On Monday, October 22, 2007, the Governor of NJ appeared at Seabrook Village, a Continuing Care Retirement Community (CCRC), to sign a bill that required CCRCs to include at least one resident of the community as a full board member on its governing board. The measure had been four years in gestation. The event was a signal victory for the Organization of Residents Associations of NJ (ORANJ) which sponsored this measure against considerable odds. (see 2007 story)
After the bill passed the legislature, a senior staff member in the Senate said to the President of ORANJ, “How very gratifying it was to see a group of ‘regular’ citizens successfully work through the process without a big lobbying firm engine in the background. The personalities and industriousness of your group were not so ‘regular,’ however, and each of you made the birthing of this bill a thought-provoking experience.”
Background
The decision to sponsor this legislation resulted from a meeting of Presidents of ORANJ communities in August 2003 to discuss priorities and set strategies for the organization. The ORANJ Legislative Committee proposed such a bill and, after much discussion, a motion was unanimously passed in favor.
This legislative move was undertaken after ten years of fruitless effort to convince CCRC managers to voluntarily include at least one resident on their governing boards. The NJ bill followed the pioneering work of Michigan, Missouri, California, Maryland, and the District of Columbia, which had already enacted legislation mandating resident board membership.
So, the Legislative Committee of ORANJ set to work. Most of the responsibility devolved on four leaders who came together as the ORANJ Quartet. The lead presenter was Charles Germany, an ordained minister and former President of ORANJ. David Hibberson, a former Engineering Manager, was a Vice President of ORANJ and Chair of the Legislative Committee, Gary Baldwin, a former corporate officer, was President of ORANJ, and Wink Livengood was another ORANJ Vice President.
The four leaders spent many hours planning, drafting, and making countless trips to meet with legislative committee chairs and key members of the NJ Assembly and Senate. At the request of the ORANJ Legislative Committee, many letters were written by residents to legislators, asking for their support. Many CCRC residents traveled to Trenton to attend the hearings and demonstrated that this was an important issue for which they wanted their representatives’ vote. These efforts spanned a number of years, leading to success in 2007.
The Mandate
The Bill itself had other provisions concerning CCRC governance in addition to the mandate. The mandate itself reads as follows:
The board of directors or other governing body of a facility shall include at least one resident as a full voting member of the board or body. Resident members shall be nominated by the elected representatives of the residents and selected by the board of directors or other governing body.
The Opposition
The main sources of opposition were the chief executive officers of the state CCRCs, supported by the professional staff of LeadingAge NJ, formerly NJAHSA. The main arguments against the mandate were two-fold: First, resident trustees, whose chief loyalty was presumed to be to other residents, could not be trusted to keep trustee discussions confidential. Second, there was an inherent conflict of interest in the resident/trustee concept. It was argued that residents would put their priority on low monthly fees, whereas trustees must give priority to investing in updating the facility in order to promote the long-term financial health of the community. The opposition showed no concern about the inherent conflict of interest in CEOs of CCRCs serving as trustees on boards bearing responsibility for evaluating CEO compensation. They also showed no concern about some trustees who were trading with some CCRCs, either directly or indirectly.
Educating the Residents
After passage of the mandate in the legislature, the first priority was to teach residents how to function as resident/trustees. ORANJ leaders held numerous training sessions throughout the state regarding the nature and functioning of an effective Board of Trustees and the appropriate role of the resident trustee. It was emphasized that the BoT deals with policy, not daily operations, and that the resident serves, not as representative of residents, but as a trustee committed to the effectiveness of the Board. Their special role was to provide the perspective of the residents as an input in board discussions. Thus, they would ensure that there was someone to voice the relevant concerns and suggestions from the resident body.
The Result
Three years after passage of the law, ORANJ sponsored a follow-up study to find out how the program was working. (The 2010 Transparency Survey) Contact was made with all resident trustees asking them to respond to an open-ended questionnaire regarding their experiences as board members. The study found that all CCRCs with one exception had selected resident trustees following provisions of the new law, nomination by residents and appointment by the board with full membership rights and responsibilities. In about half the communities, including those with resident trustee programs that antedated the passage of the law, the programs were well established and the resident trustees were respected as members with a special contribution to the board discussions. In several CCRCs the resident trustee report is now a standard item on the agenda at each board meeting.
However, in a number of CCRCs, boards were “playing games,” giving the resident trustee insignificant and possibly illegal status. Some boards appointed the resident trustee to a separate “board” that had no executive functions. This “board” could even be an empty room. Also, since the resident trustee is a new reality in many of the boards, the resident trustee had not yet been appointed to key finance and executive evaluation committees of the board. ORANJ is continuing to work with the New Jersey Department of Community Affairs to correct these anomalies.
Conclusion
The mandate, which has resulted from the efforts by ORANJ, has brought a board presence to residents in many of the CCRCs in NJ. In some cases, the boards have fully accepted the resident trustees and have already elected them to serve additional terms, as is the case for other board members. However, opposition, while more muted, has not disappeared. There is more work to be done and the Department of Community Affairs has recognized that pressure must continue to be applied to bring the reluctant boards into line with the law.
Gary Baldwin
Charles Germany
Ellen Handler
David Hibberson