State still can’t handle the bills for day care subsidies

One child care provider estimates the state Department of Early Education and Care owes him $15,000 in unpaid bills. Another fears the department is going to ask him to pay back $80,000.

Day care center directors all across Massachusetts are scheduling one-on-one meetings with department officials to hash out unpaid and disputed bills from the past year.

The reason? The new technology the state launched last July to modernize its reporting and billing of day care subsidies still can’t handle the bills. State officials think they’re close to a fix and hope to re-launch on July 1 — exactly a year after they rolled out the current system and discovered its flaws.

Since last summer, the state has spent at least $2.6 million trying to fix its brand new Child Care Financial Assistance system, which cost $5.05 million to develop in the first place, according to the Executive Office of Education.

For many day care providers who rely on it for payments of subsidies for low-income children, that has meant 11 months of estimated billings that now need to be reconciled with their actual costs.

“You end up putting in change orders to their IT people, and do it five or six times because they can’t seem to fix it and then they blame us for it,” said Leo Delaney, chief executive officer of Ellis Memorial Early Education Center, a South End facility that serves 117 children, some of whom receive subsidies. “It’s been a yearlong struggle with the state of getting this system up and running.”

The department could not say how much money is in dispute. About 50 providers were owed refunds, while another 120 were being asked to return money they were overpaid, according to an early May update from the department’s chief financial officer obtained by the Globe.

The Child Care Financial Assistance program was built to replace two separate and outdated systems the state was using to administer $500 million in subsidies to day care centers that serve low-income children.

Developed starting in 2013 under the administration of Governor Deval Patrick, the application was built by a team of vendors and contractors working with officials from three different state agencies — the Massachusetts Office of Information Technology, the Executive Office of Education, and the Department of Early Education and Care.

But the system was rolled out by Governor Charlie Baker’s administration on July 1, 2015 — the same day the governor’s early retirement incentive took effect, eliminating much of the staff of the agency tasked with making the new technology work. Twenty-nine of 150 employees left the same day the system launched, according to records from the State Treasurer’s office and state budget documents.

The Massachusetts Association of Early Education and Care, a trade group that advocates for child-care providers, had urged the state to consider a postponement, fretting about the ongoing technological glitches and the toll the early retirement incentive would take on the department.

But the technology went live last July and immediately created problems — and more work for day care center directors. Unable to use the billing function the system was built for, they had to submit estimated bills and track children’s actual attendance for a later reconciliation. Many also found their submissions suddenly denied because of the strict controls built into the new system. As a result, they found themselves manually and repeatedly resubmitting children’s attendance records dating back to the beginning of the fiscal year.

“I can’t even tell you how much of our time it has taken up,” said Delaney.

The Baker administration had refused until last week to detail the additional costs of the project or the status of the consultants hired to repair and complete it.

In November, the Globe filed a public records request from the three state agencies, seeking the new expenses; a rundown of how many employees and consultants had been hired and fired as a result of the problems; and an explanation of which department was paying each of the specialists.

Last week, the Executive Office of Education finally provided the information showing it cost $2.6 million to date: $1.7 million came from Massachusetts Office of Information Technology capital funds, and $900,000 came from funding that was left over from last year’s budget.

To deal with the system, the state also hired a new project manager, several vendors, and a new consulting firm for the project this year.

Laura Rigas, a spokeswoman for the Executive Office of Education, previously told the Globe that none of the employees on the Child Care Financial Assistance project took the early retirement incentive.

The Globe learned, however, that the retirees included at least two senior officials integrally involved with the technology and three more employees who worked on the help desk for the new system. Two of the help desk retirees wrote the user guide for the Child Care Financial Assistance system, and the third was the help desk director. Those three were hired back after the faulty launch to help with calls from frustrated day care providers, the Globe learned.

Rigas acknowledged that three early retirees were hired back temporarily.

The technology was built with an eye toward detecting fraud and waste. In a 2014 audit, the state Inspector General faulted the Department of Early Education for failing to adhere to its own regulations — for instance, by halting subsidies for children with excessive absences. As a remedy, Commissioner Thomas L. Weber pointed to the new technology, which was expected to be in full use by January 2015.

Providers say, though, that the system is now so rigid that it fails to account for legitimate variables and denies them payments for valid costs.

As an example, Delaney pointed to a student who attends Ellis after school, but goes to a different day care center in the morning. The system repeatedly refused payments to both day care centers, suspecting fraud in the dual use of the same identification number, he said.

“It could not understand that there were two different providers for the same kid,” Delaney said.

That’s what happens, he added, “when the computer does the thinking instead of a human being.”

For providers, the added work of reporting and re-reporting all their children’s hours has taken its toll.

Some day care center operators are so frustrated they’re now asking the state for reimbursement.

At Nurtury, a group of child care centers and family providers that could owe the state as much as $80,000, three day care directors each spend about two hours a week on billing, said Wayne Ysaguirre, president and CEO.

“I have a colleague who hired two full-time people,” said Ysaguirre. “I have staff that come in on so many weekends and I had to increase their salary. There’s a real cost, and while [state officials] are apologetic, there hasn’t been any action to say, ‘Let me recognize you by paying for this extra.’ ”

Rigas did not address those concerns directly. In a prepared statement, she thanked the providers for their work, their commitment to children and families, and “for their contributions to the system’s development over the past year.”