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Mental Health Agency Managers Struggle to Cope with Deep Budget Cuts – UPDATED

Cuts to the Social Services Block and the Substance Abuse Prevention and Treatment Block Grants mean tens of millions less for services statewide.

By Rose Hoban

Leaders at mental health management entities are struggling this month with the realities of more cuts to their budgets, and how to distribute them throughout their agencies’ services.

Local managers received the news from the Division of Mental Health, Developmental Disabilities and Substance Abuse Services last month that funds from the Social Services Block Grant, and from the Substance Abuse Prevention and Treatment Block Grants would be cut for a total of almost $20 million.

Map of the state's mental health agencies or LMEs

Map of the proposed mental health agencies in North Carolina. Image courtesy NC DHHS

These cuts come on top of $20 million in additional budget cuts ordered by the General Assembly.

On top of that, lawmakers slashed $45 million from the mental health entities last year.

“The question is not just how many more cuts can we take, but how many can our consumers and citizens take,” said Foster Norman, head of CoastalCare, the local management entity (LME) that serves five southeastern counties. His agency is losing a total of $1.19 million, with $452,000 coming out of substance abuse services.

See table at bottom for details

Norman said he particularly regrets the loss of substance abuse treatment money, because only those funds can be used to provide the substance abuse services.

“I’ll put it this way, substance abuse is the most underfunded service, but it’s the one that has the most need,” he said.

The social service block grant funds services such as transportation and respite care for people with disabilities. The substance abuse fund pays for drug and alcohol treatment services, including outreach, detoxification services, residential treatment and vocational counseling for people in recovery from addiction.

Both block grants target the provision of services to people who do not have insurance.

“These cuts come primarily to those folks who have no other means – no Medicaid, no private insurance,” said Charlie Schoenheit, interim CEO at Western Highlands Network, the agency that serves eight mountain counties.

“They’re usually working poor, who have no insurance from their jobs, or they might have some income, too much, in fact to qualify for Medicaid. Or they might have a little income, but they’re not disabled enough to qualify for Medicaid.”
Western Highlands has a $138 million budget for this fiscal year, but Schoenheit said that large amount can be deceiving.

“The cuts might look like a small amount when compared to the total budgets of these agencies, but we’re all required to keep accounts for different patients differently,” Schoenheit said.

“For instance, Medicaid dollars can pay for people who qualify for Medicaid primarily because they’re disabled. Medicaid covers very few adults unless they do have a disability – only people who make less than half of the federal poverty level are eligible for Medicaid.”

In North Carolina, low-income adults are eligible for Medicaid if they earn less than 49 percent of the federal poverty level, about $5,400  per year.

Cuts on top of cuts

Last year, lawmakers in Raleigh trimmed $25 million from state funds for mental health services for these same indigent patients, but instructed the LMEs to replace those funds with money from their reserve funds and not cut services. Lawmakers also cut an additional $20 million last year, leaving many LMEs depleted.

“We’re worried,” said Rob Robinson, a spokesman for the Durham LME that’s in the process of merging with the mental health entities in Wake, Johnston and Cumberland counties. The new agency is called Alliance Behavioral Healthcare.

“There’s no more fat in the system to cut and we can’t afford any more ‘trim here, trim there.’ We’re looking at something significant.”

Robinson said the agency will have to cut at least one or two major service programs.

“Last year’s cuts already forced us to do wait lists, and these folks are now at risk for ending up in a hospital, or a jail, or an emergency department,” he said.

“Four years ago, we didn’t have any waiting lists.”

Robinson said Alliance will be holding two town hall meetings this week to get input on what and where they will cut, one in Durham on Monday evening and one in Wake County on Tuesday evening.

“Because of the amount of money that’s being cut, we felt like it was important that we hear from the community and our providers to let them know what’s coming,” Robinson said, “so that we can stand by the cuts we make.”

In other parts of the state, mental health advocacy groups have complained that the process of cutting has not been as transparent.

Pitting one disability group against another

Block grants are given to state-funded agencies so that they can have some flexibility about how money gets spent, but that flexibility usually comes in exchange for getting fewer total dollars overall.

In this instance, however, managers have said that some of the programs cut need more funds, but because of the nature of the cuts, they have less leverage to move the money around.

Recently, mental health advocates in Forsyth and three neighboring counties raised an outcry when their local LME, CenterPoint, announced it was going to trim some mental health services in order to meet the service needs of people in their developmental disability population.

“We did ask the mental health community to offset the cuts to the IDD (Intellectual and developmental disability) community,” said CenterPoint spokeswoman Penny Casto, “The IDD cmty would have suffered a lot because of how the cuts were made.”

Casto said CenterPoint had asked for input from “stakeholders” but declined to elaborate.

Foster Norman from CoastalCare explained that LMEs must provide a certain level of service to some people, such as those with developmental disabilities because of federal requirements.

Before the block grant cuts, Norman and managers like him might have been able to move a little money from block grants to cover state budget cuts to that population. But with the elimination of the block grant money, Norman said his hands are tied.

He agreed the situation ends up pitting some service recipients against others.

“It makes everyone angry,” he said. “We have had to reduce our benefit plan several times, say, ‘Here’s the services that are available and here’s how much you can get.'”

“I’ve had families come in and they’ll say, ‘My son or daughter has been getting some level of service in the past. I want the same level of service,’ and I’ve had to explain to families that if I continue your level of services, that means someone else’s son or daughter will not get any services,” Norman said. “And believe it or not, people say ‘Yes, that’s what I want you to do.'”

“It gets to be a very emotional kind of thing,” Norman said.

LME/ MCO Amount Cut Social Services Block Grant Percentage Cut Amount Cut Substance Abuse Prevention and Treatment Block Grant Percentage Cut
Centerpoint 1,050,787 100 722,553 32
Cumberland 170,763 100 69,787 12
Durham 1,946,519 100 308,062 24
Eastpointe 1,043,832 100 952,913 67
ECBH 824,760 100 692,521 11
Guilford 693,853 100 416,595 24
Johnston 171,308 100 49,131 24
Mecklenburg 131,820 100 397,347 13
Partners 846,967 100 741,947 90
Piedmont 1,865,235 100 1,517,970 92.5
Sandhills 388,366 100 353,877 11
Smoky Mountain 783,979 100 974,070 65
CoastalCare 736,097 100 451,950 19
Western Highlands 493,305 100 351,277 7

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