Ricketts Says Budget Can Handle Increased Child Welfare Costs; Committee Hears Proposal for State to Pay More for Special Education

Jan. 25, 2021, 3:33 p.m. ·

Nebraska Capitol during Monday's snowstorm (Photo by Fred Knapp, NET News)

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Gov. Pete Ricketts said Monday the state has enough money in the budget to pay the higher-than-promised costs for an organization that provided child welfare services. And the Education Committee heard a proposal to have the state pay more for special education costs that are currently borne by local property taxpayers.

Kansas-based Saint Francis Ministries provides case management services for child welfare cases -- children affected by abuse and neglect -- in Douglas and Sarpy Counties under a contract with the state. At a hearing Friday, CEO William Clark said the organization needs $25 million more for this year and $10 million for last year to continue to provide services. Testifying and answering a question from Sen. John Arch, chair of the Legislature’s Health and Human Services Committee, Clark said the need is urgent

“I would like to have a new contract in place by January 29,” Clark said. “This year?” Arch asked.

“Yes sir,” Clark replied. As of February 12, he added, there would be “no funds left available in the current piggybank…to continue operations in the eastern service area,” meaning Douglas and Sarpy counties.

Sen. Machaela Cavanaugh criticized Danette Smith, CEO of the Department of Health and Human Services, for entering into the contract with Saint Francis when potential financial problems were visible during contract negotiations in the summer of 2019. Cavanaugh referred to briefing materials the department provided the committee.

“You’ve even included in here the letter from Tom Blythe where he says that they need $15 million more,” Cavanaugh said.

Cavanaugh was referring to a June 24, 2019 letter from former Saint Francis chief operating officer Tom Blythe to DHHS saying Saint Francis would need that much more over the life of its proposed five-year contract to meet the state’s requirement of having of each worker managing between 12 and 17 cases.

Smith said despite the letter, she had gotten assurances from Blythe.

“I think there was a lot of questions. But within a conversation with Tom Blythe, he said they could meet the requirements of the contract,” Smith said.

And in a letter three days later, Blythe said Saint Francis had identified staff that could handle the caseload without additional cost.

Asked about the matter at his news conference Monday, Gov. Pete Ricketts said the state is still negotiating with Saint Francis, but that there’s enough money within the existing DHHS budget to meet the additional costs of keeping services going.

Ricketts was asked if it sets a bad precedent for the state to pay a contractor additional money for services that should have been covered under the original contract.

“I would say this is probably more of an unusual case. You know, first of all, this happened with PromiseShip, the previous provider, where they came back and asked for more money to be able to take care of the kids. And we obviously know that the executives at Saint Francis were fired because of financial mismanagement. So I think you’ve got kind of a unique case here. I don’t believe this is going to set a precedent,” Ricketts said.

Blythe and former Saint Francis CEO Rev. Robert Smith left the organization in November following allegations of financial mismanagement. The Kansas Department of Children and Families has also said an employee of Saint Francis filed false reports of family visits that never took place. Meanwhile, Smith says Nebraska will be “persnickety” in making sure Saint Francis lives up to its contract with the state.

Also Monday, the Legislature’s Education Committee heard a proposal by Sen. Anna Wishart that would have the state pay up to 80 percent of special education costs. Currently, the Department of Education says, the state pays about 47 percent of those costs. Wishart offered both moral and practical arguments for her bill.

“I believe the state should take a more active role in supporting children with special needs and their families. The investments we make today at an early age in children with needs and disabilities helps them stay healthy and learn while in school, and aids them in growing up to live a fulfilling life as independently as possible. Right now, the majority of the funding responsibility for special education falls in the form of an unfunded mandate on local communities, their school districts, and property taxpayers,” Wishart said.

The state Department of Education and the Nebraska Association of School boards were among those supporting the bill, with no one testifying against it. Wishart’s proposal would increase the percentage of costs paid by the state gradually over the next three biennial budgets. The total increase would be more than $930 million, but because the increased revenue to school districts would decrease other school aid, the net cost would be about one-fourth of that, or around $230 million.

Since state revenues come largely from income and sales taxes, the proposal would represent a significant shift away from property taxes and toward those sources to pay for special education costs. It will now go into the hopper along with other proposals to control property taxes that senators will consider this year.