Kansas Audit Reveals Greater Financial Faults Than Previously Known of NE Child Welfare Provider
A republication from Sherman Smith, The Kansas Reflector
Introduction By Emily Chen-Newton
Less than two weeks ago, (Dec. 14) Nebraska’s Department of Health and Human Services (DHHS) and Saint Francis Ministries (SFM), which has been managing child welfare cases in the Omaha area since the end of 2019, announced— in their words— a “mutual agreement” to end the contract more than a year early.
The announcement was first divulged to several local reporters in private meetings. CEOs of both SFM and DHHS were present for a 15-minute conversation with each reporter. NOISE reported that the CEOs were short on financial details in the meeting and we were told to email DHHS with any financial questions. Roughly a day later, DHHS did respond to NOISE’s financial questions. Khalilah LaGrand of DHHS told NOISE that as of Dec. 14, 2021, Nebraska has paid a total of $147,110,852.28 to Saint Francis Ministries.
This payment has been handed out despite the fact the SFM has never once been in compliance with certain Nebraska state statutes for child welfare caseworkers (caseload ratio requirements) and were operating with their state issued child placing license on probation for several months. SFM’s child placing license was reapproved earlier this month by DHHS after more than five months of probation for being out of compliance on 20 items. Clark said in the meeting with NOISE that SFM remains out of compliance on two of those items. LaGrand told NOISE in an email that SFM remains out of compliance on elements concerning the proper documentation of children when they are moved within the system (should be documented in 72 hours), and statutory caseload ratio requirements.
Over the past year a special committee from the Nebraska Legislature has been investigating this state contract, SFM and their financial flaws, the extent of which has now been revealed to be far greater than was previously known.
SFM officials were repeatedly warned
SALINA KANSAS— As the CEO of Saint Francis Ministries, Robert Smith used company credit cards for lavish hotel stays, first class upgrades on airlines, clothing, cash withdrawals, iTunes purchases and meals at five-star restaurants while hiding increasingly dire financial problems from his board of directors.
Documents from a Saint Francis investigation show Smith invested $11 million in a friend’s business for software that crashed and destroyed the organization’s financial records. Saint Francis spent hundreds of thousands of dollars in a program led by Smith’s wife to harvest a “miracle” food in El Salvador, where staff asked for and received Visa credit cards for the purpose of getting cash to bribe local officials. Smith repeatedly was warned about the financial perils of entering a contract to provide services in Nebraska, where Saint Francis is projected to lose $27 million in the current fiscal year, before Smith signed the deal.
‘God will provide’
Top Saint Francis Ministries officials at the time including then CEO Robert Smith and chief operating officer Tom Blythe knew their proposed agreement to provide foster care services in the Omaha, Nebraska, region would be a money loser.
Smith’s response: “God will provide.”
The unexpected decision last year by Nebraska’s Department of Health and Human Services to move the state’s only privatized foster care contract from PromiseShip to Saint Francis prompted immediate and ongoing criticism from Nebraska lawmakers. Saint Francis provided a bid of $197 million for the five-year deal, undercutting the $341 million offer from PromiseShip.
The actual cost of services threatened the financial stability of Saint Francis, which has failed to meet its obligations to children in Nebraska. Saint Francis lost $7.4 million on the Nebraska deal in the first six months of 2020. Projections for the current fiscal year indicate a $27 million loss.
Clark said Nebraska officials have “agreed to cover” the projected losses moving forward and to reimburse Saint Francis for earlier losses.
“We have worked with the state of Nebraska on how we move forward with that because obviously that would be a large cash drain on the organization,” Clark said.
Nebraska state Sen. Sara Howard, a Democrat who represents an Omaha district and served as chairwoman on a foster care oversight panel, said everyone outside of HHS and Saint Francis knew the bid was too low to be realistic. “People knew that they were walking into a situation where it was either going to be an enormous loss to Saint Francis, or we were going to see them take on the contract and then either ask for more money or eventually get out,” Howard said.
Smith didn’t reveal to the board the real costs of the Nebraska contract, removing information about the projected losses from PowerPoint slides that were prepared for a board meeting in September of this year.
“I had no idea of the severity,” Meissen said. “We knew there were things to work through, but we had no idea, and when I read that part, that was really troubling that information was withheld from us.”
