Missouri lawmakers hear from child care providers about massive subsidy payment backlog

State Rep. Brad Pollitt, a Sedalia Republican, leads the House Elementary and Secondary Education Committee hearing Tuesday afternoon (Annelise Hanshaw/Missouri Independent).

Julita Harris has worked in child care for 47 years and has refused to shut down her business, Peter Rabbit Learning and Development Center in St. Joseph, despite mounting financial concerns.

The preschool has become a family affair, with her son Edwin helping with administrative tasks. Lately, that’s meant watching for payments from the state’s child subsidy grant program, which is a federal grant administered by the state to help low-income families afford child care.

But even he can’t understand the software, which doesn’t recognize all the subsidized children correctly.

And the money from the state has gotten sparse since this past winter.

While she waits for the money she’s owed, her family is  nearly $70,000 in debt. The utilities to their home are shut off — anything to keep the lights on at the day care.

“We borrowed a lot of money, tied our (trucking business) up, used our social security and using other funding we had set aside that’s not there now,” Julita Harris said. “I don’t regret that, but it’s wrong.”

Payment backlog leaves Missouri child care providers desperate, on the brink of closing

She attributes the financial hardship to a change in the child care subsidy program, a federal grant administered by the state. The Department of Social Services administered the subsidy until December, when the Department of Elementary and Secondary Education took over and contracted with a new software provider to manage the program.

Since then, payments have been sparse, with providers around the state closing their doors and others taking out loans to stay in business. The Missouri House Elementary and Secondary Education Committee, back in Jefferson City for veto session this week, called for an informational hearing about the problem.

Officials with the Department of Elementary and Secondary Education and the Office of Childhood told committee members Tuesday that the backlog of payments to providers should be resolved by mid-October. The backlog of subsidy applications will be completed by the end of this month.

But the meeting’s attendees, which were largely child care providers, weren’t so sure.

“The current plan talked about today is just not working,” said Lyndsey Elliott, director of Missouri S&T’s child development center. “I’ve been waiting for more than 60 days for payment resolution requests to even make it to a human.”

The center was missing more than $50,000 in subsidy payments from the state between the months of January and July, she said. Other providers had as much as $148,000 owed to them, they told the committee.

Kari Monsees, DESE’s commissioner of financial and administrative services, said there were “startup challenges” beginning the new system. The new system developed by World Wide Technology in St. Louis must interact with a preexisting attendance-tracking software, KinderConnect.

The interaction between the two software systems has caused duplication errors and created manual labor, Monsees said. The program by World Wide Technology hasn’t been meeting contractual obligations, he said, but it is past the 90-day warranty period.

The errors have created a backlog where providers are waiting months to receive payment, and parents’ applications are taking over a month to get approved.

Pam Thomas, assistant commissioner for Missouri’s Office of Childhood, said some records are taking “months” to be accepted and entered into the system when it should be instantaneous.

The department has hired 22 staff members to oversee eligibility, 10 to process payment and 14 hourly technicians to fix system issues at a combined cost of $4.8 million, Monsees said.

State Rep. Marlene Terry, a Democrat from St. Louis, said the state needs to “find a way to get these people their money.”

Rep. Crystal Quade, House Minority Leader and Democratic candidate for governor, asked why checks can’t be sent today.

“That is the kind of question that all of us were asking,” Commissioner of Education Karla Eslinger said. “Let’s just get the money out the door. Let’s do it. But I have been learning on this job that those kinds of things are not that easy.”

Quade said the state legislature has already appropriated funds, so repeat providers should receive their checks without having to revalidate currently.

Monsees said he believes that fixing the issues with the system is a “more productive” use of staff time.

State Rep. Ed Lewis, a Republican from Moberly, suggested temporarily implementing an enrollment-based system instead of using attendance and paying the providers at the beginning of the month. These are goals of the department, as well as federal suggestions. He also said the department could pay based on average attendance to expedite payment.

Child care providers said an enrollment-based system would alleviate some of the pressure.

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Rachel Wilfley, a program director at Kindercare, said parents fill out attendance using tablets. Some have technology problems, and attendance registers lower than kids’ actual turnout.

Others complained that the department had removed incentives for providers to take on a large amount of subsidy-funded children.

Diane Coleman, who owns Nanny’s Early Learning Center in Columbia, said she previously received a 30% bonus for having an enrollment with over 50% subsidy-funded kids and an additional 20% bonus for an accreditation program. Now, she said, she must choose one or the other.

This change alone is costing her $148,000. “We relied on that money,” she said.

Lacey Allen, owner of Learning and Fun Preschool in Kansas City, said losing the bonus has cost her $107,000.

“I have not received a correct payment since DESE took over,” she said.

Discussion of the problems plaguing the subsidy program isn’t over. The House Budget Committee will hold a hearing Wednesday morning to look into the issue as well.