Benchmark Family Services in Watertown — which has been hit hard with state penalties for not submitting paperwork correctly — will get a hefty taxpayer-backed loan it needed to avoid locking its doors.

Approved by 4-1 decision from the Jefferson County Industrial Development Agency’s Board of Directorstoday, the $504,726 bailout will provide working capital to keep the daycare 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 Agency ($118,054) and Watertown Savings Bank ($272,802).

After factoring in loans already owed to the three financial agencies, Benchmark will now have to repay a total loan amount of $983,335.

The emergency loan approved today was nearly shot down by the JCIDA board last week, but board members had a change of heartafter reviewing the nonprofit’s financial history and hearing a firsthand account from owner Marguerite K. “Peg” Feistel on how she plans to correct ongoing problems with filing monthly billing statements — the main cause of center’s lingering debt.

Mrs. Feistel candidly admitted she’s struggled to comply with state requirements and said she will now collaborate with a team of staff members to correct the problem.

“I’ve found out I can’t do this all by myself and need to rely on my team,” Mrs. Feistel, who will now hold weekly meetings with four staff members to check billing statements for errors. “We’re going to meet on a regular basis to make sure we’re doing it right.”

Every paperwork error cost Benchmark about $17,000 in state aid, Mrs. Feistel said, and the nonprofit’s Consolidated Fiscal Report it submitted to the for 2011-2012 was fraught with mistakes. The report, which establishes the amount of state aid the nonprofit will garner next year based on a formula, is now being revised by an auditor hired to iron them out.

The nonprofit should receive a daily rate of $144 per child, Mrs. Feistel said, but will only get $138 unless all of mistakes are corrected. That funding is received from the state Department of Health and Department of Education.

“We hope to submit the plan by the end of the month, but we can’t do it until we get the other mistakes squared away,” she said.

Several board members questioned Mrs. Feistel’s ability to follow through on her plan to turn around the nonprofit. Voting against the plan, Michael J. Docteur pointed out that similar daycare services will continue to be offered in Jefferson County regardless of the board’s decision.

“These services are going to be provided elsewhere no matter what we do today,” he said. “If it’s not done through Benchmark it will still happen.”

Commenting on Mrs. Feistel’s business plan, board member Urban C. Hirschey questioned whether the nonprofit, which has 35 employees, might be taking on too much work instead of focusing on its most pressing concerns.

“It appears like you’re 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 daycare centers across Jefferson County to make connections with parents who have disabled children.

“There’s 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 to eliminate some of its daycare programs for children without disabilities this fall, she said, which don’t receive as much state aid. “We have to provide a decent program but we can’t overreach the amount of money we ask from parents — there’s just not money in it.”

Calling it a “courageous decision,” JCIDA CEO Donald C. Alexander lauded the board’s willingness to give the nonprofit a fresh start after being mired with ongoing problems.

“Lending institutions wouldn’t 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.

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