Austin, Texas – Over 500 Texas school districts have been stuck in a financial bind in what appears to be a financial crisis due to allegedly incorrect Medicaid billing of almost $16 million. The problem results from audits started in 2017 that examine the claimed School Health and Related Services (SHARS) program expenses. Established in 2010, this program lets districts get Medicaid compensation for particular services rendered to qualified students, including housing for disabled students and nursing care.
With a startling $400 million decrease from SHARS, the Texas Health and Human Services Commission (HHSC), which manages the program, has experienced extreme budget cuts this year. Some districts have decided to drop out since they cannot afford the financial load the program now requires. According to the federal audit, many claims filed by these districts since the program started were not acceptable under Medicaid guidelines, which calls for a large federal government payback.
For the districts engaged in this financial demand timing is especially challenging. As Brian Woods, director of advocacy at the Texas Association of School Administrators, noted, many schools are struggling to make adjustments without prior notice as the unexpected repayment demand shows up midway through the budget year.
“Because this comes in the middle of a budget year, it makes planning for schools virtually impossible,” said Woods. “Had this clawback been known prior to schools approving their budgets in the summer of 2024, then at least it could have been planned for, right?”
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Complicating matters even further, a much-anticipated rise in state financing for districts was postponed during the most recent legislative session when Governor Greg Abbott’s school voucher proposal failed. Opposed by a combination of rural Republicans and Democrats, this proposal would have transferred public money to cover tuition at mainly wealthy private schools. Abbott stopped the increase of public-school funds due to the political deadlock, therefore exposing districts financially.
Schools must make difficult decisions as they navigate these financial pressures: eliminating bus lines, cutting programming, and staff layoffs. The extra multimillion-dollar charge from HHSC simply aggravates the situation, therefore affecting not only the financial stability of the districts but also the educational possibilities for students, especially those in special education.
Districts expressing dissatisfaction over the lack of cooperation from HHSC and wondering whether the agency should have been more proactive in spotting ineligible charges earlier are working on appeals of the charges. It is getting more and more evident as the situation develops that the SHARS program might suffer going forward, therefore reducing the resources accessible to students with special needs.
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The continuous financial crisis emphasizes not only the difficulties of federal financing and state management but also the difficulties school districts have in balancing budgetary restrictions with the necessity to offer their students with basic services. Parents, teachers, and legislators continue to be concerned about how Texas schools handle this financial situation regarding their educational programs.
