Fayette County

Regional group calls state’s attempts to pull funding ‘political’

The Bluegrass Area Development District building 699 Perimeter Drive in Lexington.
The Bluegrass Area Development District building 699 Perimeter Drive in Lexington. Herald-Leader

Officials with the Bluegrass Area Development District said Tuesday they will continue to pay staff through July as they fight the state’s attempt to take away millions of dollars in federal and state funding for aging and workforce programs by Friday.

David Duttlinger, the executive director of Bluegrass, said at a news conference that the area agency has corrected oversight and other problems cited in a 2014 state auditor examination and two other examinations by state agencies. Attempts by the two state agencies to yank more than $6.4 million in aging money and millions of dollars in federal workforce grant money were based on politics and not facts, he said.

“We believe that when and if the facts, and not the politics, are adjudicated by a non-partial mediator or judge with all the politics removed that justice will be found,” Duttlinger said. “A hostile take over is a recognized business tactic, but it has no place in the public policy arena.”

The state contends Bluegrass misspent more than $1.1 million in federal and state aging and workforce funds from 2010 to 2013.

In May, Gov. Matt Bevin sent Bluegrass a letter saying that as of July 1, Bluegrass would no longer be the fiscal manager for federal workforce funds used to provide services to 17,000 unemployed or underemployed workers in a 17-county area. That letter said the Workforce and Education Cabinet, which oversees federal workforce dollars, had concerns about how Bluegrass was spending the money.

The letter said a review of 2015 spending showed “excessive travel expenses and questionable documentary support for use of program funds on authorized activities. Moreover, it appears there is a lack of independent verification of training completion and employment outcomes for participants in the programs.”

The state announced earlier this month it was transferring the federal workforce program to two Louisville agencies — Kentuckiana Works and ResCare. Bluegrass filed an appeal of the state’s decision with the U.S. Department of Labor last week. Bluegrass lawyers say the state can not transfer the contract to ResCare or Kentuckiana Works until federal labor officials make a decision on the appeal.

Duttlinger said Tuesday that up to 17 Bluegrass employees in the workforce program have been told they can stay on until the appeal is decided. The federal agency has 45 days to make a decision.

State officials said late Tuesday they were going to temporarily award a short-term contract to Bluegrass for workforce services until the appeal is decided and will delay moving the contract to ResCare and Kentuckiana Works.

A hostile take over is a recognized business tactic, but it has no place in the public policy arena.

David Duttlinger, executive director of the Bluegrass ADD

“In light of available options, the cabinet believes this is the best course of action to ensure continuity of customer services and to provide as much clarity as possible to Bluegrass ADD workforce employees.,” said Woody Maglinger, a spokesman for the workforce cabinet.

The Workforce and Education Cabinet has said Bluegrass owes the state nearly $900,000 in questioned costs for 2010 to 2013. Some of those questioned costs include travel expenses and rent paid to a nonprofit started by a founding director of the Bluegrass ADD.

In addition, the Cabinet for Health and Family Services says Bluegrass owes the state more than $187,000 in questioned costs for aging and independent living money for the same time period. The cabinet said some of those disallowed costs include one-time bonuses to aging staff that were paid at the time there were waiting lists for services.

Bluegrass Area Development District serves 17 counties: Anderson, Bourbon, Boyle, Clark, Estill, Fayette, Franklin, Garrard, Harrison, Jessamine, Lincoln, Madison, Mercer, Nicholas, Powell, Scott and Woodford.

A senior cabinet official notified Bluegrass last week the state was terminating the agency as its aging service provider but Bluegrass staff refused to turn over computers and other information regarding those programs to the state last week. Duttlinger said the state could have access to information about the aging programs but Bluegrass could not turn over its computers because of a different law that says it must retain records for at least five years.

Its refusal means the state can terminate Bluegrass as the designated area agency on aging, though it has not yet started the process.

Bluegrass administers several programs for the aging, including a Medicaid program for people with disabilities that allows them to remain in their homes. Duttlinger said Tuesday he has not been told what would happen to the Medicaid program but that “we are committed to paying our aging staff through July.”

Some people who depend on the Medicaid program said during Tuesday’s news conference they have received no direction from state health officials on what will happen to them if Bluegrass is de-certified as an area agency on aging. Many applauded Bluegrass’ management and oversight of the program and said for-profit companies can’t manage the program as well.

More than 600 people with disabilities use the Medicaid program in the 17 county region. There are 22 Bluegrass staff that oversee the program.

Bluegrass lawyers are researching whether the state has the authority to de-certify an area agency on aging, which is a federal designation. A group of locally-elected officials in the 17-county region has the authority to make that designation, not the state, Duttlinger said.

Doug Hogan, a spokesman for the Cabinet for Health and Family Services, said late Tuesday that those 600 people have been told via a letter sent Friday that there will be no disruption of services for that Medicaid program. But many consumers said the letter does not tell them who will be managing the program if Bluegrass is no longer serving as the administrator.

Hogan said the cabinet is exploring various options on moving the financial oversight of that Medicaid program. Hogan blasted Bluegrass for using “scare tactics”.

Bluegrass “takes over 40 percent off the top of all allocations just to serve as a pass through agency,” Hogan said. “They do not provide direct services.”

Duttlinger said Wednesday they have asked to meet with Bevin and workforce and aging officials to settle their differences, but no date for a meeting has been set.

Duttlinger also said he thinks the decision to terminate Bluegrass’ federal contracts was driven by Fayette County’s unsuccessful attempt to become its own federal workforce area. Lexington pushed unsuccessfully to leave the Bluegrass workforce area last year, citing ongoing financial issues at the district and a desire to better serve its urban population.

A spokeswoman for Lexington Mayor Jim Gray said Tuesday that Bluegrass’ problems are not driven by politics or Fayette County’s desire to become its own federal workforce area. Gray resigned from the Bluegrass executive committee earlier this month because of ongoing concerns about Bluegrass’ ability to address problems.

“Mayor Gray voted to keep conflict of interest, poor financial management, inappropriate spending, and substandard purchasing practices out of Bluegrass ADD,” said spokeswoman Susan Straub. “Two governors — one Democrat, one Republican — the federal government and three state agencies share his concerns. It’s time to move on and to focus on helping people find jobs and on caring for the elderly.”

Maglinger said there are ongoing issues and problems with oversight at Bluegrass, despite what Bluegrass officials have claimed.

“Unfortunately, problems with Bluegrass ADD have not been corrected,” Maglinger said.” The final determination that was issued [on March 31, 2016] identified numerous problems that have yet to be corrected. The cabinet has identified multiple concerns through recent audits and monitoring reviews.”

Bluegrass officials have said those reviews and recent audits have not been shared with them.

Bluegrass has an annual budget of more than $24.4 million, 90 percent of which comes from federal and state grants.

Many smaller counties and towns depend on Bluegrass for grant writing and other planning services. The 17 counties the agency serves are Anderson, Bourbon, Boyle, Clark, Estill, Fayette, Franklin, Garrard, Harrison, Jessamine, Lincoln, Madison, Mercer, Nicholas, Powell, Scott and Woodford.

Beth Musgrave: 859-231-3205, @HLCityhall