The nonprofit that manages foster care throughout Central Florida has been accused of double-billing the state for employee salaries after receiving more than $1 million in federal Paycheck Protection Program loans during the pandemic.
An audit ordered by the Department of Children and Families also found Maitland-based Embrace Families failed to seek competitive bids for high-dollar-value contracts as required by law.
Embrace Families could face increasing penalties, including having its contract revoked, if it does not remedy the problems identified in the audit, wrote Kathryn Williams, assistant secretary in DCF’s Office of Child & Family Well-Being, in an August letter to the nonprofit’s current interim CEO.
The nonprofit oversees foster care and other related services for roughly 3,000 children in Orange, Seminole and Osceola counties, said Gerry Glynn, the organization’s interim chief operating officer. Roughly 85% of its funding comes from the state.
The audit, which covers the 2019-2020 and 2020-2021 fiscal years, does not accuse the organization of failing to provide proper services, Glynn noted in a recent interview.
“We are dedicated to the children and families of Central Florida,” Glynn said. “We continue to provide a quality service to the children and families of Central Florida. There’s been no question in any of these reports about that service.”
Spokespeople for DCF did not respond to several questions about the report sent by email from the Orlando Sentinel.
But a message posted to the department’s website in August said it had flagged various problems with six agencies across the state, including Embrace Families. The message said DCF seeks to ensure “that the vulnerable children in our care have their needs met and that our contractors are good stewards in ensuring funding is maximized to improve service delivery.”
“These audits are one step in a series of efforts undertaken by the department to strengthen oversight and immediate action is being taken to hold these state contractors accountable,” the unsigned message said.
One other contractor included in the review also was accused of overbilling the state after receiving the federal PPP loans. Like Embrace Families, it was ordered to pay back the excess. Two others were cited for “possible overbilling.”
Embrace Families has already submitted a plan for correcting the issues noted in its audit to DCF as requested and is waiting for the department’s approval, Glynn said.
Embrace Families is one of 20 organizations across the state, known as lead agencies, that manage services for foster children and parents under contracts with DCF. Two decades ago, Florida switched to a model called community-based care, which entailed outsourcing foster care services to local organizations. That change marked a dramatic improvement in the quality of child welfare services, Glynn said.
Lead agencies like Embrace Families have contracts with other local organizations that generally work directly with children and parents.
The audit reported myriad issues, including with loans Embrace Families received through the federal Paycheck Protection Program, which were intended to help small businesses weather the pandemic.
Embrace Families Community Based Care, which holds a contract with DCF, and two other related nonprofit organizations received a total of $2.4 million in PPP loans in 2020. The loans to Embrace Families were later forgiven, as they were to most organizations that received them.
Embrace Families Community Based Care used PPP loans awarded to one of the other nonprofits to cover salaries but then still billed DCF for the same salaries, resulting in an overbilling of approximately $523,342, the audit alleged. DCF ordered Embrace Families to pay back that amount, which Glynn said the organization has already done.
Glynn said the organization thought it could use the DCF money that was allocated for salaries in other areas. Like other organizations, Embrace Families’ expenses increased during the pandemic, he said.
“Our intention was never to overbill the state,” he said.
Former CEO Glen Casel, who presided over the organization during the time period included in the review, did not respond to requests for comment about the findings. Glynn said Casel, 54, announced his plans to retire in May and left the organization at the end of June. His departure was not related to the findings outlined in the audit, Glynn said.
The recent audit also determined that Casel’s and Bryant’s compensation exceeded state limits during the 2019-2020 and 2020-2021 fiscal years, but Glynn said the organization only charged the state for part of the salaries. He said Embrace Families used money from a company it manages that provides Medicaid care coordination services to fund the rest of Casel’s compensation, which state law allows.
“The statement that we overpaid Glen Casel is not accurate. We did not exceed the cap,” Glynn said.
The audit also alleged Embrace Families hadn’t sought competitive bids for projects valued at more than $250,000, as required by the state. Glynn said the organization realized it wasn’t bidding out contracts correctly long before the DCF report came out and acknowledged the organization had been “sloppy” in awarding six contracts.
The organization has already taken steps to address the issue, he said.
“The staff responsible for this process was let go in March of 2023,” he said.
Earlier this year, Embrace Families said it faced a deficit of $12 million, which it blamed on a gap in state funding. That deficit prompted the organization to lay off roughly three dozen employees, WFTV-Channel 9 reported. The organization reported having more than 170 employees on its tax forms during the previous year.
Those layoffs were unrelated to the issues outlined in the recent review, which covered the 2019-2020 and 2020-2021 fiscal years, Glynn said.
Instead, he said, the shortfall during the 2022-2023 year was due to increases in workers’ salaries and costs associated with caring for foster children, who have more needs than they did in the past. He also said Florida uses a funding formula that he argues weighs too heavily the number of children in foster care. Glynn said his organization strives to keep children with their families, which results in underfunding of his organization.
“The more we stabilize families, the less money we get,” he said.
But Mallory McManus, deputy chief of staff for DCF, countered Embrace Families’ claim that a “gap” in state funding had necessitated the layoffs.
“It is a basic responsibility of all lead agencies, including Embrace Families, to develop budgets based on the funding allocated by the Legislature,” she wrote. “Developing a budget greater than the allocation is not a gap in funding, but rather an inappropriate over-commitment.”
anmartin@orlandosentinel.com
