Debbie Ellis knew something wasn’t right.
It was the spring of 2018 and day care providers like herself, who run centers that serve children in poverty, were in turmoil.
The Mississippi Department of Human Services hadn’t approved a single new child care voucher for a low-income working parent in five years.
And yet, the welfare agency had just bestowed a “financial windfall” on a north Mississippi nonprofit that had previously pulled in a modest annual revenue of around $1.5 million.
The new funding for the Family Resource Center of North Mississippi – which the state never publicly announced but would eventually total about $45 million – was enough for the nonprofit to open 15 new centers and increase its staff from 30 to 260 to run a program called “Families First for Mississippi.”
Ellis only knew about the nonprofit’s new cash infusion because the Daily Journal in Tupelo published an article about its recent expansion. She didn’t know where their money was coming from, but she had a hunch MDHS might be diverting funds from the Child Care Development Fund, which is supposed to supply the child care vouchers that centers like hers had stopped receiving.
The general public wouldn’t learn until two years later how much of that nonprofit’s operation was an alleged coverup for a still unresolved welfare scandal that occurred during then-Gov. Phil Bryant’s administration.
Family Resource Center is officially on the hook to repay the state $15 million, what the auditor says it misspent plus interest, though no one from the nonprofit has been accused of a crime. The founder of another nonprofit that helped run the Families First program, Nancy New, has pleaded not guilty to multiple embezzlement, bribery and racketeering charges and is potentially facing hundreds of years in prison.
Most of the misspent money came from a federal block grant called Temporary Assistance for Needy Families (TANF), commonly known as “welfare”, but the Families First program also received some child care funds, according to a state audit.
Ellis still believes the newspaper article, which raised her suspicions, came about because an employee at the Family Resource Center, “who did not know there was anything wrong and did not know what not to say, just spilled the beans.”
Ellis’ instinct told her that this money, which was intended to help the state’s most vulnerable residents, was instead being shoveled into a program that lacked transparency and evidence of actually uplifting people in poverty.
“I knew then, this is entirely too much money for a subgrantee and there’s something to this story. There has to be. This is a lot of money,” Ellis recently told Mississippi Today. “The girl even reported that they were building new facilities, new facilities for Families First, one for every two counties. Now, there are eighty-something counties in Mississippi. That’s at least 40 facilities. And you know full well that grant money can not be used to build personal wealth. And yet these facilities were titled to Nancy New. It was absolutely stunning.”
But Ellis had an idea for how she would use this newfound knowledge. She took to her blog.
“Approximately one-half of all children who were being served (by the Child Care Development Fund) have been eliminated due to new, draconian eligibility requirements and new, additional hurdles in the redetermination process,” Ellis wrote on the website she runs on behalf of a consortium of child care providers in the Delta. “… Delusions of grandeur, bullying, inefficiency and state issued psychobabble rule the day.”
Agency leaders had recently acknowledged that MDHS programs were likely to suffer because of budget shortfalls. “Not so for Family Resource Center!” Ellis wrote in a sarcastic tone. “Wow! We are happy for them.”
Similar to TANF, the Child Care Development Fund (CCDF) is a federal block grant. States can use the development fund to provide child care certificates to low-income parents so they can go to work or to improve the quality at day care centers.
Ellis, who opened The Learning Tree in Greenwood in 1986, relies on the voucher program to stay in business, because without it, many of the families she serves cannot afford to put their kids in child care. The department reported a voucher waitlist of more than 21,000 children in 2017. As Mississippi stopped issuing new vouchers, the state’s workforce participation rate hit a historic low of 55%.
“For those who would criticize the working poor, for those who would criticize those receiving public assistance, they need to understand these were working parents,” Ellis told Mississippi Today. “They were not at home sitting on their laurels. They were working. And because they lost their funding, they could no longer work. Now there’s a double standard in there somewhere, isn’t there?”
The day Ellis posted on her blog about the “financial windfall” of Families First, both the welfare director John Davis, who also is awaiting trial for his alleged role within the welfare fraud scheme, and Bryant’s early childhood education czar Laurie Smith reached out to the rebellious child care provider. They wanted to know what it would take for her to stop writing about them.
“Do you have time for a lunch meeting anytime soon?” Smith texted Ellis on March 12, 2018.
Ellis said she “knew from the immediate reaction from both John’s office and Laurie, that I had hit on something with the Families First post.”
Smith was the director of the governor-appointed State Early Childhood Advisory Council. A member of the council had sent Ellis’ blog post to Smith, asking for an explanation. “None of this is true,” Smith responded.
“They knew more would be coming,” Ellis said, referring to her blog. “I couldn’t put all of the pieces together, but I had enough information to know something was very, very sinister and wrong.”
Less than two week later, Ellis met with Smith, Davis and his deputy Dana Kidd, head of the economic assistance division, at Wellington’s Buffet inside the Hilton hotel on the north edge of Jackson.
“Honestly I never got past salad. Because I had a lot of things to say,” Ellis said.
“My posts had continued to say, ‘No new enrollment. No new certificates for new enrollment.’ And so they knew that my end game was to have that funding released,” she continued. “And we were also beginning to call for forensic audits for the CCDF from 2014 to 2018. That still has not been done … Where did that money go for five years? We still don’t know.”
At lunch, Ellis said, Smith was very quiet and Davis was friendly as always.
“He asked what he could do for me to help alleviate my concern for the Child Care Development Fund,” Ellis said. “And I said, ‘You can do for me as you must do for every low-income child care provider in the state of Mississippi: release this funding today. We don’t have a lot of time.’”
They asked Ellis how long she would give them to start issuing the vouchers before she would continue blogging. Ellis said two weeks. They missed the first deadline, but three weeks after that, the department began making their way down the wait list and working parents started receiving notification they had been approved for the benefit.
“I just knew we had to have new enrollment in order for the industry to survive. And we’re still recovering from that. The only salvation for the child care industry, as a whole, as a result of their shenanigans — the nicest thing to ever happen to us was a deadly pandemic,” Ellis said. “Because of the relief funding and the stabilization grants. With that kind of funding we can do the things that need to be done for child care.”
Today, low-income parents still face barriers getting the child care certificate, but Ellis said the agency isn’t systematically blocking enrollment anymore.
“There are good and honest people at DECCD (Division of Early Childhood Care and Development) today,” Ellis said. “But one thing the pandemic told us was that the policies are still punitive.”
This is a supplement to Part 4 of Mississippi Today’s series “The Backchannel,” which examines former Gov. Phil Bryant’s role in the running of his welfare department, which perpetuated what officials have called the largest public embezzlement scheme in state history.