Seventy percent of Kansas school districts are repaying amounts from hundreds to millions of dollars after a Medicaid calculation error by a state contractor, a Kansas official testified this week.

Secretary Janet Stanek from the Kansas Department of Health and Environment told the Legislative Budget Committee Tuesday that 153 of the 286 school districts had to repay funds from fiscal year 2016 to 2023.

Kansas school districts owe $11.2 million to Medicaid, with most owing less than $50,000 each, Stanek said. Wichita Public Schools owes the most at $11.3 million and 19 districts owe less than $1,000.

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The $11.2 million was 4.4 percent of the Medicaid payments made during that time period, Stanek said.

Districts bill Medicaid in two ways, one for claims reimbursement in which providers bill for services like physical or speech therapy, and the other for administrative claims, which cover the cost of providing services at schools, she said.

It was the second method that was incorrectly calculated by Public Consulting Group, a KDHE contractor, Stanek said. 

Gary Menke, chief financial officer for Topeka Public Schools, said the administrative claims calculation is complicated. It involves payments for support services the district provides to students to make sure they receive Medicaid services.

“It takes an army of people to get a student that needs those services pulled away from instruction, ready if they have to move to another building or facility for services, then you’ve got to get them back from those services,” he said. “Those are the dollars they are talking about.”

Topeka Public Schools owed just more than $424,000, which Menke said the district elected to repay in four installments to be deducted from a quarterly Medicaid reimbursement the district receives.

While the repayment isn’t a hardship for the school district because Menke said he’s wary of budgeting Medicaid funds until final amounts are set, that $400,000 still would have covered multiple special education teacher salaries, which average about $61,000 annually.

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Wichita Public Schools owed over $3 million, and the district’s Medicaid coordinator Deanna Beard told the committee that she would like to see more transparency in the process and Medicaid funding expanded for schools.

“Currently, districts are excluded from key components of the calculation, such as the numerator used to verify Medicaid-eligible students who received services,” she said. “This lack of information from KDHE prevented us from validating data and any ability to identify errors early.”

In an emailed statement, a representative for the Wichita district said it elected to repay the amount in four installments.

“Unforeseen financial needs such as this are an example of why WPS maintains unrestricted reserves,” the statement said. “These reserves will have to backfill the shortfall the audit finding repayment has created for the 2025-26 budget year.”

Stanek, who said she was offering no excuses, explained that previous administrations had cut staff and the program was “under-resourced.” In addition, schools had quite a lot of turnover at the same time the contractor PCG had turnover.

“It was a perfect storm,” she said.

Representative Kristey Williams, R-Augusta, asked whether anything in the contract allowed Kansas to hold PCG responsible for the error.

Stanek said nothing in the contract allows that but the state is working with PCG and have asked for a corrective action plan.

“But I can tell you, PCG has stepped up, and we are holding them more accountable,” Stanek said. “We are going to look at adding positions to manage – even though you have a consultant or a contractor, as you know, somebody’s got to manage them too – and I would say it was loose, and that’s on us.”