One of the most persistent themes in post-recession K-12 education has been continually increasing expenses with largely stagnant state and federal revenues. Inevitably this has led to budget deficits and painful cost cutting in many school districts around the country.
Typically, school districts do not think about opportunities to maximize revenues, as they have no control over state funding formulas and only limited control over property taxes. That said, school districts can do their part by maximizing the revenues available to them. One area we often see opportunities for significant revenue improvement in school districts – especially those with high poverty and special education needs – is in the form of Medicaid reimbursements.
To give some background, public schools provide medical services to students who need such services to get an education; think speech therapy or health aides. School districts are eligible to receive Medicaid reimbursements for these services whenever they are provided to Medicaid-eligible children.
The theory is simple but practice can be a headache, and perhaps that’s why most districts receive far less from Medicaid reimbursements than they could.
We had an experience like this recently. One school district we work with was facing a sizable annual budget deficit, and their Medicaid revenues had dropped by 50% in recent years even though eligible students increased over the same period. At the time, Afton was hired to examine these revenues, the District received about $430,000 annually from the fee-for-service Medicaid program annually, and they were probably leaving a lot of money on the table. Their staff had more than enough to worry about on a daily basis, and Medicaid is a complex, technical program requiring a fair amount of administrative reporting.
Their situation is not unique, but rather just another consequence of a declining funding environment: central office typically gets cut before instruction. The fact is, there are less administrators than 5-10 years ago, but that hasn’t changed the responsibility of the central office. The special education department still needs to track and oversee special education, and the finance department still must do a budget every year. With fewer personnel to do the same tasks, it’s no wonder that Medicaid reimbursement—which fall squarely between the special education and finance departments—often falls through the cracks. Finance personnel view Medicaid billing as a special education responsibility because the data required comes from special education staff. Yet special education staff are often not trained in financial exercises such as claiming, billing and financial compliance.
Afton was able to bridge that gap with this school district, bringing the District’s fee-for-service Medicaid revenues from $430,000 to over $1,000,000 annually. In addition, we identified an additional $500,000 of one-time revenue that the District had not yet claimed.
Our client was facing deficits in the millions of dollars, so this wasn’t the miracle solution everyone hopes for in a budgetary crisis. Nevertheless, we were able to close a significant portion of their deficit, and the best part about it was that not a single program, staff, or expense had to be cut. In today’s funding landscape and the dire situations Districts are forced into, we couldn’t be happier about our work and the result.
For more information about this work please visit the case study on our website.