Kansas foster care provider asks Nebraska for immediate funding boost to maintain services

William Clark, interim CEO at Saint Francis Ministries, says substantial progress has been made in the past two months to restore the organization's financial footing. (Sherman Smith/Kansas Reflector)

TOPEKA — William Clark, the interim CEO for Saint Francis Ministries, provided a bleak and urgent understanding of his organization’s financial stability during a hearing last week with Nebraska lawmakers.

Past executives for Saint Francis misled Nebraska officials about the cost of providing foster care service for the Omaha region, Clark said. Now, he explained, lawmakers have one week to provide an additional $110 million through an emergency, no-bid contract or the Salina-based nonprofit will run out of money.

“I’ll say this twice, just so I’m not misunderstood,” Clark said. “Saint Francis failed to bid the contract properly. Saint Francis takes responsibility for not accurately providing a bid to the state of Nebraska for what it costs to provide the services that we’re expecting.”

Former Saint Francis CEO Robert Smith and COO Tom Blythe left the organization in November after an investigation substantiated allegations of financial misconduct. A combination of bad investments and personal expenses forced Saint Francis to eliminate programs and staff as it works to stabilize its core operations.

The Kansas Department for Children and Families is nearing completion of a yearlong audit into the financial stability of Saint Francis and its use of taxpayer funds. A spokesman for DCF said the agency hopes to finalize the report by early April.

In 2019, Saint Francis expanded its reach to Nebraska by severely underbidding PromiseShip for a contract to provide services in the Omaha area. Smith and Blythe lied to Nebraska officials and board members about the true cost of those services, according to an investigation conducted by Saint Francis in November of 2020.

Nebraska lawmakers and child advocates immediately scrutinized the state’s decision to award the contract to Saint Francis, which has failed to meet basic requirements for social worker caseloads and left foster children sleeping in offices.

During Friday’s hearing, Sen. Machaela Cavanaugh, of Omaha, lashed out at Dannette Smith, CEO of the Department of Health and Human Services, for not recognizing red flags.

“How could you possibly think that another child welfare entity could come into the state and do the work at such a significantly reduced amount,” Cavanaugh asked.

Smith said she was misled by dishonest executives at Saint Francis. Cavanaugh accused her of lying.

“That shows a lack of judgment on your part,” Cavanaugh said. “I mean — this is galling. This is galling, and this is negligent, and you’re saying you didn’t know. But you did know. You just chose not to do anything about it.”

Smith said she “could have done some things differently.”

“We take responsibility for those things that have happened,” Smith said. “We are working with Saint Francis in the best interest of children and families. We are doing what we need to do to get this contract back where it needs to be. Could we have done something different? Perhaps we could.”

Clark said he is working with Smith’s agency on a new contract that would add $25 million per year for the current fiscal year and three future years, plus $10 million for past expenses. He said the funds made available through the current contract will be exhausted by Feb. 12.

Saint Francis funding for services in Kansas is not in jeopardy.

Khalilah LeGrand, a spokeswoman for DHHS, declined to answer questions for this story about whether a new contract can be reached by Friday or if the agency is considering any other options.

“We are in ongoing negotiations,” LeGrand said.

Nebraska Gov. Pete Ricketts in a news conference Monday said the state can afford to give the requested additional funding to Saint Francis.

“We obviously dealt with executives at Saint Francis who were fired because of financial mismanagement, so I think we’ve got kind of a unique case here,” Ricketts said. “I don’t think this is going to set a precedent.”

Morgan Rothenberger, a spokeswoman for Saint Francis, said the organization would not stop providing services without working with the state to transition those services.

“We were clear in testimony before the Nebraska Legislature on Friday that to stabilize Saint Francis we must receive additional funding, and since all state partners have been supportive of our work and in agreement that they will provide that funding, we are not concerned about giving up the contract,” Rothenberger said.

This story has been updated to clarify that funding for services in Kansas is not in jeopardy.