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Posted on Mon, Jan 9, 2012 : 5:56 a.m.

Ann Arbor schools to seek $1.4 million in Medicaid funds

By Danielle Arndt

Ann Arbor Public Schools Superintendent Patricia Green plans to recover at least $1.4 million in Medicaid reimbursement money owed to the district in an effort to close a yawning budget gap.

Green said Medicaid reimbursement dollars are unrestricted general fund dollars that school districts receive for health, psychological and instructional special education services they have provided.


WISD Superintendent Scott Menzel

“In each of my previous districts, I have significantly increased, by millions of dollars, the Medicaid reimbursement,” Green said. “A lot of people don’t recognize how significant that (money) is because it’s unrestricted.”

The Washtenaw Intermediate School District currently holds Ann Arbor’s $1.4 million, along with the reimbursement funds of other districts in the county, in a separate bank account. The $1.4 million was accumulated from the 2008-2009, 2009-2010 and 2010-2011 school years.

WISD Superintendent Scott Menzel said the issue has been resolved and any district wishing to receive its share of the reimbursement money can file a request.

“My premise was this: It’s general fund money; it should come under the purview of the Board of Education,” Green said. “Other jurisdictions chose to leave it there; I chose to bring it back. That’s money that can go and offset anything that would be a reduction (in the budget) because it’s general fund money. And that’s huge.”

Willow Run Community Schools is the only other district in the county that has requested its funding from 2008 to the present. Ann Arbor is facing a $14-million budget shortfall, while Willow Run is likely $1.2 million in the hole.

Patricia Green.JPG

Ann Arbor Public Schools Superintendent Patricia Green

Green added it would be up to the board to determine what to do with the money.

The federal government funnels each individual district’s Medicaid reimbursement dollars through the school’s ISD, Menzel said.

It is the district’s responsibility to submit the proper paperwork and documentation of services to receive its share of federal dollars, he added. A district’s share may vary from year to year based on the hours of services it logs.

Menzel described how, around 2003, discussion began about Michigan’s Medicaid reimbursement collection process.

“The feds did not agree with the methodology we were using to collect,” he said. “They thought they overpaid us, so there was talk they’d have to do some backcasting.”

Backcasting would have meant the government re-collected money from each school district after the ISD had distributed it. In an effort to prevent that confusion, county superintendents agreed to leave the money in the ISD’s account, Menzel said.

“It was a conservative approach to ensure no district was going to be put in the position where they would have to pay back funds,” he said.

The federal government changed the way it issued Medicaid reimbursements in 2008, Menzel said.

About a year ago, several local superintendents met and discussed using the reimbursement money in the ISD’s account toward a common software system for human resources and business services throughout the county.

That way, Washtenaw school districts could share administrative, accounts payable and payroll services, helping to streamline these processes and save money. The software could potentially allow struggling districts to cut administrative staff, saving more money for children, Menzel described.

He said the WISD is “very close” to issuing a request for proposals to determine the best software product for its purposes. He anticipated the ISD would do so in January.

Ann Arbor, Willow Run and any other district that might request their shares can opt into the common software system in other ways.

“They could have other resources already dedicated to the shared platform, many may not request all (of their reimbursement money), or they could request what’s currently in the bank and intend to use their dollars from the adjusted figure to cover the cost of participating in the shared software,” Menzel said.

The total countywide reimbursement for both 2008-2009 and 2010-2011 was about $1.9 million, whereas in 2009-2010 it was $220,000. He said the ISD soon will receive an adjustment that he expects will put the total closer to $1.9 million.

So Ann Arbor Public Schools’ total Medicaid reimbursement for 2008-2011 should be greater than $1.4 million.

Staff reporter Danielle Arndt covers K-12 education for Follow her on Twitter @DanielleArndt or email her at


Steve Norton, MIPFS

Wed, Jan 11, 2012 : 1:38 a.m.

As I think we've tried to make clear, there is no "diversion" of funds. AAPS has already paid to provide these services, and has documented to the Federal government the money they spent. These funds are a *reimbursement* for a portion of AAPS's expenses to provide services to eligible students. As such, it should go back into the general fund, where the original funds came from in the first place.


Tue, Jan 10, 2012 : 2 p.m.

THE ART OF STEALING : Thank you for bringing this issue to public attention. Personally, I am not aware of this diversion of funds from Medicaid. I understood Medicaid as a public health program through which certain medical and hospital expenses of those having no income, or a low income, are paid for from State and Federal funds. If a student needs Special Education, it does not automatically qualify that student to receive Medicaid assistance. Secondly, the intent of this public health program is to pay for some of the medical and hospital costs and it is not intended as a program to promote health through health education. If a student needs health education in the clinical management of his sickness, such education or instruction is provided during the visit to a doctor's office or hospital while seeking medical attention. It could be illegal to falsely claim that a health benefit is provided by any instructor who is employed by the School District. The instructor may not have the qualification or training to provide a health benefit by means of verbal instruction. Any health benefit claims must be properly validated by scientific research. If there is valid sceintific research, the medical intervention must be authorized by a health care provider who may have a license to practice and recommend the remedy for a therapeutic purpose. It will be a shame and it will be an act of utter disgrace, if the School District gets involved in laundering Medicaid funds for its private gain. If this story describes the reality of Medicaid program, the School District must impart education to teach the Art of Stealing.


Mon, Jan 9, 2012 : 10:52 p.m.

Medicaid money for the general fund - incredible. Let the Supt. and Board decide how to spend it - incredible. I obviously don't understand the process of paying for the wonderful work that the WISD does, but it blows my mind to think that the money could be spent on bloated administrative salaries.

Steve Norton, MIPFS

Mon, Jan 9, 2012 : 9:53 p.m.

To repeat the point made by DonBee above, the district already spent this money on services for qualified students. This represents Federal reimbursement of some of those expenses, and so can be used for whatever the Board chooses. It's true that this represents several years of reimbursements, so it is risky to use it all to defray the anticipated budget cuts in one year. However, the anticipated deficit is not mostly the district's "structural deficit," and the outlook for state school funding in future years is modestly optimistic. AAPS has taken huge strides toward more efficiency, and has had to cut teachers and programming regardless. It's a convenient fiction that we would be doing just fine if only we could try to be a little more efficient. Been there, done that over the last seven years.

Steve Norton, MIPFS

Wed, Jan 11, 2012 : 1:41 a.m.

As far as I can tell, we are up a net one, yes one, central administrator - that being the deputy superintendent for instruction which had been vacant for only a few years. It was Todd Roberts' top priority to get that position filled again. Whatever you may think of the varsity athletic facilities, that money could never be used to hire teachers. So what, precisely, is your point?


Mon, Jan 9, 2012 : 9:59 p.m.

Yes, Steve - More Varsity Athletic Facilities, more Administrators, fewer teachers!


Mon, Jan 9, 2012 : 5:35 p.m.

The misuse and abuse of Medicaid : Medicaid dollars should be spent only to provide a direct benefit to those specific individuals who are entitled to be served by the program. To spend Medicaid dollars as general fund is simply misappropriation of funds and it could be reported as theft.


Mon, Jan 9, 2012 : 2:50 p.m.

Sounds likes there is way too much red tape in keeping tabs on these funds. As I understand it, the medicare funds for "special needs" students is given to WISD, and thenit is supposed to go to the various districts. If these funds are originally earmarked for instructional special services, then that is where the funds should be applied--to those individuals such as teachers and assistants who are hired to provide those services for our very special students. Green states that it should be up to the board as to where to spend these funds. Totally disagree in that they were earmarked for special needs and that is where those funds should be spent. And, why would these funds that are earmarked for special needs be used for some type of software -- Don't understand why the federal government continues to provide these funds if the individual school districts are not using them -- it should stop or there definitely should be better auditing to account for the tax dollars the citizens are contributing to the various governments and school districts.


Mon, Jan 9, 2012 : 1:36 p.m.

Floyd - If anyone should be rewarded it is our former Superintendent. Maybe Robert Allen, but not Dr. Green, this was well underway long before she was hired. All - The funds in question replace funds the school district already spent. The problem is that the funds coming cover several school years and the administration will spend it all in one year, while it might help close the gap in 2011-2012 or 2012-2013, it will again kick the can down the road on the structural problems the district has. So long as AAPS starts with the assumption that they will get 5 percent more money in the next year, there will be a structural budget gap. It is time to really zero base budget, create from new, rather than take out last year's budget and add on top.


Mon, Jan 9, 2012 : 3:55 p.m.

ah keep believing that and maybe the good fairy will send you a reimbursement check as well. Not.

Dr. I. Emsayin

Mon, Jan 9, 2012 : 1:28 p.m. provokes negative comments given the way it reports. Once the money has a dedicated purpose, that is the time to let readers know how the money will be used. While it is true that teachers and other staff got a pay cut while the administrators at the top level got a huge raise, general fund money hopefully will go toward more direct student services. Upgrading a system in the central office does not necessarily cut down on the number of people who work in that office. It would be interesting to know how many people are paid to be administrators or secretaries at the Balas building. As secretaries and administrators are cut at the schools, it seems that the central office keeps growing and adding administrative functions that AAPS did not have 5 years ago.

Silly Sally

Mon, Jan 9, 2012 : 1:13 p.m.

Another reason why our federal budget is in debt. Money just piles up in lo9cval areas and they are not sure what to do with it. If it were not taken from me in the first place, I would know what to do with it, or the debt would be less. Sure, special needs kids need resources, but finding like this? No!


Tue, Jan 10, 2012 : 5:43 a.m.

And what kind of funding, in your great knowledge, should special education kids have? Are you well versed in the costs? Have you ever had a special needs child? If so, was that child well served? Waht were the costs for educating that child? And so forth?

Silly Sally

Mon, Jan 9, 2012 : 1:14 p.m.

Funding, not finding

Basic Bob

Mon, Jan 9, 2012 : 1:08 p.m.

Aren't we actually, just taking a withdrawal from our own Medicaid reimbursement account to spend on whatever - administrator salaries, executive travel, maintenance for excess buildings like the former Jones School. Because we could not possibly be more efficient.


Mon, Jan 9, 2012 : 1:57 p.m.

My thoughts exactly!


Mon, Jan 9, 2012 : 12:02 p.m.

Pat Green deserves a raise for such a great idea! Furthermore, I propose we praise her with the pecuniarily affectionate name of "Superintendent Green-back!"

Basic Bob

Mon, Jan 9, 2012 : 1:07 p.m.

More raises for the rich, taking credit for the work of administrations past.