June 2007

Question:
Is there a difference between flex funds and stipends? If so, what is/are the differences?

Answer:
Yes, there is a difference between the two. A flex fund is a source of payment for an activity, whereas a stipend is a form of payment.

Flex Funds

Flex funds are mainly used when there is no payment stream that can be reimbursed as a traditional, formal or insurable expense. Some communities may use this financial source to pay for non-traditional expenses in systems of care, for things such as rent, car repairs, groceries, non-traditional therapies, or other items that cannot be billed to insurance or a formalized contract.

When drafting your policy for flex spending, it would be best to have a limit for an individual to authorize. For example, set a limit of $1000.00 so that any additional expenses would require an added approval from either the supervisor, PD or Board. Your SOC may already have an accounting process of forms for this purpose that you may be able to borrow as a template. Incentives: As you look at incentives, one thought/suggestion is to go to your information arsenal—look at barriers to participation. See the examples below for suggestions:

View a sample flexible funds request (PDF).

Stipends

Stipends may be used to pay for reimbursable expenses like daycare, mileage or other costs incurred for a family member to attend a meeting or appointment on behalf of their support to their community or family. Below is an example of a policy created by Kalamazoo Wraps, a system of care community in Kalamazoo, Michigan. When creating this policy and its approaches, please consult with your community's financial expert and ensure that you are in compliance with the IRS guidelines. Please review guidelines for 1099 Forms when giving stipends. As long as the amount for a year is $599.00 or below, no W-9 will be issued. This is key for members receiving aid, as it could jeopardize their public assistance. You may want to confer with an accountant or the IRS (www.IRS.gov) to see which items compensation is given for that will not constitute payment for services. When implementing your policy, consider if this compensation is a reimbursement—if it is, it can be listed under a separate category that does not fall under compensation, and therefore would not count toward the $600 limit.

Stipend Policy for Parents and Youth

What is the Purpose of Stipends?
Workgroups have been established to ensure parent and youth voice in the Kalamazoo Wraps process. Participation within all workgroups, committees and teams is unlimited. In order to recognize the importance of parent and youth participation and the value of their experiences, stipends are available for a limited number of parent and youth participants. Anybody may participate in groups without holding a stipend position. This document explains the policies regarding stipends.

What is Expected of Members?
In order to receive a stipend, each parent or youth must be appointed to a stipend-supported position by a Kalamazoo Wraps Co-Project Director. Holding such a position requires the parent or youth to meet certain expectations, the same as for all other members. All members are expected to:

• Focus on problem solving. Help to identify barriers within the context of achieving the goal, and be solution-oriented.
• Provide input to help the group make an informed, quality decision.
• Plan to attend the entire scheduled meeting.
• Be able to make a decision on behalf of your peers or organization.
• Notify the chair if you are unable to make a meeting. If you are representing an organization, please arrange for a designee.
• Be attentive, help move the agenda along.
• Support other members and seek support if you need it.
• Remain respectful of all views expressed.
• Work in a consensus-building fashion, allowing ideas to move forward when you can live with the results, even if sometimes they are not your top choice.

Who Qualifies for a Stipend Position?

• Parents and caregivers of youth with serious mental health or complex challenges, OR
• Youth with serious mental health or complex challenges.

How Do You Collect a Stipend for Your Participation?

• Parents/caregivers and youth must fill out a stipend position application and be appointed to a position on a committee or workgroup by a Kalamazoo Wraps Co-Project Director.
• Parents/caregivers and youth can also receive a stipend if they are invited by a Kalamazoo Wraps Co-Project Director to participate in other public meetings, such as trainings, conferences, policy meetings in Lansing, etc.
• Parents/caregivers and youth must complete a contract with Kalamazoo Community Mental Health and Substance Abuse Services (KCMHSAS) to receive stipends.

Who is Excluded from Receiving a Stipend?

• Parents/caregivers and youth who attend activities as part of their employment duties cannot receive a stipend.
• In order to have a variety of opinions voiced, no more than two members from one family (e.g., one youth and one parent, two parents, etc.) can receive a stipend for the same committee meeting.
• Prior to each meeting you attend, you must verify in advance that you are participating as a recipient of a stipend/consultation fee, rather than as an employee or as a concerned stakeholder.
• If a parent/caregiver or youth attends a meeting without prior approval for stipend payment or appointment from a Kalamazoo Wraps Co-Project Director, he or she will not be paid a stipend.

What is the Appointment Process?

• Ask any workgroup chairperson or Co-Project Director for a stipend application.
• Complete this application and submit it to a Co-Project Director.
• The Co-Project Directors will work with committee chairs and workgroups to assure that parents and youth have equal access to paid membership seats on committees.
• The Co-Project Directors will approve a 6-month appointment to a stipend-supported position on all committees. Parents/caregivers and youth are entitled to reapply for a stipend position upon the end of their 6-month term.
• The Kalamazoo Multipurpose Collaborative Body (MPCB) approves all appointments to the Integrative Action Team (IAT).
  
  • The Co-Project Directors can approve an initial 3-month appointment to the Integrative Action Team while waiting for appointment by the Multipurpose Collaborative Body.
  • Integrative Action Team membership is reviewed by the Multipurpose Collaborative Body annually.
• A Co-Project Director will inform you of your appointment, and provide you with a contract form with Kalamazoo Community Mental Health and Substance Abuse Services (KCMHSAS).
• You will fill out this contract and submit to a Co-Project Director.
• At each meeting you attend, you will fill out a form and have it signed by the workgroup chairperson to verify your attendance, and submit this form to Kalamazoo Community Mental Health and Substance Abuse Services (KCMHSAS). Stipend payment may take up to 30 days.
• Additional parents and youth are welcomed to provide input at any workgroups. As members, their input shall be considered equally when decisions are made. Also, parents and youth are welcomed to provide input at any Integrative Action Team meeting, and it will be considered when members make their decisions.

What Types of Meetings will be Stipend-Eligible?
There are several types of meetings for which a parent/caregiver or youth may receive a stipend, and each type of meeting has specific rules. These are explained below.

Meetings in Kalamazoo: Workgroups, committees, the Integrative Action Team (which oversees the entire Kalamazoo Wraps process), and other groups all meet at various times during the month in Kalamazoo, typically for less than 2 hours at a time. To make sure a broad spectrum of people participate, the following applies:

• The Integrative Action Team and subcommittees have defined memberships:
  • The Integrative Action Team has 4 parent members and 4 youth members, all who can receive stipends.
  • Kalamazoo Wraps workgroups each have up to 4 participants who receive stipends. Others are welcomed to participate even if they do not receive a stipend.
  • The Youth Advisory Group and the Parent Advisory Group shall be composed of youth and parent stakeholders exclusively, and staff support shall be provided to these committees if needed. The number of stipend membership seats is established via a separate process.
• Stipend recipients receive $25 for assigned meetings that last up to 4 hours, or $50 for a meeting that lasts longer than 4 hours.
• Members receive their stipend even if snacks, beverages, or other food items are provided at the meetings

Day-trip Meetings: Sometimes family members are invited to meetings in other cities that will take several hours, but the participant will be home the same day. These usually occur only a few times per year. Several guidelines apply:

• The family member must get prior approval or invitation from a Co-Project Director before attending the meeting in order to receive a stipend.
• A separate policy will be designed to determine which family members will be invited to attend day-trip meetings.
• Stipend recipients receive $25 for a meeting that lasts up to 4 hours, or $50 for a meeting that lasts longer than 4 hours.
• Members receive their stipend even if snacks, beverages, or other food items are provided at the meetings. If these are not provided, the member may need to purchase a meal from his or her stipend money.
• Reimbursement directly to a childcare provider is available for parents who experience the need for additional childcare as a result of participation at day-long meetings. Childcare reimbursement must have the prior approval of a Co-Project Director.
  • The need for additional childcare must be documented on an application.
  • Childcare reimbursement is not available to a provider who resides at the same address as the child or parent of the child.
  • The childcare provider must sign a release such that a background check can be completed.
  • The reimbursement rate is a maximum of $10 per hour for a total of up to $20.
  • Individualized arrangements will be designed for children with complex needs or who have serious mental health challenges.
  • It can take up to 30 days after an invoice is submitted before a childcare provider receives the reimbursement.
  • Parents of recipients of Kalamazoo Community Mental Health and Substance Abuse Services (KCMHSAS) services are encouraged to use respite in lieu of daycare reimbursement, and additional respite will be authorized by KCMHSAS. Flexible options are available.

Overnight Conferences: Sometimes family members are invited to conferences in that require travel and overnight stay(s). These usually occur only a few times per year. Several guidelines apply:

• The family member must get prior approval or invitation from a Co-Project Director before attending the conference in order to receive a stipend.
• A separate policy will be designed to determine which family members will be invited to attend conferences.
• The stipend for conference participation is $50 per full day of travel and is less for partial days. This stipend is intended to cover the cost of meals, and therefore the rate is based on the IRS governmental maximum per diem. Family members may keep whatever portion of the stipend they do not spend on meals. They do not have to submit receipts from their expenses, because the stipend is counted as income and not reimbursement for meals under IRS rules. IRS rates are as follows: $10 for breakfast, $13 for lunch, $25 for dinner. Here are some examples of stipends:
  • A parent who travels Wednesday at 4 p.m. and returns home Friday at 10 a.m. would receive $25 for dinner Wednesday, $50 for Thursday, and $10 for breakfast Friday, for a total stipend of $85.
  • A youth who travels Tuesday at 10 a.m. and returns home Saturday at 10 a.m. would receive $13 for lunch and $25 for dinner (and $2 for incidentals) for Tuesday, $50 for Wednesday, $50 for Thursday, $50 for Friday, and $10 for breakfast Saturday, for a total stipend of $200.
• Members do not receive the stipend rate for any meal that is provided at the conference.
• An additional consultation fee of $50 is available in circumstances where the parent/caregiver/youth suffers a documented loss of income by attending the conference or meeting.
• As an invited guest, travel, hotels, and conference fees will be paid in advance for the member by Kalamazoo Wraps as applicable.
• Reimbursement directly to a childcare provider is available for parents who experience the need for additional childcare as a result of participation at conferences. Childcare reimbursement must have the prior approval of a Co-Project Director.
  • Childcare reimbursement is not available to a provider who resides at the same address as the child or parent of the child.
  • A childcare provider must sign a release such that a background check can be completed.
  • For children without serious mental health challenges, childcare reimbursement is $25 per day for one child or a maximum of $50 per day if you have more than one child.
  • For a child with serious mental health challenges or who has “complex needs” and would appear to meet the definition of Serious Emotional Disorder as authorized by a Co-Project Director reimbursement is available to cover the cost of childcare. Reimbursement for each child would be “at actual cost” under two conditions: (1) childcare is up to the respite standards of care and (2) costs are not more than the maximum allowable cost for a similar service provided by a Kalamazoo Community Mental Health and Substance Abuse Services respite provider.
  • It can take up to 30 days after an invoice is submitted before a childcare provider receives the childcare reimbursement.
  • Parents of recipients of Kalamazoo Community Mental Health and Substance Abuse Services (KCMHSAS) services are encouraged to use respite in lieu of daycare reimbursement, and additional respite will be authorized upon request to the Co-Project Director. Flexible options are available.

What are the Financial Implications of Accepting a Stipend?

• Accepting a check from KCMHSAS may decrease other public assistance such as SSI Benefits and Food Stamp eligibility.
• Accepting a check will increase the amount of tax you owe the state and federal government. You will need to pay income tax and social security tax.
• Each participant receiving $600 or more will receive a 1099. This income is reported to the IRS so you must file an income tax return.
• Participants who receive stipends/consultation fees are paid consultants and are not employees KCMHSAS.

For either a flex fund or stipend approach, a community should implement a policy for the enforcement and execution of each. These policies need to be custom to the specific needs of the community and can vary as such.

Good luck in your quest!