s note: There seems to be some confusion regarding "restricted" vs. "unrestricted" investment assets. Dr. Tullio apparently forgot to mention that the 1997 "restricted revenue" was $1,462,141 (2,437 Student Test Equivalents). He also didn't mention that the "restricted revenue" for 1998 was $788,793 (1,315 Student Test Equivalents). The 1999 Proposed Budget Revenue Summary doesn't even show any of the interest income from the now over $5 million in "restricted investment funds". Assuming a 6% return, this means that the restricted investments grow by approximately $300,000 (500 Student Test Equivalents) each year on their own without the 8% restriction. According to the 1999 Proposed Budget, the 8% restriction put an additional $583,655 (973 Student Test Equivalents) into the restricted funds. That's an estimated increase in restricted investment assets of $883,655 (1,473 Student Test Equivalents) for 1999. That puts the increase in restricted funds to an estimated $3,134,589 (5,224 Student Test Equivalents) in just three years
It should be further noted that the operating revenues (this may or may not include restricted investment interest income) over expenses for 1997 was $1,171,373 (1,952 Student Test Equivalents); in 1998 was $1,320,762 (2,201 Student Test Equivalents); and is already $1,444,655 (2,408 Student Test Equivalents) after only nine months of 1999! The numbers presented by Dr. Tullio don't look quite as modest when the restricted income is included.
DC: There have been concerns over a number of financial issues regarding the NBCE. Would you be willing to allow an independent auditor review your financial records for the last two years and report the results to the profession?
Dr. Tullio: The NBCE is proud of its financial stewardship over the years and it has been open in reporting its financial operations. Its prudent budgeting, including the development of appropriate reserves, has enabled it to provide an extensive, psychometrically sound and legally defensible testing program for the chiropractic profession. The Board's financial soundness has permitted it to support the development of examinations to help standardize the licensing process of the state licensing boards.
DC: Is there anything you would like to add regarding these or other issues?
Dr. Tullio: In addition, the NBCE is supportive of most organizations in the profession via participation and financial assistance where allowed and appropriate. In sum, we are proud of the organization that the NBCE leadership has developed and the service it provides to the chiropractic profession. We trust you find the above responsive to your questions. We would like to reiterate the invitation for you to visit the NBCE in Greeley to gain a better understanding of and appreciation for the product and services the NBCE provides to our profession.
Editor's note: For additional discussion on this issue please see "Clean the Slate" on page three of this issue.
1. Nat'l Board Delegates Seek Greater Authority. Dynamic Chiropractic May 31, 1999. http://www.chiroweb.com/archives/17/12/20.htmlDynamic Chiropractic editorial staff members research, investigate and write articles for the publication on an ongoing basis. To contact the Editorial Department or submit an article of your own for consideration, email
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