RALEIGH — Public Schools of Robeson County misspent $3.16 million of Medicaid-related money intended to provide education and medical services for disabled children from 2011-13, and that could signal an $18 million annual problem statewide, according to a state audit.
Moreover, according to the audit findings released Monday by State Auditor Beth Wood, the school district failed to claim more than $364,000 in available Medicaid funding that would have further helped students with special needs.
The problem was linked to misinformation from the state Department of Public Instruction, and inadequate training of school district employees handling the funds.
The audit notes that the federal Individuals with Disabilities Education Improvement Act requires state education agencies to provide “education and related medical services to students who have disabilities that adversely affect their ability to obtain a free and appropriate public education.”
The state’s Exceptional Children Program allocates $3,743 to school districts for each eligible student.
The money pays for transportation, speech-language pathology and audiology, interpreting, psychological, physical and occupational therapy, social work, school nurse, and counseling services, according to the audit.
If a special needs child is on Medicaid, a school district can receive from Medicaid direct reimbursements for medical services provided to an individual, and administrative reimbursements for programming and support staff.
Under an interagency agreement between the state Department of Health and Human Services and the Department of Public Instruction, school districts were required to return all Medicaid reimbursements for administrative costs back into the special needs program, Wood said.
“DPI didn’t tell them that they should put it back in the special needs children’s program,” but instead said there were no restrictions on use of the money, Wood said.
“The school systems got reimbursed, and just dumped it in their general pot, and spent it on whatever they wanted to — school text books, or janitor services, or the cafeteria,” Wood said.
There were no guidelines issued on how to use the direct reimbursements.
Wood said DHHS did what it was supposed to do in engineering the interagency agreement. “The [fault] is on DPI for not telling the school systems, and then not tracking them,” Wood said.
As a result, according to the audit, “there is a statewide risk that [local school districts] are using about $18 million per year in Medicaid administrative reimbursements for purposes other than the benefit of students with disabilities.”
“The $3,700 that the state gives the school systems is not enough” for all of the unique educational needs of children with disabilities, Wood said.
“So for those that Medicaid is reimbursing, if you take that [reimbursement] money and put it right back in the program you could offer more of the services [to] make sure that the children are getting all that they need so that their ability to learn is more equal to other children,” Wood said.
Robeson schools have about 4,000 students with disabilities eligible for the state Exceptional Children Program, and receives on average $12.5 million a year from the state to provide services to them.
The Robeson district received $3.16 million in Medicaid administrative reimbursements during the three-year period audited, but spent only $26,780 of that amount on special needs services.
The district was selected for audit because it has the highest population of students receiving free and reduced lunches of any district in the state, and therefore likely gets the most Medicaid reimbursement for special needs children, Wood said.
“Some counties don’t even get any [Medicaid reimbursement] at all, some get a lot less, and some get in between,” Wood said.
The audit also concluded that “as a result of several organizational weaknesses” the Robeson district “did not claim Medicaid reimbursement” for more than $364,000 on $4.8 million of eligible expenses.
The audit recommended that DPI and DHHS work together “to clarify the intent and use of Medicaid administrative reimbursements in the interagency agreement and communicate those requirements to the School District.”
It recommended that DPI monitor the spending of Medicaid administrative reimbursements to ensure compliance with the state interagency agreement.
The audit further recommended that the school district “should establish operating procedures, provide adequate training to staff, and document the job position descriptions necessary to administer Medicaid reimbursement and cost reporting requirements.”
DPI agreed with the audit findings and recommendations. It also noted in its response that the interagency agreement with DHHS was updated in October 2014 to correct the manner in which reimbursement money could be spent. It said further clarifying language would be added to the agreement to comply with the audit recommendation.
In its response, Robeson school officials said it is “still in limbo” as to how to spend the money while it awaits notification from DPI.
A response was unavailable from DHHS. A spokeswoman said agency officials had not had time to assess the audit.
Dan E. Way (@danway_carolina) is an associate editor of Carolina Journal.