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Some will say the loss of yet another lead foster care provider -- this time it's the Boys and Girls Home -- is another nail in the coffin of Nebraska's public-private reform of foster care.

State Department of Health and Human Services officials Kerry Winterer and Todd Reckling refuse to go there. There have been signs of early success, despite some failures, in trying to move to more in-home care of children and less out-of-home foster care, they say.

The percentage of children in out-of-home care in the Lancaster County area already has dropped from about 70 percent to about 60 percent, said Reckling, director of children and family services.

"Signs tell us that vision (of reform) is right," he said. "It's where things are going nationally."

Still, it was hard on the system to have Boys and Girls Home, which coordinates services for 1,832 children in the central, western and northern parts of the state, pull out, by mutual consent, after months of struggle to pay their bills and keep up with administering services for kids and families.

Rumors had been circulating for months that Boys and Girls Home would not be able to hang on. Subcontractors have been demanding late payments. Foster families had questioned why they weren't getting paid to watch over state wards. Last month, Pathfinder Support Services of Fremont sent a letter to the provider insisting it pay $365,000 that had been past due since May 31.

Boys and Girls Home, based in Sioux City, Iowa, was responsible for coordinating services in the huge geographic area outside of Lincoln, Omaha and Southeast Nebraska, Reckling said.

Getting administrative systems in place as a lead contractor was a challenge, said Bob Sheehan, Boys and Girls Home president and CEO. The provider needed at least another three months, after hiring a consultant, to accomplish that.

HHS couldn't wait that long, he said.

Over months of conversation, Winterer said, he and Reckling came to realize administration and billing and payments of multiple subcontractors were not Boys and Girls Home's strength.

"Their strength is in providing direct services," Reckling said.

The contract ends Oct. 15, but the state will take over paying the bills Friday. It will take two weeks to transition family and children's services to the state, which will assume the duties temporarily.

HHS plans to contract with another lead provider in the future, Reckling said. In contingency plans of what to do if providers drop out, KVC is listed as one possibility.

Sandra Gasca-Gonzalez, KVC-Nebraska president, said Thursday she has not talked with the state about service coordination in the central, northern and western areas. Her focus is on solidifying operations in the southeastern and eastern areas before she would "even think about ... taking on more," she said.

Sen. Mike Gloor of Grand Island, who as a former hospital administrator knew how important the administrative systems are, said he was pleased with the decision to end the contract.

"I wasn't sure (Boys and Girls Home) had the skill sets or resources to manage that contract," Gloor said.

Lincoln Sen. Colby Coash has been predicting another lead contractor was going to fail. Cedars gave notice in early April it was dropping its lead-provider contract and Visinet, the only for-profit provider, declared bankruptcy two weeks later.

Losing one more, Coash said, will put pressure on the state and the remaining two providers, KVC and Nebraska Families Collaborative, which includes Boys Town, in the Omaha area.

"I'm very concerned we're going to lose those last two," he said.

KVC and Nebraska Families Collaborative have put in millions of their own dollars to subsidize reform. For KVC that's $5.9 million the first year and $6.2 million next fiscal year. The Omaha collaborative will put in $5 million over two years. Boys and Girls Home had tossed in $3 million.

Child advocacy agencies have called for sufficient funding of reform.

The loss of yet another agency will increase the vulnerability of children and families in the child welfare system, Kathy Bigsby Moore, director of Voices for Children Nebraska, said in a news release. Those families are likely to see changes in caseworkers, agency policies and even placements.

"We believe the administration can identify the additional dollars needed to adequately fund the remaining contracts so that real and lasting reform is achieved," Moore said.

If not, the Legislature should take action, she said.

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Nebraska Appleseed Director Rebecca Gould went further, demanding in a written statement that, in light of a third provider ending its contract, the state must reconsider reform, which is flawed and unsustainable.

"The state must seriously re-evaluate whether this privatization makes sense for Nebraska," she said. "The well-being of thousands of children is at stake, and they cannot wait months and years for the state to truly reform the system and meet their obligations to children in care."

As of the end of August, Nebraska was serving 6,347 state wards, 4,093 of them in out-of-home care.

For those served by Girls and Boys Home, the focus now is on transition.

"We want to have ... as little disruption as possible," Reckling said.

The state is still managing care for the 900 or so children in the Omaha area passed to it when Visinet declared bankruptcy.

Even with the third provider out, reform is not collapsing, Boys and Girls Home's Sheehan said. The principles and values of what the state is trying to do are good.

As it leaves its role, there are still past-due and other bills to be paid. Sheehan said some claims are being disputed.

"Otherwise, everyone will be paid," he said.

Boys and Girls Home employees are left wondering if they will continue to have jobs in two weeks, after cases are transferred to the state.

That, Sheehan said, is the hardest part of all.

Reach JoAnne Young at 402-473-7228 or jyoung@journalstar.com.

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