FAYETTEVILLE -- The Fayetteville Veterans Home owes $236,000 in unpaid bills from previous fiscal years, said Karen Watkins, who became chief financial officer for the state Department of Veterans Affairs in October.
"I discovered several months ago that it was standard practice not to enter invoices into the state accounting system if there was no money to pay the bills," Watkins told a dozen state legislators whose committees met Thursday at the veterans home.
The legislators were members of the Senate committee on children and youth and the House committee on aging, children and youth, legislative and military affairs.
The unpaid bills included about 16 months of invoices from Allcare Pharmacy of Arkadelphia totaling about $200,000, she said.
Watkins said there was no record of the pharmacy bills in the state agency's computer system, and there were no hard copies of the bills.
Watkins said the problem was worse than she had initially suspected.
"When I called Allcare, I was shocked," she said. "The agency had not been paying its bills."
Also, the Fayetteville Veterans Home still owes the University of Arkansas for Medical Sciences $36,000 for February 2013 rent. There was no record of that invoice in the system either, said Watkins.
The Fayetteville Veterans Home rents the top two floors of the six-story UAMS building in Fayetteville, as well as administrative offices in an annex.
The state Department of Veterans Affairs oversees the Fayetteville Veterans Home, which operates on a cash basis. Watkins said the financial problems were on the Department of Veterans Affairs' end, not the fault of anyone at the veterans home.
Watkins said she doesn't believe that any fraud occurred as a result of the unpaid bills.
Watkins said she had asked the Arkansas Department of Finance and Administration if an audit could be done of the agency's books.
As a result, the Legislative Audit Division expanded the scope of its regular annual audit of Veterans Affairs. The audit began in April and is due to be complete by the end of June, which is also the end of the state's fiscal 2014.
"We've been very transparent about the issue," Watkins said. "We've talked to everyone we need to about the issue. We're cleaning it up. These are accounting issues. It has nothing to do with fraud.
"We really just want to get it cleaned up and operating smoothly, and it's going to take us another year to do that."
One thing that exacerbated the problem, said Watkins, is that Tracy Pearsall, the previous chief financial officer for the agency, left that job before the end of fiscal 2013, so revenue and expenses that showed up in July weren't accrued to the appropriate fiscal year.
"Last year, things did not get done properly because there was no financial captain of the ship, so to speak," said Watkins. "He left right before year end closed last year, so there was really no one in a financial leadership position to close the books last year."
The Department of Veterans Affairs began fiscal 2014 with a cash balance of $650,000, said Watkins. If the outstanding bills had been paid at the appropriate time, the beginning-year cash balance would have been closer to $400,000.
"We carried about $650,000 into the year from last year," Watkins told the legislators. "That was sort of a phantom profit on the bottom line because we had accounting issues. There's really been a lack of oversight regarding accounting methods at the agency."
Watkins said she believes that the Fayetteville Veterans Home will end fiscal 2014 without spending all the money it had at the beginning of the year, but it will still owe the $236,000 from fiscal 2013.
Allcare Pharmacy and UAMS will have to go through the state's claims procedure to be paid now, since the debts are over 45 days old, said Watkins. The Legislature will have to approve any payments over $15,000, she said. Former state Sen. Percy Malone, D-Arkadelphia, is the president of Allcare Pharmacy, according to the secretary of state's website.
The Fayetteville Veterans Home has been operating at a monthly deficit of $84,000 this year, said Watkins.
That's because of an 18 percent decline in the number of patients, she said. In fiscal 2013, the home had an average monthly census of 78. This year, it's 64, said Watkins.
Because of the drop in patients, revenue is down.
Watkins blamed the decline in patients on negative media coverage in 2013.
The Fayetteville Veterans Home had several problems last year that centered on patient care.
Sarah Robinson, who had been administrator for about a year, was fired in November after the home was the subject of "three reportable incidents" within a week.
The complaints were lodged with the state Department of Human Services' Office of Long Term Care, which investigates complaints against nursing homes in the state.
Robinson was hired as the director of nursing at the veterans home in January 2006. She was promoted to administrator after the previous administrator, Nadine Huddleston, resigned in October 2012.
The problems went back further.
The Fayetteville Veterans Home has been cited by the Office of Long Term Care for violations several times in 2012 and 2013, including allegations of neglect, failing to file reports and staff members providing false reports.
On Dec. 8, 2012, a patient's arm was broken while being restrained by staff members at the facility. Four employees were fired after it was discovered that they provided false reports during the investigation.
A resident died at the facility on Jan. 15, 2013, after a licensed practical nurse failed to address an occupational therapist's warning that the patient wasn't breathing properly. When the nurse went to check on the patient, the patient was dead. The nurse was fired after an investigation.
But it's a new day at the Fayetteville Veterans Home, said Kriss Schaffer, who was hired as administrator in January. Schaffer co-owned and operated Greenhurst Nursing Center in Charleston -- a family business -- until December 2012, when he sold his share of the company.
Schaffer spoke to the legislators Thursday, saying he's working to improve the facility. He wants to install a kitchen and provide more activities for patients. Several patients were recently taken on a fishing trip, he said.
Schaffer said money has been tight at the veterans home this year. He needs to replace three batteries in a floor buffer, but after discovering they would cost $236 each, Watkins told him to hold off on the purchase until the next fiscal year.
Watkins said the message she was trying to send the legislators is "We need a little cash infusion."
Watkins told legislators that the Little Rock Veterans Home, which is currently closed, had received state General Improvement Funds, but the Fayetteville Veterans Home never has.
When asked by state Rep. Stephen Meeks, R-Greenbrier, how much money the Fayetteville Veterans Home needed to pay its debts and whether a few unprofitable months until its patient numbers increase, Watkins said about $600,000.
"If we get can get back to 78, like we were last year, then our financial difficulties will become nonexistent," she said after the meeting. "We just need a little bit of breathing room so we can build our census."
A section on 06/13/2014
Print Headline: Fayetteville vets home lets bills pile up