Two weeks after the embattled Division of Child Protection Services stunned lawmakers by revealing a record-breaking $38 million deficit, the agency has dramatically downgraded its request to $12 million in state funds.
The revised estimate is due primarily to an influx of federal dollars, but the agency informed the House Appropriations Committee on Tuesday that it also plans to make approximately $8 million in internal cuts this fiscal year.
And while a $12 million pill may be easier to swallow than one three times its size, lawmakers admit they’re still not sure where the funding will come from in an already tight year.
“But we’re going to have to come up with it,” said House Appropriations Chairman John Read, R-Gautier. “Where it’s going to come from, I can’t tell you right now. So we’re going to be looking across the board. That’s about all we can do.”
While Child Protection Services has taken a number of tacks to reduce the deficit, the crux of the solution centers on lobbying the Legislature to reverse the action that caused the problem in the first place, spinning Child Protection Services off from the Department of Human Services.
The Legislature voted to split Child Protection Services and the Department of Human Services in 2016, but the roots of the agency’s current financial crisis date back to 2004, when six children in foster care sued the state of Mississippi for failing to adequately provide for children in its custody. A federal court sided with the plaintiffs, known collectively as Olivia Y, and the resulting settlement has completely remade the agency, mandating everything from staff minimums to how money for the agency is appropriated.
The biggest change, however, was the requirement that the Legislature create a stand-alone agency for its Child and Family Services division, which had only been a department within the larger Department of Human Services. In their rush to comply with the settlement, lawmakers admit, they may have overlooked a key element of any agency — how its funding works.
The Department of Human Services receives federal matching funds at a much higher rate than Child Protection Services— 50 percent vs nine percent, according to Jess Dickinson, the agency’s commissioner. Separating the two agencies means that Child Protection Services is no longer eligible for the increased federal funding.
“We thought we could do it on our own, and we went out and did it wrong,” Sen. Terry Burton, R-Newton, said earlier this month. “I’m just telling it like it is.”
The question of blame has swirled beneath many discussions about how the agency plans to address the problem. Dickinson, who took over the role of agency commissioner in September, told House members that by the time he arrived, “it was clear to me from a business standpoint that Child Protection Services was headed for a catastrophe.”
During the meeting Tuesday, Rep. Preston Sullivan, D-Okolona, put a finer point on it, asking if the responsibility for this deficit should fall on his predecessor at the agency, David Chandler.
“Your situation is sort of similar to inheriting the farm without knowing how much the mortgage is. … Mr. Davis’s agency is going to help you with it, so I guess the question might be, what’s this going to do to his agency? Somebody’s got to take the hit, because that’s a lot of money.” (John Davis is head of the Department of Human Services.)
Dickinson’s answer was clear: The Legislature is responsible.
“I believe that when Dr. Chandler was running CPS they represented to the Legislature that what (the agency) was going to require to comply with the requirements of the litigation, they needed an extra $70 million dollars,” Dickinson said. “I think the Legislature appropriated an extra $32 million (to the agency). Fourteen million of that was taken away the next year.”
“In my view, respectfully, this agency’s never been properly funded.”
Senate Appropriations Chair Buck Clarke, R-Hollandale, strongly disagreed with Dickson’s assessment, saying the $14 million Dickinson mentioned was actually $12 million and that it was one-time money, specific to the costs of starting up the agency.
“We gave them all they asked for,” Clarke said. “We knew we were under a court order.”
Caring for children is expensive for the state. The agency estimates that 5,800 children are in state custody. The cost of caring for a child ranges from $700 a month for a healthy child to as much as $60,000 a year for a child who has special needs.
Initially, the agency had expected the deficit to be $52 million. The Department of Human Services stepped in quickly, committing $13.8 million, reducing the deficit to just over $38 million, which is where it stood two weeks ago when the agency made its presentation to the Senate Appropriations Subcommittee.
Since then, the agency said it has cancelled more than $3 million in contracts. One $1 million contract paid a company to recruit foster homes. Another multi-million dollar contract with the University of Mississippi, Dickinson said, handled staff training. Both of these functions now will be handled by in house staff.
The agency has also saved $5 million through a hiring freeze and by delaying implementation of a new agency-wide computer system until the next fiscal year. If the agency goes back to being a full sub-agency under the Department of Human Services, Dickinson said, he expects the budget deficit to be resolved for fiscal year 2019.
The current computer system, Dickinson said, is “three decades old. It operates with a green screen and a blinking cursor, and it is very difficult for employees to use.” Like updating the computer system, increasing staffing has been a requirement of the Olivia Y settlement. Dickinson said the agency still needs to hire another 240 caseworkers and 60 supervisors to comply.
“Of course, anything we do that compromises our ability to respond to a complaint is of concern to us,” Dickinson said. “The plaintiffs’ counsel are not going to like the fact that we’re doing a hiring freeze. They’re not going to like the fact that we’re delaying implementation of (the new computer system). But they’re going to understand there’s nothing we can do about it.”
Rep. Andy Gipson, R-Braxton, has authored a bill that would reverse the separation of the two agencies. The bill, which has broad legislative support, would take effect as soon as it passes, meaning the agency would qualify for more federal funds this fiscal year.
As a result of this, and what John Davis has called the “back room processes” of shifting some Child Protection Services services and employees into “cost pools” under the Department of Human Services, Davis expects his agency to come up with another $8 million. This means a total Department of Human Services contribution of approximately $22 million.
The rest of the funding would come from the $12 million state appropriation. Once the agency becomes a sub-agency of the Department of Human Services, its federal match rate will go up to 50 percent, meaning that the $12 million state contribution will become $24 million in federal and state funds.
Dickinson acknowledged that the Department of Human Services and other agencies were going to take a large hit to help his agency.
“It’s not free money. It’s going to cause some pain to people,” Dickinson said. “But you’ve got to determine priorities, and there are few priorities more important than taking care of these children.”