State wants some child care assistance money returned

By Brad Swenson
Bemidji Pioneer

Low-income families might get a New Year’s gift from Beltrami County — an average $475 dun bill for child care assistance they didn’t deserve.

Through a quirk in interpreting state law, it appears that 58 Beltrami County families who received child care assistance from the county to four local centers from September 2003 to March 2005 were overpaid $27,542.05.

And now the state wants that money back, asking the county to submit its plan for doing so by Jan. 15. And its preferred plan is to “recoup or recover” the overpayments directly from the families. The overpayments range from $9 to $3,514.85 per family, for an average dun bill of $474.86 per family.

The County Board has budgeted the first hour of its work session Tuesday, which begins at 3 p.m., to discuss the problem and what to do about it.

“We have received notification from the state DHS (Department of Human Services) that we must address this issue or sanctioning will begin,” County Administrator Tony Murphy states in a long memo to commissioners.

Not responding means the state will begin sanctioning Beltrami County by withholding state child care fund allocations to the county, beginning with the portion of the aid used by the county to administer the program.

“The state has advised that (there) are two options that they would accept as resolving this issue,” Murphy states. “The first is to collect the overpayments from the families.”

The Department of Human Services cites state law that “an overpayment must be recouped or recovered from the family if the overpayment benefited the family by causing the family to pay less for child care expenses than the family otherwise would have been required to pay under child care program requirements.”

The second option, Murphy states, is for the county to make the payment to the state for the overpayment amount on behalf of the families.

Under that option, the county would be required to pay all of the overpayment — $6,100.86 — for those families still receiving child care assistance and 75 percent — $16,080.89 — of the amount of overpayment from families not currently getting the assistance. The county can retain the 25 percent as a collection fee only on the recoveries it makes on those families.

Murphy notes that under the second option, the county would pay the state about $22,182.

Still, the County Human Services Department has provided several other options for commissioners to consider, as well, such as seeking the state to forgive the debt, to sanction the county only up to the overpayment amount in administrative funding, seeking recovery only from families with bills higher than $1,000 (seven families) or in changing the threshold amount for recovery and in adjusting co-payments.

The problem started when the Legislature froze child care reimbursement rates as part of its budget balancing to reduce a $4.5 billion state deficit. Lawmakers, however, froze the weekly rate.

Three Beltrami County child care centers and a Hubbard County center that serves Beltrami families changed their billing from weekly to hourly or daily, and believed they were relieved of the weekly caps.

Prior to state fiscal year 2004, child care centers could charge for, and receive, whatever rate they billed, Murphy states in his memo. With legislative action, the rates were frozen from July 2003 to June 2005, but didn’t take effect until September 2003 because of notice requirements.

“The providers changed their rate standard from a weekly billing rate to an hourly or daily rate, in an attempt to get paid a fair rate for the services they provided,” Murphy states, noting that the rates established were faulty in that the hourly or daily rate extended to five days a week was way below the average hourly and daily rates.

“Providers believed that this negated the weekly maximum,” Murphy wrote.

The billing is sent to the state, where computer technicians there calculate reimbursements. The computers accepted hourly and daily billings, up to the hourly or daily maximum amounts, but didn’t provide “prompts” or “error reports” when those payments for services exceeded the legislatively set weekly maximums.

For example, if a center provided 50 hours of service and invoiced the county at an hourly rate of $3, the center was paid $150 for the week, not paid at the maximum weekly rate of $75.

“Although the provider changed their rate standards, in good faith, it was they who in fact invoiced above the legislatively directed weekly maximum,” Murphy states. “Our argument is that the families would have sought and secured alternative child care providers whose rates were affordable at the co-payment amounts that the agency determined for the families.”

The families didn’t receive any more hours of child care than they were eligible to receive, nor did they have discretion on the rates that were paid to the provider, he states.

“The provider benefited by invoicing for and receiving payments that exceeded the weekly maximum allowed by statute,” Murphy contends. “State DHS does not agree with this argument. They continue to maintain that the family benefited, not the provider.”

The state, however, will not allow the county to assess the overpayments to the providers. The providers include Tot Stop in Hubbard County and, in Beltrami County, Kids & Co., Campus Child Care and Bi-CAP.

The largest overpayment, at $15,266.62, was to Tot Stop.

With seven of the families receiving more than $1,000 in overpayments, the majority of the affected families — 29 — received from $50 to $250 more than they should have in child care assistance.

The County Board, at its work session, will also hear from Sheriff Phil Hodapp on securing a grant-funded position under a Safe Trails program, discuss adding some improvements to planned unfinished courtrooms on the third and fourth floors of the new Judicial Center, and plan for their Jan. 30 retreat.

The meeting will be held in the County Administration Building’s commissioners’ conference room, prior to the 5 p.m. regular board meeting.