Ohio Youth Advocate program under financial scrutiny

Agency reins in groups that run its foster care
Children Services adds safeguards on taxpayers' money if providers fail
Pyle, Encarnacion. Columbus Dispatch, Dec. 1, 2006, pg. B3.

Four months after discovering that one of the state's largest foster-care providers wasn't paying bills on time, Franklin County Children Services is taking steps to protect taxpayer money if the private group goes under.

Children Services officials said they don't expect the Ohio Youth Advocate Program to financially fail. But they said they can't be sure because they don't know the extent of the Hilliard group's money problems.

"I want them to succeed," Executive Director John Saros said yesterday. "But we've become increasingly concerned about their financial situation, and I don't want any child denied services.
"It's a question of trying to hold them accountable."

At its meeting yesterday, the Children Services board added safeguards that limit how Ohio Youth Advocate and its parent company can spend public money. The board also gave Saros the authority to terminate the groups' contract if they don't improve their financial situation.

Children Services has been asking for a detailed financial accounting from Ohio Youth Advocate and the National Youth Advocate Program, which also is based in Hilliard, since July. But Saros said the last audit he received was for 2004, which shows the groups had about a $4 million deficit.

Last year, the agency paid the programs nearly $17 million to provide foster care, managed care and emergency shelter for children declared delinquent or unruly by the courts. They handle 65 foster- care cases for Children Services and 901 managed-care cases.

The largest chunk of the Children Services money is for managed care, an experimental program in which the agency sends Ohio Youth Advocate about 40 cases a month at $33,500 a case. Ohio Youth Advocate receives 50 percent of the money upfront, another 40 percent 90 days later and the remaining 10 percent when the case is closed.

"Children Services is preparing for the worst-case scenario, but we're a long way from the worst-case scenario," said attorney David A. Kopech, who represents the Youth Advocate programs.

The groups have improved their bottom line and shown "good faith and a willingness" to work with Children Services, he said.

"They have a fiduciary responsibility to show that the kids have been taken care of, and we have that same responsibility."

He refused to say how much the groups owe, but National Youth Advocate President Marvena Twigg said in a letter published by The Dispatch Sept. 20 that the Ohio office owed less than $2 million and the national group has assets of $5.2 million and $3 million in real- estate equity.

Kopech said the programs have provided Children Services with weekly accountings since summer.

They've also promised to give Children Services a 2005 audit for Ohio Youth Advocate in January and one for the national program by mid-February. The documents were held up when the groups changed accountants, Kopech said.

While giving Saros the power to cancel the groups' contract, the Children Services board decided that he could not act without first getting the approval of the board chairman, vice chairwoman and a Columbus lawyer who serves on the board. That board vote took place in closed session because it involved matters that could end up in a lawsuit.

In open session, the board agreed to changes to the contract to add financial protections:

* The Youth Advocate programs agreed to provide Children Services with several financial records, including balance sheets, reserve account statements and a business plan.

* The groups agreed to deposit $100,000 a month in an escrow account at Huntington Bank, which they can't tap into without Children Services' written approval. Children Services expects the groups to accumulate $2.9 million in the reserve account by February 2009.

* The groups also agreed to put a lien worth a total of about $1 million on all of their property as collateral.

*And they agreed to allow Children Services to reduce the number of cases it sends to them if their money problems worsen and to allow the agency to directly contract with their foster parents if the contract is canceled.