Money For Special Ed Pulls Disappearing Act ; Some Local School Districts Are Out Sums In The Six Figures; The Iu 13 Is Out Nearly $1 Million.

Staff writer

[email protected]

Earlier this year, Sherry Zubeck vowed to visit all 22 school districts in Lancaster and Lebanon counties. She was on a crusade.

Zubeck, early childhood and special education services director for Lancaster-Lebanon Intermediate Unit 13, wanted to talk about kids with disabilities - students and preschoolers who need physical or speech therapy or similar services. The services are expensive; often a family's insurance company picks up the tab, but if the family is eligible for Medical Assistance - Medicaid --government money pays the bill.

The problem, Zubeck told school officials, is that there's a lot less money to go around these days.

Due to new federal regulations and problems at the state level, as much as $28 million is owed to school districts, private and charter schools and intermediate units.

And without the money, Zubeck worried the IU and schools would find it harder to provide the services kids need - and are mandated by law to receive.

Zubeck's wanted to convince school districts to pressure state officials to break the logjam. Ultimately, she never did make it to all 22 districts, though she spoke personally with all 22 superintendents. And the crusade, capped by testimony before a state House committee in May, elicited promises of change.

She just hopes those promises aren't empty.

At issue is Medicaid's School Based Access Program, a joint effort between the federal government, Pennsylvania departments of Education and Public Welfare and local school districts, IUs, charter and private schools. These "local education agencies" are reimbursed for services provided to kids with special needs who have an IEP, or Individualized Educational Program, and are eligible for Medicaid.

For years the program provided a modest but stable subsidy. But a federal audit in 2012 required significant changes to the program, including greater oversight and eliminating reimbursement for some expenses. The amount of available funding dropped.

Compounding the problem, the state hired a new third-party firm to process claims. School officials say this resulted in bureaucratic nightmares, with months-long delays in reimbursements.

Bottom line, schools and other education providers have seen the bottom drop out on available funding.

For school districts the effect hasn't been catastrophic, though it has required shifting funds from other programs to pay for the federally mandated services.

The Warwick School District, for example, received $333,431 from the program during the 2010-11 school year, a figure that fell to $185,389 in 2012-13. This past year, the district expected $145,000 in revenue - but so far had received $15,279.

"It's just a giant mess," said Warwick Superintendent April Hershey of the program. "This is one of the few ways we can look to defray special education costs, and it's drying up."

The School District of Lancaster used to get about $900,000 in reimbursements from the program, said district business manager Matt Pryzwara. That amount has dropped by 40 percent.

In Hempfield, officials realized that the cost of tracking and claiming the reimbursements was beginning to exceed the reimbursements themselves -- so the district opted to discontinue its direct participation in the program, though some funds still get passed on via IU 13, said Hempfield business manager Mary Lynne Kniley.

For the intermediate units themselves, or schools that cater to children with disabilities, the pain has been more acute - and could ultimately impact their ability to serve kids in need.

Jim Bouder is chief operating officer of the Vista School, a Dauphin County school that serves children with autism. A few years ago, the school received up to $330,000 in reimbursements; through June of this year, the school had gotten just over $106,000.

"We're a nonprofit, and we spend the money that comes in on the kids who need our services," Bouder said. "When that money's not there, we don't stop providing the services - we finance the shortfall. But our line of credit isn't endless."

<p>Earlier this year, the Vista School filed a federal lawsuit against the state and Boston-based firm Public Consulting Group, the contractor the state had hired to administer the program. The suit accused PCG and the state departments of Public Welfare and Education of negligence and mismanagement, and estimated that the Vista School was out $500,000 over the past two fiscal years.

That, the suit claimed, was "financially devastating."

A major reason for the reimbursement delays, according to the lawsuit: new regulations requiring "proof," waivers stipulating that students receiving the services weren't covered by private insurance. All insurers in the state had to submit the paperwork; delays by insurers meant delays in reimbursement.

Vista's lawsuit also claimed that when the school was reimbursed, it was sometimes reimbursed at the wrong rate.

The suit was withdrawn June 30, Bouder said, after the school received an email from the Department of Public Welfare saying that the problems were fixed.

Bouder said he'll believe it when he sees it. "We've been told repeatedly we're going to get paid soon, but our experience over the past two years causes us serious doubts that we'll be paid what we're owed," he said.

The state Department of Public Welfare did not respond to requests for comment. PCG representatives were unavailable for comment, but forwarded a letter to the editor sent to the Allentown Morning Call in May by Stephen Skinner, principal of the group. "PCG has been consistently filing requests as they come in from districts," he wrote. "There is no frozen money waiting to be disbursed. ... Schools are receiving less money than in previous years because a 2012 federal audit by the Centers for Medicare and Medicaid Services found they were claiming for services that actually are not eligible for reimbursement."

"Our goal," he concluded, "remains to help districts receive all the Medicaid reimbursement to which they are entitled."

Tim Eller, a spokesman for the Pennsylvania Department of Education, said that the department "continues to work closely with the contractor to ensure that schools receive the money that they are owed."

In May, educators detailed the problems at a hearing of the state House Health and Education committees. Zubeck, from IU 13, told lawmakers that the local IU got $1.3 million from the program in 2011-12 - but the following year, got just $176,000.

At the hearing, state officials vowed progress was being made. For example, the state will contact all insurers that haven't responded to requests for proof that students aren't covered by private insurance. If the insurers fail to respond, that will be deemed a waiver.

Other tweaks are in the works as well. The state, said Department of Public Welfare Secretary Bev Mackereth at the hearing, will use "whatever resources we have to make this right."

Zubeck came away from the hearing hopeful. But as of last week, "we were still seeing millions of dollars wrapped up" in red tape.

"This could impact early intervention programs," she said. "The IUs largely have the responsibility to provide services to kids ages 3-5, and we can be held accountable. But unlike a school district, we have no tax base - when we provide the services, the only monies we have to do that are state and federal dollars. And when we have such a loss, we have nowhere to go.

"We can't just say to families, 'Johnny's not getting services this week because we can't pay for his therapist.' "