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Following an investigation by Propublica and CBS News, Texas health officials are overhauling programs designed to keep people away from abortion.
The money flows into a network of nonprofits that are part of a thriving Texas family. It is a state program that supports abortion and child-rearing and adoption that provides counseling, substance support and other services. Most groups operate as crisis pregnancy centers or pregnancy resource centers. Pregnancy Resource Centers often resemble clinics, but are criticized for providing little or no actual health care and misleading women’s options.
Over the course of its 20 years of existence, the program’s funding has grown 40 times, reaching $100 million a year since September 1st, making it the country’s most heavily funded effort.
Thereafter, under the new rules set to be effective, the program’s organization must document all costs and will only refund costs associated with services approved by the state. And they cannot ask for a refund when they redistributed the donated items. This is an effort to prevent taxpayer money from going to the organization for products they have obtained for free.
Meanwhile, Texas is opening its programs to a competitive selection process instead of automatically renewing contracts with contractors, including one contractor who has overseen most programs for nearly 20 years.
The change became an obstacle discovered a year ago by Propublica/CBS News research. With thriving Texas families now operating, most providers are paid a flat rate for each service they provide, regardless of the actual cost of their services. As a result, a single client visit can incur multiple stacked fees and significantly increase the amount of public funds being spent. Records reviewed by Propublica and CBS News show that they will be billed individually for each item or service given to clients, including diapers, clothing, blankets, wipes, snacks and even educational brochures.
The arrangement allowed organizations to maintain the difference by charging states for more than the services actually provide. One group, Sealy Pregnancy Resource Center, Quintpling assets over three years by banking refunds. Executive Director Patricia Penner acknowledged the practice, saying her goal is to “ensure that this center is sufficient to continue and continue for the next few years.”
“There is no guarantee that the funds we receive will be sufficient to continue the centre,” Penner added.
Two other people, the McAllen Pregnancy Center and Pregnancy Center at Coastal Bend in Corpus Christi, used refunds to fund the real estate transaction. McAllen Center, which receives almost all income from the state, has purchased the building that previously housed an abortion clinic. The Coastal Bend Center has openly admitted to using state funds to purchase the land for the new facility. The center did not respond to questions.
In San Antonio, thriving Texas families cut off funding for pregnancy centers known as the new generation of new life after local news outlets reported that they had funded vacations, motorcycles and smoke shop businesses owned by their president and CEO. The center did not respond to requests for comment.
Propublica and CBS News also found that state health officials are not aware of what services offered are or whether they are reaching the people most needy. In many cases, the state refunded $14 for each donated product or material, regardless of the cost or how it was obtained.
It includes distributing pamphlets on parenting, fetal development, and adoption, which can cause the same refunds that provide specific assistance, such as diapers and ceremonies. The state could not say exactly how much they spent on these materials.
The nationally recognized pamphlets and lessons reviewed by the reporter stated the inaccuracy that the fetal heartbeat begins 21 days after conception, depicting single motherhood as risk and loneliness, where marriage or adoption is a better option.
Texas sends millions of people to Crisis Pregnancy Centers. It is intended to help poor families, but no one knows if that will work.
While government contracts sometimes use flat rate refunds, nonprofits and accounting experts have said that applying it to the distribution of donated goods is very irregular, although there is no clear standard of quantity or value.
Officials from the state Health and Human Services Committee, which oversees prosperous families in Texas, did not say anything that encouraged policy change, but simply followed guidance from the state director. That guidance recommends awarding state grants as a refund for actual costs.
For a long time, the state has allowed its main contractor, the Texas Pregnancy Care Network, to handle most of the program’s monitoring. The network told news organizations last year that when state funds are handed over to subcontractors, those groups are free to use them, “no longer taxpayer money.” The HHSC was pushed back against the network and still thought the money was taxpayer dollars and expected it to be used in line with state guidelines.
The move to a cost-reimbursement model appears to align the program more in line with how public funds are typically distributed across state agencies in Texas.
The Texas Pregnancy Care Network has received nearly 75% of Texas’ thriving families in recent years, distributing it to dozens of Crisis Pregnancy Centers, faith-based groups and other charities acting as subcontractors, and did not respond to questions about whether they plan to approach new contracts or adapt to strict refund rules.
State Senator Donna Howard, an Austin Democrat and a voice critic of the state’s support for the anti-abortion program, said she views the new rules as a step in the right direction while she opposes taxpayer support for the abortion program.
However, with new refund requirements being introduced, Howard questioned whether funds would be available to many centres. Unlike previous flat rate systems, providers must track expenses, document services, and send receipts to justify spending. “We have to show you the receipt, so who knows if they can actually use the funds,” she said.
By requiring pregnancy centers to track client income, education levels and employment and provide clients with information about public interests available to clients, the state is away from a system in which nonprofits allowed them to raise funds without considering who is not receiving support.
The Pregnancy Resource Center and anti-abortion activists lobby Republican lawmakers at their latest legislative meeting to stop policy changes, and some people have denounced it.
On social media platform X, Rep. Jeff Leach, a Republican from North Dallas suburb, urged the scholarship to “not give veto” the program “biased media reporters.” Leach did not respond to requests for comment.
In an interview, John Shego, the president of living rights in Texas, warned that a new model of refunds would block participation. He said, “It’s not worth entering the program for small providers because of all red tapes.”
And in written testimony, Sealy’s Penner pleaded with lawmakers from Sealy to maintain the current model, saying that “we can focus on providing services to our clients, rather than staffing them to process the documents” required for refunds.
Despite the pushback, lawmakers did not take action to block new rules.
Ge Bai, a professor of accounting and health policy at Johns Hopkins University, said switching to a cost reimbursement system will help prevent waste by ensuring that organizations only pay what they are actually spending.
However, she warned that the model has its own risks. Providers may not be cautious about keeping costs down as they know they will be refunded. She pointed to Medicare, which had previously used a similar system, but abandoned it after costs went out of control.
To avoid the same issue, the program will require strong public surveillance to ensure that the organization is not spending too much just because the state knows it will cover the bill, she said.
One reproductive health policy expert who closely tracked spending on Texas’ Crisis Pregnancy Centers warned that reforms would be of little use to address the wider gaps in the state’s social safety net.
“We cannot compensate for the shortage of Medicaid health insurance for the extremely poor people in Texas. By providing education services, brochures and diapers to people.”
But at least she said, “understanding where the money is heading is a really good first step for this program.”
