Benchmark Family Services in Watertown, which has been hit hard with state penalties for not submitting paperwork correctly, will receive the hefty loan it needs to avoid locking its doors.
Approved in a 5-1 decision Thursday by the Jefferson County Industrial Development Agency board of directors, the $504,726 bailout will provide working capital to keep the day-care center at 1635 Ohio St. open. To be paid back over 16 years, the loan includes contributions from the JCIDA ($113,870), Watertown Local Development Corp. ($118,054) and Watertown Savings Bank ($272,802).
On top of loans already owed to the three financial agencies, Benchmark now will have to repay a total debt of nearly $1 million $983,335.
The emergency loan approved Thursday was nearly shot down by the JCIDA board last week, but board members had a change of heart after reviewing the nonprofits strategic financial plan and hearing a firsthand account from owner Marguerite K. Peg Feistel on how it plans to correct ongoing problems with filing monthly billing statements the main cause of the centers lingering debt.
Mrs. Feistel, who was formerly compliance officer, candidly acknowledged her struggle to comply with state requirements. She said she now will collaborate with a team of staff members to make sure all documentation is submitted correctly. Chelsea VanArnum, the centers clinical supervisor and occupational therapist, was appointed by Mrs. Feistel as the new compliance officer last week.
Ive found out I cant do this all by myself and need to rely on my team, said Mrs. Feistel, who will hold weekly meetings with four staff members to check billing statements for errors. Were going to meet on a regular basis to make sure were doing it right.
As a part of the loan agreement, Mrs. Feistels $80,000 annual salary will be capped at $60,000 next year, and she will be required to take a second mortgage on her house to provide equity for the loan. The board first moved Thursday to cap Mrs. Feistels salary at $40,000, but board members agreed later in the day to raise that figure to $60,000, after Mrs. Feistel said she could not support her family on the lower figure, according to JCIDA CEO Donald C. Alexander.
She says she cant survive solely on the $40,000 and has convinced the board to change its mind, he said. The board decided to reduce her annual salary because they were concerned there wouldnt be enough cash flow the first year to service the debt on the loan.
Every paperwork error cost Benchmark about $17,000 in state aid, Mrs. Feistel said, and the nonprofits Consolidated Fiscal Report it submitted to the state for 2011-12 was fraught with mistakes. The report, which establishes the amount of state aid the nonprofit will receive next year based on a formula, is being revised by an independent auditor who was hired to iron out the errors.
Next year the nonprofit should receive a daily rate of $144 per child, Mrs. Feistel said, but it will receive only $138 unless all of the mistakes are corrected.
We hope to submit the plan by the end of the month, but we cant do it until we get the other mistakes squared away, she said.
Another immediate concern is obtaining an early intervention contract with Jefferson County, Mrs. Feistel said, which will enable it to reinstate its early intervention program that was discontinued. The county reimburses contracted providers for early intervention and preschool services with Medicaid money through the state Office of Community Services. Benchmark also receives funding from the state Department of Health and Education Department.
Several board members questioned Mrs. Feistels ability to follow through on her plan to turn around the nonprofit. Michael J. Docteur, who voted against the plan, pointed out that similar day-care services will continue to be offered in Jefferson County regardless of the boards decision. At last weeks meeting, he said Benchmark has been given plenty of time to fix problems but has failed to do so.
These services are going to be provided elsewhere no matter what we do today, he said. If its not done through Benchmark, it will still happen.
Commenting on Benchmarks proposed business plan, board member Urban C. Hirschey questioned whether the nonprofit which has 35 employees might be juggling too many responsibilities instead of focusing on expanding its most successful programs.
It appears like youre throwing a lot of plans out there to try to make them stick, he said.
In response, Mrs. Feistel said the nonprofit plans to focus primarily on expanding its programs for preschool children with disabilities. She outlined how staff plans to attend free screening events at day-care centers across Jefferson County to make connections with parents who have disabled children.
Theres a huge need in this community to help children with autism, she said, because one out of 84 children have it. But (agencies) are all vying for the same group of kids, so we need to get out there and recruit them.
Benchmark also plans this fall to eliminate some of its day-care programs for children without disabilities, she said, which dont receive as much state aid. While some employees may lose their jobs, Mrs. Feistel didnt specify what programs would be cut. Day-care services now have a total of 57 slots: eight for infants, 12 for toddlers and 37 for preschool-age children.
We have to provide a decent program, but we cant overreach the amount of money we ask from parents theres just not money in it, she said.
Calling the vote to approve the loan a courageous decision, Mr. Alexander lauded the boards willingness to give the nonprofit a fresh start after it was mired in ongoing problems.
Lending institutions wouldnt (normally) have approved this decision based on the merits of the loan, but the decision was made based on the fact that Benchmark has 35 employees and provides important services to the community, he said.